Copyright © 2024 by Ryan Ham.

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Index

Introduction

Chapter 1.   Unveiling the Money

– Money like Chameleon

– 4 key events

– Cypherpunk movements

Chapter 2.   Bitcoin and Blockchain fundamentals

– 4 concepts in advance

– Bitcoin: A Peer-to-Peer Electronic Cash System

– Transaction initiation, Transaction verification

– Transaction pool

– Mining process + Consensus protocol, Rewarding Miners

– Block creation, Block addition, Chain continuation

– The decentralized nature

Chapter 3.    Ethereum, unlocking a world of smart contracts and dApps

– Birth of Ethereum

– Introducing the EVM

– Ethereum world state

– Gas

– Storage, Memory and Stack

– Proof of Stake and Ethereum 2.0

– Merkle Patricia Trie

– Solidity

Chapter 4.   DeFi, NFT and DAOs

– DeFi

– DEX(UniSwap, Curve Finance)

– Stable coin(Tether)

– Lending(Maker DAO)

– Yield farming and Liquidity Mining(Yearn.finance)

– Derivatives(GMX)

– Liquidity staking(Lido finance)

– Oracles

– Tokenomics in DeFi

– Regulatory landscape and DeFi hacks

– NFT

– ERC-721 & ERC-1155

– NFT trading platforms

– How to mint a NFT?

– What comprises NFT?

– Trading fees in NFT

– P2E

– Soulbound token and POAP

– DAO

– How the DAO works?

– Game theory and DAO

– DAO in real life

Chapter 5.   Altcoins - Polygon, Worldcoin, Solana, Ripple, Dogecoin and Terra

– Polygon - Dreaming a Swiss army knife

– Worldcoin - Sam Altman’s dream of PoH

– Solana - Insanely hot speed as a sun

– Ripple – Ultimate goal of global crypto payment

– Dogecoin - The most loved memecoin

– Terra - A meteoric rise and crash of algorithmic stablecoin

Chapter 6.   To infinity and beyond: Emerging technologies and future horizons

– RWA, the next Tsunami is approaching

– Zero Knowledge, adding ultimate privacy

– Crypto Airdrops

– Bitcoin ETF

Reference

Introduction

Imagine a world where the notion of digital currency was more than just a speculative whisper among tech enthusiasts—a world on the cusp of financial revolution. It was within this burgeoning digital landscape, on a seemingly ordinary day in May 2010, that a simple transaction for two pizzas would mark one of the most iconic moments in the history of cryptocurrency. This is the story of Bitcoin Pizza Day, an anecdote that beautifully encapsulates the humble beginnings of a movement set to redefine our understanding of money, value, and the mechanisms that govern their exchange.

Laszlo Hanyecz, a programmer and early Bitcoin enthusiast, found himself craving pizza. In a moment of inspiration, he proposed a trade on a Bitcoin forum: 10,000 Bitcoins in exchange for two large pizzas. A fellow forum user took Hanyecz up on his offer, and the deal was struck. At the time, the value of those 10,000 Bitcoins was about $41—a modest sum for two pizzas. Fast forward to today, and the value of those Bitcoins has soared into the millions, making those pizzas the most expensive in history.

This quirky tale is more than just a footnote in cryptocurrency’s short but storied existence; it’s a testament to the nascent potential of digital currencies and the visionaries who believed in their value before the rest of the world caught on. It signifies the first real-world transaction using Bitcoin, setting the stage for the myriad ways in which this new form of money could be used.

But why start our journey into the world of cryptocurrency with this story? Because it perfectly illustrates the journey of cryptocurrency itself—from an obscure, experimental form of digital cash to a global financial phenomenon. This book is written for those curious souls standing at the threshold of this new digital frontier, looking to understand not just the how and the what, but the why of cryptocurrency.

Our exploration begins at the very foundation, with the blockchain technology that underpins cryptocurrencies like Bitcoin. Understanding blockchain is essential, for it is the heart of the cryptocurrency revolution—a decentralized ledger that promises security, transparency, and efficiency.

As we delve deeper, we’ll navigate through the intricacies of various cryptocurrencies, demystifying how they work, why they hold value, and how you can engage with them safely and effectively. This book aims to equip you with the knowledge to confidently participate in cryptocurrency discussions, investments, and applications.

Moreover, we will look into the potential of cryptocurrencies to alter the financial landscape. Then, examine the economic and philosophical implications of a decentralized currency, pondering its ability to challenge and potentially upend traditional banking systems.

Moreover, this book addresses the inevitable challenges and risks that accompany any groundbreaking innovation. From the volatility of cryptocurrency markets to the evolving regulatory landscape, understanding these hurdles is crucial for anyone venturing into this space.

But the journey doesn’t end with investment and speculation. We’re on the brink of a broader technological revolution, with blockchain poised to transform industries beyond finance. Through discussions on smart contracts, decentralized finance (DeFi), non-fungible tokens (NFTs), and more, we’ll explore the far-reaching implications of this technology.

This book is your gateway to the world of cryptocurrency. Whether you’re drawn to the investment potential of digital currencies, intrigued by the technology behind them, or simply curious about the future of finance, my aim is to provide a comprehensive and accessible guide to the crypto universe.

So, why read this book? Because understanding cryptocurrency today is akin to understanding the internet in the early ’90s. It’s a chance to be at the forefront of a technological paradigm shift, armed with the knowledge and insight to navigate its opportunities and challenges. Join this journey with me and welcome to the future of money.

Chapter 1

Unveiling the Money

Money like Chameleon

$100 dollar backed by the U.S. government as a legal tender

Let’s stare at this $100 bill. What makes you feel? You might imagine getting a stack of $100 bills for your outstanding work for a bonus, or perhaps you are thinking about the dollar printing machine underneath the dark basement of the Bureau of Engraving and Printing. Perhaps you might be imagining hanging out with your friends in a club with a dollar shooting gun.

Money is a mysterious existence. We laugh and cry because of money, sometimes craving so badly but sometimes neglecting and shouting out Happiness does not come from money. However, there is no argument that it is the driving force of what makes us wake up early every morning with our sleepy eyes and go to work with a cup of coffee.

We use money all the time, it is like the breathing air of our society. Money is spent from buying a cup of coffee, fueling our car and paying our rent. But did you ever take it seriously about the core existence of the money? How it was first started, where it is made, how the quantity is maintained. Bitcoin and blockchain technology was first created to replace the throne of fiat currency, so it is necessary to understand the characteristics of money in advance.

Let’s take a look at the history of money from the beginning to the present. You are going to learn that the money we are using right now is not just granted. Also it would be interesting to see how the money’s appearance had changed by the evolution of society. The range encompasses from Barter system(Prehistoric times), Commodity Money(3000-1000 BC), Metal Money and Coinage (around 1000 BC), Paper Money(7th Century AD), Gold Standard(19th Century), Fiat Money(20th Century onwards) to Electronic Money and Digital Currencies(Current).

Barter System (Prehistoric times)

The barter system represents an early form of economic exchange where goods and services were directly traded without the intermediary use of money. Central to this system was the principle of direct exchange, fulfilling immediate needs through mutual negotiation. Each party in a barter transaction had to possess something the other desired, making the process highly dependent on individual requirements and the perceived value of the items or services offered. The absence of a standard unit of value meant that the worth of exchanged goods was subjective and varied according to each trade.

However, the barter system faced notable challenges. The most significant was the need for a double coincidence of wants, requiring both parties in a trade to have what the other wanted. This requirement often made it difficult to find suitable trading partners. Additionally, issues such as the indivisibility of certain goods (like livestock) and the perishability of items like food products limited the practicality of barter. These limitations were particularly pronounced when attempting to store wealth or conduct trades over larger distances or longer periods, as the system lacked a reliable means of preserving or transporting value efficiently. Despite these challenges, barter served as a foundational economic practice in many early societies, especially in small communities or in times when currency was scarce.

Commodity Money (3000-1000 BC)

Commodity money marks a pivotal stage in the history of money, characterized by the use of items with intrinsic value as a medium of exchange. Unlike barter, where goods and services were directly exchanged, commodity money involved commodities that were universally valued for their utility and rarity. Common examples include gold, silver, salt, cattle, and grains. These commodities were chosen for their durability, divisibility, portability, and widespread desirability. This evolution from barter to commodity money was significant because it circumvented the need for a double coincidence of wants, a major limitation of bartering.

Precious metals like gold and silver were universally valued commodities and formed the basis of early coinage in civilizations such as ancient Egypt, Greece, and Rome, with the Roman denarius being a notable example. Salt, crucial for food preservation, also served as commodity money; its historical importance is reflected in the term salary, originating from the Roman practice of compensating soldiers with salt. Similarly, cattle, vital in agrarian societies, were used as a standard form of payment in places like ancient Ireland. In various cultures across Africa, Asia, and North America, shells, particularly cowries, became a medium of exchange due to their rarity and aesthetic appeal. In agrarian economies like ancient Egypt and Mesopotamia, grains, a staple food, were used as money, while in regions like Central Asia, tea bricks, essential for their nutritional value, served a similar purpose.

The shift to commodity money brought several advantages and marked a leap forward in economic systems. It facilitated easier storage of value, overcoming the perishability and bulkiness of many barter goods. It also enabled long-distance trade, which was previously impractical with barter. Furthermore, the divisibility of commodities, particularly metals, allowed for transactions of varying sizes. Despite these benefits, commodity money had its limitations. The supply of these commodities could be unpredictable, affected by factors like new discoveries, technological changes, or trade routes, leading to fluctuations in value. Additionally, the physical nature of commodity money, especially heavier items like metals, posed challenges in terms of transportation and security in large quantities. These limitations notwithstanding, commodity money represented a significant advancement in the understanding and practice of trade and economics, laying groundwork for more sophisticated economic transactions.

Metal Money and Coinage (around 1000 BC)

Metal money and coinage, emerging around 600 BC in Lydia with the creation of electrum coins, marked a significant advancement in the history of money. This innovation quickly spread to ancient Greece and Rome, with civilizations adopting standardized silver and gold coins, enhancing trade efficiency across the Mediterranean. Metal coinage offered numerous advantages over earlier forms of money, such as durability, portability, divisibility, and standardized values. The intrinsic value of metals like gold, silver, and bronze provided a stable and widely accepted basis for transactions, facilitating trade over vast distances and between diverse cultures.

The introduction of coinage profoundly impacted both economies and societies. It enabled the development of more complex trade networks, markets, cities, and even contributed to the expansion of empires by streamlining tax collection and army payments. Coins also held cultural significance, often bearing the images of rulers or deities, reflecting the state’s power and religious beliefs. Notable examples include the Roman denarius, known for its silver content, and the various forms of bronze coinage in China during the Zhou dynasty, which evolved into round coins with square holes.

This transition to metal money and coinage represented a pivotal moment in economic history, laying the groundwork for modern financial systems. By providing a reliable and convenient medium for transactions, metal coins were instrumental in the evolution from primitive trade practices to more sophisticated economic structures.

Paper Money (7th Century AD)

Paper money, began in China during the Tang Dynasty (618-907 AD). Initially emerging as promissory notes to ease the burden of transporting copper coins, it evolved into government-issued currency, known as Jiaozi during the Song Dynasty. This innovation responded to the need for a more efficient medium of exchange amidst a growing economy and copper shortages. The concept was later documented by Marco Polo during the Yuan Dynasty, highlighting its widespread acceptance in China.

The adoption of paper money in Europe occurred significantly later, with the first European banknotes issued in the 1660s by Stockholms Banco in Sweden. These early notes were essentially receipts for coin deposits. In the Americas, the Massachusetts Bay Colony was a pioneer, issuing paper money in 1690 to fund military efforts. Over the 17th and 18th centuries, paper money became more common in Europe and the American colonies, transitioning from being