I’ve known about Bitcoin and Ethereum since 2017, and started deep delving into crypto in late 2021. And below are the things I believe beginners should first understand and master when starting their crypto journey. This will help you build your understanding gradually, avoiding being overwhelmed by the complex terminology of crypto or Web3.
💵 Understand what money is? And how does it work?
Money is anything widely accepted as a medium of exchange for goods/services, a unit for calculating value, and a store of value. It works by replacing direct exchange (barter) with a common intermediary, making transactions easier between people who don't know each other. Historically, money has evolved from gold/silver to paper money and digital money (fiat money), issued and controlled by governments or central banks. It must have three main functions: medium of exchange, unit of account, and store of value. In the modern economy, money operates through the banking system, where value is based on trust in the government (no longer backed by gold as before). Understanding this helps you see that money is not a "physical entity" but a social agreement.
₿ What is Bitcoin? How is it similar and different from money?
Bitcoin is a decentralized digital currency, created in 2009 by Satoshi Nakamoto, operating on a blockchain network to record transactions without needing intermediaries like banks. It is similar to traditional money in that: it is a medium of exchange, a store of value, and can be used to buy goods/services (though more volatile). However, the big difference is: Bitcoin is not controlled by governments (decentralized), has a limited supply of 21 million coins (anti-inflation), and peer-to-peer transactions directly without intermediaries. Unlike fiat money (like USD) that can be printed infinitely and relies on government trust, Bitcoin's value comes from scarcity and the user network. This makes Bitcoin more like "digital gold" than ordinary paper money.
🌐 Continue learning about DeFi? How is it similar and different from TraFi?
DeFi (Decentralized Finance) is a financial system built on blockchain, using smart contracts to provide services like lending, saving, exchanging without traditional banks. It is similar to Traditional Finance (TraFi) in core services: lending, investing, payments, but automated through code instead of people. The main differences: DeFi is decentralized (no intermediaries, anyone can participate), transparent (transactions public on blockchain), and more accessible (no strict KYC), but higher risks like hacks or volatility. TraFi is more stable thanks to legal regulations, but slower and excludes many people (e.g., requiring bank accounts). DeFi is narrowing the gap with TraFi through integration, but still needs regulations for safety.
Final Thoughs
Understanding these basic things will build for you a solid foundation so that you can easily learn all the other things in this vast and creative world of crypto.
No matter what, everything is born (created) to solve some problem in society. Crypto (originating from Bitcoin) was born to solve the world's financial problems. It is the undeniable future of the global financial system.
✍️ Written by @CryptoTradeSmart
Crypto Insights | Trading Perspectives
⚠️ Disclaimer
This article is for informational and educational purposes only, NOT financial advice.
Crypto carries high risk; you may lose all your capital
Past performance ≠ future results
Always DYOR (Do Your Own Research)
Only invest money you can afford to lose
Thanks for reading! Drop your comments if any!
