Blockchain-based topics are hot agendas at current and cryptocurrency is one of those. Bitcoin and other cryptocurrencies have the potential to compete with both fiat currencies and online payment systems such as Credit/Debit Cards and PayPal. If the 20th Century was the beginning era of the banks and stock market, then the 21st Century is the beginning era of blockchain and cryptocurrency owing to their innovative features which have already impelled many Biggest IT corporations and online retailers to accept them. Though cryptocurrency became a global phenomenon, there are many people who are unaware of the crypto world.
Mentioned below are 10 things about Cryptocurrency you must know before stepping into its world.
What is Cryptocurrency?
The prefix ‘Crypto’ stands for ‘Cryptography’ which is a method of encrypting and decrypting information through the use of a complex mathematical equation. The method verifies the transfer of digital assets, secures financial transactions and controls the creation of new units. Cryptocurrency is basically digital currency traded from one person to another person with the help of cryptography. It works without the involvement of intermediaries like governments and banks. Bitcoin is the first cryptocurrency and other digital currencies like Ethereum (ETC), Ripple (XRP), Litecoin (LTC) and Stellar (XLM) are referred to as ‘Altcoins’. Bitcoin and other cryptocurrencies run on their respective blockchain to process transactions.
Bitcoin is an open-source and decentralized software created in 2009. It is also a cryptocurrency and it is a peer-to-peer payment network which is operated on a cryptographic protocol. Its transactions are recorded in a distributed public ledger which is known as Blockchain. Bitcoin.org is the domain name which was registered on 18 August 2008. The Titled ‘Bitcoin: A Peer-to-Peer Electronic Cash System’ was posted to a mailing list authored by Satoshi Nakamoto on October 31, 2018. The first block in Bitcoin Blockchain is known as ‘Genesis Block’ which had a reward of 50 BTC.
‘Alt’ stands for Alternative and “Coins” signifies to Cryptocurrencies. Altcoins are basically known as ‘Alternative Cryptocurrencies’ launched after the success of Bitcoin. There are more than 2000 cryptocurrencies over the internet as of December 19, 2018. Along with Ethereum (ETH), Litecoin (LTC), Stellar Lumens (XLM) and Ripple (XRP), others altcoins are Namecoin (NMC), PeerCoin (PPC), Dogecoin (DOGE), Dash (DASH), Monero (XMR), Bitcoin Cash (BTC), Tether, Zcash (ZEC), NEM (XEM) and EOS.IO (EOS). Not all altcoins have mining process, but the Altcoins created on the Bitcoin-based framework are Peer-to-Peer and has a mining process.
Blockchain is a shared distributed ledger technology which keeps a record of transactions. It is a collection of fields of different data types and the data types will be fixed number or sequence. A record cannot be changed retroactively without the alteration of all subsequent blocks and the consensus of the network. Each block is linked to 2 other blocks – one preceding it and one succeeding it, forming a Merkle tree. In 2008, blockchain was first invented by Satoshi Nakamoto in order to solve the double-spending problem without the involvement of governing entity or any other third-party. Not all cryptocurrencies run on blockchain technology, namely IOTA (MIOTA), Nano (NANO) and MaidSafeCoin (MAID).
Cryptocurrency mining is a method of verifying and adding new blocks to blockchain and also releasing new currency. Miners are supposed to solve complex mathematical problems with cryptographic hash functions. The functions will take an input of any length and will produce an output of a fixed-length. The properties of ideal cryptographic hash functions are computationally efficient, pre-image resistance, second pre-image resistance and collision resistance. The first miner to solve the problem will be rewarded with cryptocurrency. Miners will require a computer with specialized hardware so that they can be competitive with other crypto miners.
Initial Coin Offering is referred to as an ICO which is a type of crowdfunding operated on the blockchain technology. Tokens need to be sold to investors in exchange for other cryptocurrencies. Most investors invest in ICO in order to receive quick and enormous returns on their investments in the long-run. In 2014, Ethereum raised 3,700 BTC (almost $2.3 million) through an ICO in its first 12 hours. As of February 2018, Ethereum was considered as one of the leading blockchain platforms in terms of ICOs, having more than 80% market share. Ethereum tokens are based on ERC20 standard. Startup companies can use an ICO to generate capitals without intermediaries like capitalists, banks and stock exchanges.
Cryptocurrency exchange is a digital marketplace that allows customers to buy and sell cryptocurrency for other digital assets. There are three types of exchanges viz., Trading Platforms, Direct Trading Platforms and Cryptocurrency Brokers. Trading Platforms are basically websites that connect buyers and sellers across the globe and charge for transactions. Direct Trading Platforms offer direct person to person trading system and each seller is supposed to set their own exchange rate. Cryptocurrency Brokers have their own websites and allow customers to visit their respective websites in order to buy cryptocurrency at a price set by them. Some of the cryptocurrency exchanges are Coinbase, Binance, BitMEX, Kraken, Houbi, KuCoin and Bittrex.
Used For Buying Many Things
Cryptocurrency is widely accepted as a payment method. Intuit PayByCoin service enables small businesses to use Quickbooks Online payment service in order to accept cryptocurrency payments. Some technology companies are Microsoft, Expedia and CheapAir. Some hosting services are QHoster, FlokiNet and Snail.com. With the help of popular gifts card sites like eGifter and Gyft, you can purchase goods from retailers like Amazon, JCPenny, Sephora, Home Depot, Kohl’s, CVS Pharmacy, Whole Foods and Target. You can even use cryptocurrency for buying music from Ujo Music, electronic gadgets from Overstock, pizza from PizzaForCoins, Gold or Silver from Amagi Metals and jewelry from Reeds Jewelers, Inc. Dish is one of the satellite television and internet service providers who also use cryptocurrency payments.
Cryptocurrency investment is the process of investing funds for profit. The process is just like an investment in financial markets, real estate and commodities. There are two types of cryptocurrency investments viz., short-term and long-term cryptocurrency investment. If any company wants to launch their ICO and you are able to recognize and confirm the identity of your already-selected-online source, then you can go for short-term investment. Either you have idle funds and you are likely to leave it for a longer time or if you believe in the future of your already-selected-company, then you can go for long-term investment. By considering the current market cap, some of the best cryptocurrencies to invest are Bitcoin (BTC), Ethereum (ETH), Stellar (XLM), EOS.IO (EOS) and Ripple (XRP).
Cryptocurrency market keeps fluctuating. If it has seen its lowest point, then it has also seen its highest growth. Bitcoin (BTC), Ripple (XRP), Ethereum (ETH), Stellar (XLM), Litecoin (LTC), Bitcoin Cash (BCH), EOS.IO (EOS) and TRON (TRX) are among the top-10 cryptocurrencies. According to Statista, Bitcoin was its all-time high at $13,860.14 on December 17, 2018, and Ethereum reached its highest peak at $1,098.36 on January 18, 2018. According to CoinGecko, EOS.IO (EOS) price was $2.66 and TRON (TRX) price was around $0.01637477 on December 19, 2018. Litecoin (LTC) was also its all-time high with $315.15 on December 21, 2017, and Bitcoin Cash (BCH) price was $3,785.82 on December 20, 2017. On January 4, 2018, Stellar (XLM) price was $0.755119 and Ripple (XRP) price was $2.14 on January 9, 2018.