Quoted from canea:
Can any of you recommend a book or website that discusses crypto basics in layman's terms? Sort of a beginners guide to understanding how it all works?
I ask because I struggle with the mechanics of crypto (blockchain, staking, smart contracts, etc.), especially when I try to explain it to someone else (disbelieving wife). I feel like I understand the general concept. The philosophy. But the technical aspects and terminology are beyond me when I try to read about various coins. I don't know any coding. I'm not an engineer. I just don't have any background for this stuff.
Seems like this is the biggest hurdle for crypto needs to clear to make that last jump into the mainstream. The average joe needs to know why he should use it, how it works, and why it will continue to have value - and right now, that's not an easy answer.
Unfortunately, I can't point you in any particular direction. I've been reading about it for the last few years. If you have any specific questions, I'll be more than happy to help.
The "nuts and bolts" of the blockchain is that it acts as an immutable distributed ledger of account balances. Think of those big books you see in the old movies the banker has behind the counter. Says Smith - $86.75, Jones - $34.87, etc. That's the blockchain. The big difference is that the names are wallet address and the balances are coin quantities (ETH, BTC, LINK, Etc).
You lay claim to the wallet with your public / private cryptographic key pair which is basically your username / password combinations when you log into your bank account.
Transactions are validated, most typically, by PoW or Proof of Work. Meaning there are piles and piles of computers all over the world working to validate transactions on the blockchain. That's what makes it decentralized (not controlled by one entity like the company that owns the bank) and immutable (one computer can't just make a change to the blockchain). The computers do work and race to find a solution to the cryptographic algorithm. The first one to find the answer wins the block reward. Once the answer is found, all the other computers verify the solution and the transaction is written into the blockchain and can never be edited again.
Staking comes in with another transaction validation method called PoS, or Proof of Stake. In this case, the transactions are validated by a randomly chosen participant, called a Validator, that has coins staked or essentially pledged to the blockchain. The more coins you have staked the higher your chances of being chosen to validate the next transaction and get the block reward for validation of that transaction. Attempt to double-sign or attack the network and the penalty is losing what you have staked.
When staking with Coinbase, you're contributing to a big pool of other people staking with Coinbase. The larger the pool, the higher the chances of getting chosen to validate the transaction and the higher the payouts. For contributing to the pool, Coinbase, or whoever else you stake with, gives you a percentage of the payouts.
As far as continuing to have value, it's all belief. Just like fiat. If people feel it has value, then it does. That's why I try to find utility tokens, things that provide a service or fill some role in the world of cryptocurrency. I want something people will use. I feel those are the ones that will make it in the long run, whereas the off the cuff ones will die out serving no purpose and providing no value to the infrastructure.
Hopefully that helps a little.