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Lecture 1 - Introduction To Crypto

This document provides an introduction to cryptocurrencies. It begins with brief biographies of the presenters and an outline of the course topics, which include the history of cryptocurrencies, Defi and the metaverse, methods for valuing cryptocurrencies, and career opportunities. It then discusses the brief history of cryptography and cryptocurrency, including important people, concepts like blockchains and consensus protocols, and types of cryptocurrencies like coins and tokens. It explains why people invest in cryptocurrencies due to the early stage, growth potential, and opportunities for retail investors. Finally, it outlines traditional primary and secondary markets and how cryptocurrency markets function, including mining, spot trading, and investing strategies.

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leochakravarty
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77 views25 pages

Lecture 1 - Introduction To Crypto

This document provides an introduction to cryptocurrencies. It begins with brief biographies of the presenters and an outline of the course topics, which include the history of cryptocurrencies, Defi and the metaverse, methods for valuing cryptocurrencies, and career opportunities. It then discusses the brief history of cryptography and cryptocurrency, including important people, concepts like blockchains and consensus protocols, and types of cryptocurrencies like coins and tokens. It explains why people invest in cryptocurrencies due to the early stage, growth potential, and opportunities for retail investors. Finally, it outlines traditional primary and secondary markets and how cryptocurrency markets function, including mining, spot trading, and investing strategies.

Uploaded by

leochakravarty
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PDF, TXT or read online on Scribd
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INTRODUCTION TO

CRYPTOCURRENCIES
Sponsored by : Imperial College London X OKEx
OKEx Exchange
A little bit about us ...

Sean Yu
• 3rd year bioengineering student
• Been in the space since 2018
• Play with cryptos here at QT
Capital
• Don’t actually hold any bitcoins
Course outline
1. The History of
Cryptocurrencies &
Current Landscape

2. Defi &
Metaverse deep
dive

3. Methods to
valuate a
cryptocurrency

4. Career
Opportunities in
Cryptocurrency &
Blockchain
Imran Khan
• 2nd year Mechanical Engineering student​
• Been in the space since 2018 (was just a
curious spectator for a long time)
• Play with cryptos here at QT Capital as well​
• Altcoin Degenerate
• Noob profit rotator – Cash? What’s that?
• People known as Cypherpunks in the 1980s dreamed
of a borderless virtual world (metaverse much?)
• In 1997s, a team of cryptographers at MIT were told
by the NSA they had to shut down their whole
operation which consisted of an astonishing
discovery: a mathematical system
• The first cryptocurrency “ecash” was invented back
in 1983, by American cryptographer David Chaum
• Bit gold is the first unanounymous cryptocurrency
utilising the proof of work mechanism, invented in
1998
• Bitcoin was launched in 2009, it is the first
decentralised cryptocurrency.
• Peercoin, the first cryptocurrency utilising proof of
stake was invented in 2011.
• In 2021, Cuba and El Savador allowed Bitcoin to
become a legal tender (legal currency).
• Some important people in cryptography history: Nick
Szabo (Father of Smart Contracts), Stuart Haber

Brief history of Cryptography (Father of the Blockchain) and Satoshi Nakamoto.

and cryptocurrency
So… What Is A
Blockchain?
A blockchain is a database that stores
encrypted blocks of data then chains
them together to form a chronological
single-source-of-truth for the data
What Is A A digital or virtual currency that is secured by
Cryptocurrency? cryptography with a decentralized network design.
What Is A Consensus WHAT DO CONCENSUS PROTOCOLS DO?

• Prevents a single entity taking control: If a

Protocol? network has consensus then by design all


participating nodes agree on the state of a
blockchain
• Allows for a trustless system without a
controlling third party. A single entity is
prevented from distorting the truth of
what should be recorded. For example, the
act of double spending.
• Has other properties, pros and cons
depending on the specific consensus
protocol.

• For example, Bitcoin uses a Proof Of Work


consensus mechanism. Other consensus
protocols include Proof Of Stake, Proof
History, Proof of Authority and Directed
Acyclic Graph (DAG) consensus.
Two types of
• Coins: Cryptocurrency that is
cryptocurrencies native to its blockchain, e.g.
Bitcoin, Ethereum, Avax, Doge.
• Tokens: A cryptocurrency that
isn’t native to a blockchain
network of its own, but rather,
they are created on top of an
existing blockchain. e.g. COMP,
LINK, UNI.
Note: it is much harder to come
up with a innovative coin since it
requires more extensive
knowledge of blockchain
architecture and cryptography
TYPES OF TOKENS

These dAPPs together, help to build a decentralized


world, and form the different landscapes of Crypto
world.
• DeFi (Borrowing, Lending, Insurance)
• Decentralised Exchanges (Derivatives, Stocks…)
• NFTs
• Gaming & Metaverse
• Decentralised Autonomous Organisations (DAO)
• Decentralised Media (Audio, Videos, Social Media)
• Oracles and Data
One special type of
Token
• NFT (Non-fungible Token)
• Unlike most cryptocurrencies which are
produced identically, each NFT is unique to
itself, making it suitable for various
purposes including collection and using in
games. (We will dive deeper into this
industry later next session)
Why invest in Cryptocurrency?
Very early in the
stage
• Insane growth potential

• Block-chain enables many innovations (e.g. web


3.0)

• Relatively immature market

• Increasing appetites from the institutional


investors and have mostly only dipped their toes
in Bitcoin and Ethereum

• Rather like the wild west, where retail investors


could make huge gains if they do thorough
research (and sometimes even if they gamble it
away on memecoins)

• Institutional investors have less of a competitive


edge in this field comparing to other matured
asset markets
The Markets of Crypto
Markets

Primary Secondary Mining

ICO Spot

IDO Leverage

ISO Perpetual

Options

Futures
Traditional Primary vs Secondary Market
Primary Market

Where private sales (much like seed rounds for a


company) and public sales happen (similar to IPO
in stocks)

ICO: Initial Coin Offerings (often happens on CEX)


IDO: Initial Decentralized Exchange (DEX) Offering
ISPO: Initial Stake Pool Offering (fairly new, usually
used in PoS consensus)

Pros: Highest return cap, higher governance


potential
Cons: many projects fail early so high risk, high
barrier of entry
Functions similarly to the secondary market of stocks.
Spot trading is much like the buy and sell of stocks, while leveraged trading and options has
the same concept in stocks. Futures have the same concept in Commodities.

Secondary Perpetual trading is unique to cryptocurrencies; it is a futures contract that has no expiry date.
Market It could offer leverages up to 125x

Pros: Easily accessible to retail investors, Higher Liquidity


Cons: Lower return cap comparing to Primary Market
Mining

Originated as a way to generate


cryptocurrencies through solving puzzles in the
PoW consensus. (e.g. Bitcoin, Ethereum 1.0).

PoS mining is sometimes also referred to


Staking, but it doesn’t require any
computational power

Pros: Relatively Consistent/predictable stream


of income
Cons: Highest barrier of entry, lowest potential
ROI
Secondary Market,
Spot Trading
• Could be done through
centralized exchanges (e.g. Okex,
Binance, Kraken, Coinbase)
• Could be done through
decentralized exchanges (e.g.
Uniswap, Sushiwap)
Investing in Cryptos Vs Stocks
Investing in Crypto
• Your investment strategy depends on your
time horizon for investing and risk appetite.
• Diversification is recommended
• Frequent buy and sell generally don’t yield the
best results.
• 20000-10000% (20-100X) on an investment is
rare but achievable.
• Lot of market cycle theory and data science
models emerging in crypto space everyday –
some famously known ones are Stock To Flow
Model and Logistic Regression Model
Next Session:
1. Scan the QR Code
2. Copy paste the address into your
chrome browser
3. Enter your phone number
4. Get activation code
5. If you haven't registered an account,
this step should lead you to register
one
6. Download OKEx
7. Claim your BTC on your OKEx account
Q&A

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