How to get into cryptocurrencies, a guide with non technical analogies

I am a realitive newcomer to cryptocurrency myself, and have seen some people floundering in the muck and mire that can be technical jargon and established protocol so I figured I should write a general review of it for brand new people getting in to provide some aid and understanding. This will be a long post and you may not need to know parts of it if your understanding is past that point so feel free to jump around.

If you would like to begin to understand Bitcoin theoretically/technically I would start out reading Satoshi Nakamoto's white paper. It isn't extremely technical, is only about 7-8 pages and will give you a bit of an idea what the concept is. Once you have read it, realize that now, 8-9 years later we have built all that was described in it and now with the rise of Bitcoin's popularity are even getting to the upper limit of its capacity to manage transactions swiftly and efficiently. There are a number of ways proposed to end this bottleneck, but you may judge the merits of each by the time you have the technical capabilities to understand the situation. I still don't quite understand all of them but I know the merits and demerits of each solution are hotly debated topics on the bitcoin.org forums and r/btc and r/Bitcoin subreddits.

To get into a little bit of the technical side of things for us non-techies which quite a few ppl coming into BTC now are, Bitcoin is basically a huge open ledger of transactions, what is referred to as a blockchain that shows a record of each and every transaction that goes from wallet to wallet (more on wallets later) from Day 1 of Bitcoin. You could find a specific transaction on it if you knew what you were looking for, and it is this that helps make it, if not hackproof, then very hard to hack, as like a real ledger there are continually pages being added to it. To visualize, think of the blockchain as a giant digital book, millions or possibly billions of pages high, reaching up into the sky. To hack or steal coins from one or even multiple accounts a hacker would need to alter the list of transactions to favor themselves, and make a page in the ledger book. Like most people who don't want to get found out in nefarious scheme, they will want to bury it in the middle so it would be hard to find or notice by antone until it is too late. If this was a closed, centralized authority like a bank it could be relatively easy once you are past all the security as banks are effectively private ledgers listing transactions between clients, controlled by a central authority, the bank. For bitcoin it is the opposite, it is an open ledger than anyone can alter, and there is competition to do so, thru mining and running nodes to keep the blockchain running and secure. I cannot answer for mining stuff as I never really got into it, but suffice to say that there are so many different machines around the world that are trying to verify so many different transactions, it would be difficult enough so as to term it mathematically impossible to fool enough of those machines to get your fraudulent transaction in the chain fast enough. For an analogy, a hacker cannot convince enough legitimate sources that he himself is makong a legitmate page in the ledger before someone else finishes another page and beats him to it, rendering his attempted skullduggery null and void. This makes the blockchain itself very secure.

To get to the distinction between Bitcoin and Ethereum, they are different blockchains, different ledgers, with 2 different agendas. Bitcoin is/was the first and is primarily used as currency, as a store of value. Ethereum can be used as a store of value, but it can also be used as a platform to launch other programs on it, called Dapps or decentralized apps on it, and that can give it value. A lot of these projects have their own tokens and funding, making them alternative coins to the first one, Bitcoin (note: yes, even Ethereum could be considered an alt-coin). For an analogy, Bitcoin could be Disneyland, fun, useful, original, with a lot of the same themes it had in the beginning with some updates along the way. It hasn't updated drastically because it doesn't need to, people still like going to Disneyland, and when it does update it keeps to the same general theme. Ethereum and all the other altcoins are like every other theme park out there, Six Flags, Busch Gardens, Sea world, Universal Studios, they are trying to find their niche based on what they can do different from Bitcoin/Disneyland, be it more exciting rides/Dapps, a different theme (for fun, look up what Dogecoin is), or other functionality like smart contracts, or even something else that could be yet to come. A more comprehensive guide to altcoins can be seen in this google doc helpfully furnished by Reddit user u/qgalla1994 at https://docs.google.com/presentation/d/1XRep4mGg7EvZtG2C5ceNs5ne45S_SSW88N7PyE7Sbbo/edit?usp=sharing

For those in the USA just getting started buying, I would suggest using Coinbase.com to get their first bitcoin. It allows you to set up an account with them and easily purchase Bitcoin (BTC), Ethereum (ETH), and Litecoin (LTC) through their website or app, and you can do so via transfer from bank account or even credit card (sorry no Paypal) for a fee. Have heard Kraken, Polonieux, and other sites outside of the USA are good for this as well, so I would check the options available for accepting your local currencies.

Once you have your cryptocurrency from there, I would recommend 2 options, based on your intentions. No matter what, I do not recommend leaving them in your Coinbase account, or 'wallet' as the holding place of your cryptocurrency is known. Not really a knock on Coinbase, it's more following the thinking that if you don't physically hold the private keys to your wallet, i.e. they are in the care of someone else like an exchange then you don't really hold your coins and it can be easy for someone to hack into the site and get them. For more on that, read this: https://medium.com/@CodyBrown/how-to-lose-8k-worth-of-bitcoin-in-15-minutes-with-verizon-and-coinbase-com-ba75fb8d0bac

For those that you are going to be storing for later a good, reputable wallet on your desktop or mobile device is essential. This program allows you to generate private keys to your wallet so only you can have access to it, making it safe from breaches to other sites like Coinbase. I like the Mycellium wallet for Bitcoin, and the Jaxx wallet for altcoins. If you are not going to be using your coins very soon, for added security I would get a hardware wallet, which is the safest you can get for cryptocurrency, offline and not connected to any computers.

If you are wanting to trade across cryptocurrencies, then move your coins to an exchange. This is a site that allows multiple cryptocurrencies to be traded for equivalent amounts and which people can trade one for or against the other. Think of it like the Stock Exchange except online and waaaaaaaay more volatile. Swings of more than 50% can happen in a day here, so watch what you want to invest in, do your due diligence to make sure it's truly what you want to put your money in. Realize that it will take quite a bit to set up an account at any exchange with the influx of so many new people, so I would try to set up accounts at multiple exchanges. GDAX is a good place to start if you are in the USA, and it's run by the same people that run Coinbase, so it is relatively easy to transfer coin that you have bought there into your exchange account. Kraken, Polonieux and Bittrex are some of your other options with many more out there, although I would be cautious as some won't deal in fiat, i.e. dollars, pounds, yen, yuan, whatever your local currency is, so you may need to go to a place like Coinbase to get it changed into Bitcoin or Ethereum which you can then send to the exchanges and trade for other cryptocurrency there.

Sorry if this is a bit long and detailed, but it's a compilation of stuff I wish I had known when I first started. Good luck, and remember never to invest more than you are prepared to lose, because that is always a possibility.