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Architecture and Operation of Blockchain Technology

Introduction

We can obtain the definition of Blockchain by dissecting it into its two words: block and chain. Hence, Blockchain is a chain of blocks having some information in it. Using a blockchain is a way of time-stamping digital documents so that it’s not possible to backdate or tamper them. This secure technology can be used for the transfer of various items such as digital currency, property, contracts, etc. And the primary feature of any blockchain is its decentralized nature. There is no central authority or banks to control the transactions.

Blockchain Architecture and Operation

The architecture and functioning of blockchain go hand in hand. As already mentioned, blockchain is a chain of blocks containing some valuable information. The type of blockchain depends on the data that is present inside a block. For example, a block in a Bitcoin blockchain contains information on who is sending how many bitcoins to whom. Another essential piece in the blockchain is the hash.

Understanding Hash

In simple terms, the hash is the fingerprint of a block. It is unique to each block and is mainly used for the identification of a block. If the content in the block changes, the hash of block changes as well. So, a block has three components:

  1. Data (Sender, Receiver & Amount)
  2. Hash
  3. Hash of the previous block

In technical terms, blockchain is designed using the principles of a linked list. Blocks containing a hash of the previous blocks is what makes blockchain so secure.

Proof of Work

Hashes are an excellent way to avoid tampering of data. But, computers today are fast enough to calculate hundreds of thousands of hashes per second. This makes it pretty convenient for a hacker to tamper a block, and recalculate all the hashes of other blocks and the blockchain valid.

To avoid the occurrence of this situation, Bitcoin blockchains use the concept of Proof-of-Work. This concept is a computational problem that takes efforts to solve. In the case of Bitcoin, it typically takes 10 minutes to calculate the required proof-of-work and add a block to the blockchain. So, this makes it extremely time consuming and challenging for hackers to tamper a block.

Distributed P2P Network

Blockchain is known for its distributed peer to peer network. Anyone is allowed to enter the network. When someone enters the network, he will get a full copy of the network.

When a new block is created, it is broadcasted to all the nodes in the network. Each node verifies this block and makes sure it hasn’t tampered. After verification, each node adds this block to its blockchain. Later, all the nodes create a consensus. They agree about the legitimacy of the blocks and accept or reject it. If the block is verified successfully by consensus, it is added to the main blockchain. This is when the block gets its first confirmation. And when around four confirmations are received, the transaction is said to be completed successfully.

Summary

  1. There are four steps involved in the working of a blockchain.
  2. Some person makes a cryptocurrency transaction.
  3. The transaction is broadcasted to a distributed P2P network.
  4. The nodes in the network validate the transaction with the help of some algorithms.
  5. Once the transaction is verified, the new block is added to the existing blockchain.

This is how the blockchain technology works. Let us know if you have any questions below. Cheers.

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Understanding The Fundamentals Of Blockchain

Introduction

We have understood the basics of DLT in the previous guide. In this article, let’s see one of the most popular applications of DLT, which is known as the blockchain. Many say that the blockchain technology is the new internet. By allowing information to be distributed not copied and tampered, blockchain did create the backbone of a new type of internet. Initially, blockchain found its application only in digital currencies, but today’s tech has now found other potential uses for the technology.

Blockchain, a distributed ledger, is a time-stamped series of immutable records of data that is controlled by different nodes in the network and not owned by any single entity. The records are stored in blocks that are secured and bound to each other by cryptographic principles.

The blockchain technology is completely decentralized. There is no central regulatory body on the blockchain network. The ledger on the blockchain is shared and immutable. The information in it is open to anyone to access. Hence, the blockchain is transparent in nature, and everyone involved in the network is accountable for their actions.

How does the Blockchain function?

In a blockchain, information is passed from one source to another in a fully automated and secure manner. When a party makes a transaction via blockchain, the peers in the network create a block for this transaction, which is secured using cryptography. This block is verified by several nodes (computers) distributed across the network. Once the block is successfully verified, it is added to the chain. Each block in the chain has a unique record with a unique history. Falsifying a single record means to falsify millions of instances in the chain. This is virtually impossible.

Features that hold Blockchain Strong

There are three properties of blockchain technology, which have helped it gain widespread applause.

  • Decentralization
  • Transparency
  • Immutability

📌 Decentralization

Before the appearance of Bitcoin, the public was used to only the centralized systems. And the idea of centralized systems was simple. There is a centralized entity that stores user’s information. To get this information, the user must interact solely with this entity. The main drawback of centralized systems is the absence of transparency.

Imagine if the centralized system was taken out. Everyone in the network can now view the data. It simply eliminates the existence of a third party. The data now can be shared one to one without any intermediary. This will eradicate the costs to be paid to the intermediaries as well. And this system is referred to as a decentralized network, making it a great property of the blockchain.

📌 Transparency

Transparency is another property that makes blockchain much appealing. Some say that blockchain is transparent, while some say it is private. Though it may sound counter-productive, blockchain is both transparent and private. When a transaction is made between two parties, one cannot see ‘who’ has sent it to ‘whom.’ Instead, we will be able to see something called the hash of a transaction. And this will be visible to everyone. Hence, this brings both transparency and privacy in the blockchain.

📌 Immutability

The blocks in the blockchain are immutable. It is impossible to tamper with. Technically speaking, blockchain is a linked list whose structure contains data and a hash pointer to the next block, hence creating a chain. This chain makes blockchain immutable.

For instance, let’s say a hacker hacks block 3 in the chain and tries to change the data. But, a slight change in the block will affect the other blocks drastically. That is, a change in block 3 will change the hash stored in block 2. This continues up to block 1. This will change the entire blockchain, which is impossible. Hence, making blockchain immutable.

Above are just the primary properties of the blockchain. There are other beneficial properties too, which is the reason blockchain has still sustained and is developing at a rapid pace.

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Distributed Ledger Technology (DLT) – The Back-end Of Decentralized Systems

Introduction

A distributed ledger or DLT is simply a database that exists across several locations or among various participants. But, in the case of centralized databases, it lives in a fixed location. A distributed ledger eliminates the need for a central authority or intermediary to validate or authenticate transactions. This property makes DLT a trending technology.

Technically speaking, DLT is a digital system for keeping track of transactions in which the transactions and its details are recorded in multiple places at the same time. Here, there is neither a central data storage system nor an administrating functionality. Each node in the distributed ledger processes and verifies each item and creates consensus on each item’s veracity. Also, transaction information is securely stored using cryptography that can be accessed using keys and cryptographic signatures.

Blockchain and DLT: Are they the same?

The most popular application of the distributed ledger is the Blockchain. However, blockchain and distributed ledgers are not the same. Blockchain is just a type of distributed ledger. Blockchain is basically a sequence of blocks, which is in a chain. But, distributed ledgers don’t really require a chain. Therefore, Blockchain is a bit different from the typically distributed ledger. So, note that all blockchains are distributed ledgers, but all distributed ledgers are not blockchains.

Benefits of Distributed ledger

  • The primary feature of DLT is itself a great advantage. A distributed ledger gives full control to the information and transaction to the users. This promotes absolute transparency.
  • Distributed ledgers such as Blockchain find great applications in financial transactions. They cut down operational inefficiencies, which ultimately reduces cost on transactions. Moreover, it provides greater security due to its decentralized nature.
  • DLT offers means to securely and efficiently create a tamper-proof log of activities. Be it international fund transfer or shareholders records, its security and efficiency are unmatchable.

Types of Distributed ledgers

Blockchain hit the headlines when Bitcoin, the first cryptocurrency, surged in the market. Several interesting developments were made in the past decade. However, due to systematic inefficiencies and scaling issues, developers were in search of new solutions outside the blockchain. This search led to the development of Holochain, Hashgraph, and Directed Acyclic Graph.

With the arrival of these solutions, which significantly differ from the blockchain technology, has brought discussions regarding which is the best. Below is a brief comparison of these different types of DLTs.

The use cases of DLT are tremendous. Here, we shall take into account the use cases across the industrial, financial, and consumer sectors.

  • Using Smart Contracts to streamline Industrial processes
  • Immutable ledgers enable more secure financial transactions
  • Blockchain Authentication for identity theft prevention

While the distributed ledger has great advantages, which can considerably affect the present technology, it is in a growing stage and is still being explored to bring the best out of it. However, the decentralized future has at least begun for real.

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Knowing The Risks Involved While Using & Investing In Cryptocurrency

Introduction

Bitcoin, being the world’s largest virtual currency in terms of market cap, is aiming to give the financial space a new look. Also, blockchain technology, which is digital, distributed, and decentralized, has been powering transactions without the existence of intermediaries. With these features, it is believed to be a game-changer for the financial industry in the near future. However, apart from its primary features, it is essential to have a light on the risks involved in them.

Potential Risks Involved In Using Cryptos

Yet, cryptos have been the evolved way to look at currencies; there are ever-growing risks and concerns. Here are some reasons which show that using and investing in cryptocurrencies might not be a smart step.

Unavailability of traditional fundamental metrics

Cryptocurrencies lack the existence of fundamental metrics, which is useful for assigning value to an asset. In a stock, investors can get info about balance sheets, income statements, earnings reports, and many other fundamental factors to analyze a stock. However, with cryptocurrencies, there are no fundamental metrics that can be used by investors. Apart from processing speed and average daily transactions, the investors virtually get nothing about the power of digital currencies needed to analyze cryptocurrencies.

The SEC shall be of no help

A December 2017 statement from SEC chairman notes that decentralized trading can occur outside the confines of the US borders. And, as the transactions are considered to be anonymous, recovering the invested coins may not be possible.

Volatility

Though the cryptocurrencies have been in the market for quite a long time, the price fluctuation is still an issue. This could be due to the fact that people do not yet tend to trust these intangible funds. Moreover, even though a single entity doesn’t govern it, any major world news can the price of the cryptocurrency.

Lack of acceptance

While Bitcoin is welcomed in many countries, there are a few countries that still do not accept them due to its volatility and decentralized nature. Some nations have put a complete ban on it, and some have tried to cut off support from banking systems for its trading and use. Some countries that said ‘No’ to cryptocurrency are

🇨🇳 China

Bitcoin is officially banned in China. All financial institutions are prohibited from transacting with Bitcoin. The crypto exchanges in China are put to ban as well.

☭ Russia

Bitcoin is unregulated in Russia; however, its use as payments for goods and services is illegal.

🇻🇳 Vietnam

Vietnam’s government and its state banks claim that Bitcoin is not a legitimate payment method.

Thefts and Scams

Though cryptocurrency is intangible, there are possibilities of thefts and scams through hacking. Hackers have sophisticated tools that infiltrate cryptocurrency wallets and trading platforms to intercept transactions and send money to their wallets. Some of the Bitcoin scams with examples include,

Fake Bitcoin exchanges: BitKRK from South Korea
Ponzi schemes: Bernie Madoff
Fake cryptocurrencies: My Big Coin

Final Words

It is no doubt that cryptocurrencies have eased out the way of transactions. One can transfer coins to anyone, anywhere, and anytime anonymously of its decentralized nature. Having that said, the volatility, lack of acceptance, and thefts and scams can be viewed as a disadvantage and as a factor of risk.

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These Industries Have the Most Acceptance Of Cryptocurrencies

Introduction

It ain’t a surprise anymore that the cryptocurrency market is taking over several industries. Yes, it did have ups and downs but has still managed to grow at an exponential rate. In recent years, more and more people are opting to use cryptos as an alternative for fiat currencies. In the present date, there are just under 5000 cryptocurrencies listed on CoinMarketCap.

This decentralized currency has been disrupting quite a number of businesses. As they are decentralized, there are many uses of it in many fields. In the article, we have listed out some of the real-life examples of industries that are already implementing cryptocurrencies in their businesses.

Where and how are cryptocurrencies being used?

✈️ Travel Industry

The traveling industry has been using Bitcoin for quite a lot of time. There are companies that have been accepting payments in the form of Bitcoins. A great example of this would be Cheapair.com, a travel booking company, which has been accepting payments in the form of Bitcoins for booking flight tickets, hotels, car rentals and cruises since 2013. This is a great feature enabled by Cheapair.com, as it is hassle-free for customers to book tickets from anywhere in the world.

🏠 Real Estate

Ever thought one could buy houses with cryptocurrency as a mode of payment? Well, this is true. ‘Propy.com‘ is the world’s first international blockchain-based payment real estate that accepts Bitcoin as payment for buying properties. ‘Mycoinrealty.com‘ is another real estate firm which has the facility to purchase homes using Bitcoins. A few real-life examples for the same would be the purchase of a villa in Indonesia worth 1000 BTC in 2014, a home in Vegas amounting to 157,000 BTC, and 3 acres of land in Paradise Bay.

🕸️ Social Media

Back then, social media was the place where one could share their thoughts and feelings. But now, things have changed; as in, the social media space has grown to the extent that one can earn from these websites. There is a social media website that has been helping people in the career circle. ‘Vanywhere‘ is one such social media website that implements blockchain in its technology. This is a gig economy platform that uses the blockchain network to connect users with some specialized skills to those users who are in need of those particular skills. The transactions here are performed through cryptocurrencies.

🎮 Gaming Industry

Cryptocurrencies are spread over the gaming space as well. Cryptocurrencies in the gaming industry are not just a concept but is a real-life application. There are online gaming platforms that transact using cryptocurrency. A great example would be the ORB project. This is a game that enables players to cash their in-game assets into other assets, including cryptocurrency. This cryptocurrency can then be exchanged for fiat currencies if needed.

Bottom Line

These are only a few of the many industries where cryptos have maximum acceptance. From the above real-life examples, it is evident that cryptocurrency is a factor for the evolution of several industries in the market. Be it social or economic, it is playing a pretty decent role in revolutionizing the world. The expectation of blockchain & cryptocurrency is quite high. And it is no doubt that this technology is going to disrupt many other industries in the years to come. Cheers.

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Do Cryptocurrencies Have The Potential To Be An Alternative Financial System?

Introduction

Bitcoin, the first cryptocurrency, bought a notion of decentralization in the market. Initially, it had a slow start, but later as the public began to understand the working of decentralized markets & the interest towards cryptos has increased. Its been ten years since Bitcoin’s inception, and currently, close to five thousand cryptocurrencies are existing in the market. The total market capitalization of all the cryptocurrencies combined is close to $195 Billion as of Dec 2019. The 24-hour transaction volume is around $78 Billion.

This kind of volume is enormous, but it can nowhere be compared to the gazillion amounts transaction volume that takes place in the Forex market. So it is safe to say there is a lot more that cryptos have to do to compete with the current financial system directly. But that doesn’t mean they don’t have the potential to do so. Hence, in this article, let’s discuss the pros of the decentralized financial system of cryptos and the cons of centralized current financial systems.

A bright future ahead?

Cryptocurrencies have features which prove to the extent that they do have room for being replaced with fiat currencies. The most crucial point of consideration is that cryptos cannot be quite easy as the fiat currencies, thanks to their decentralized and unregulated status. The technology that makes this possible is the blockchain network.

Moreover, cryptocurrencies could support the concept of universal basic income much better than the fiat currencies. In fact, some programs have already set an example by using cryptocurrencies as a means of distributing a universal basic income. Furthermore, cryptocurrencies could remove the existence of intermediaries in everyday transactions. This would eventually cut costs for businesses and help out the consumers.

Advantages Of Decentralized Financial Systems

✔️ Fraud prevention

Cryptocurrencies are powered by blockchain, which is an open-source ledger. Every single is recorded and recorded and verified through a consensus algorithm, so it is almost impossible to tamper with any transactions. This indeed is an enormous benefit of the decentralized financial system.

✔️ Shielded from government meddling

Decentralized financial systems, such as the cryptocurrencies, are not controlled by the government, central bank, or any other government body. This is a great advantage because when government meddles with currencies, it creates inflations or hyperinflation by devaluing, debasing, or printing too much currency in a short period of time.

✔️ Faster transactions

Decentralized-based cryptocurrency transactions are often much, much faster than the bank transactions. For bank wire transfers, the transaction time is around two days. But, in the case of cryptocurrencies transfers, it takes not more than a few minutes.

Disadvantages Of Centralized Financial System

❌ Regulations & Transaction Cost

There are limitations placed on how much of funds one can withdraw in a day & in a month. For instance, in the US, $2000 is the maximum withdrawal limit, and in some banks, it is less than $500. But when it comes to cryptos, it doesn’t matter. One can transfer any amount of funds without having to worry about the limits. Also, when it comes to the transaction cost, crypto transactions are way too cheaper than the typical bank fee.

❌ Payment Delays & Human Errors

Bank wire transfers typically take 1-5 days for the transactions to get processed. It also depends on various factors like the place from where you are sending money to. This is because each of the countries will have their own banks and hence different regulations. But cryptocurrencies do not have geographical boundaries like this. Transactions get executed almost immediately irrespective of where you live. Also, there is a possibility of the occurrence of minute errors as there is human involvement. But in the case of cryptos, users just have to copy-paste the corresponding address to perform their transactions. By doing this, there is very little chance of the occurrence of human errors.

Final Conclusion

The answer to the question ‘Do Cryptocurrencies Have The Potential To Be An Alternative Financial System?’ is NO as of today. But they do have the potential to be so. As of today, central banks are extremely powerful, and they can not be replaced with the current technology. One thing that we are sure about is that the cryptos have made an impact, and they have grabbed the attention of most of the central banks. We have also seen some of the central banks adopting blockchain technology to issue their own coins. So the most plausible prediction is that cryptocurrencies may play an active, supportive role in making the traditional banking processes extra cheaper, more transparent, and faster.

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Beginners Guide to Cryptocurrency Mining

Introduction

There is a significant difference in how cryptocurrencies and fiat currencies are generated and issued to the ecosystem. Fiat currencies are created and printed by the government bodies in response to orders by the state authority. At the same time, cryptocurrencies are issued to the public by going through the blockchain network according to a preset algorithm. There are different schemes assigned for mining, such as the Proof of Work, Proof of Stake, Proof of Authority, etc. These are referred to as consensus algorithms. The in-depth working of these processes is complicated. So, we shall stick on the basic working of it.

Definition

Cryptocurrency mining is the procedure to bring up new coins into the current flowing supply, by verifying the coins through a system. The ones that mine these coins are called miners.

Procedure to Mine Cryptocurrency

  • When a transaction is performed over the blockchain network, i.e., when a user sends coins to another address, the transaction information is recorded and put onto a block.
  • This block must be encrypted and made secure. This is where the miners come in.
  • To encrypt a blockchain, miners solve a complicated cryptographic puzzle to find the appropriate cryptographic hash for the code. For this, miners typically make use of large rigs of application-specific hardware to increase their chances of being the first one to verify and secure the block.
  • Once the block is successfully secured, it is then added to the blockchain, where other nodes on the blockchain network verify it. This verification process is known as consensus.
  • When the block successfully clears through the nodes in the network, the block is officially said to be verified and secured. And for securing a block, the miner is rewarded new-created coins. Hence, the complete above procedure of work is called Proof of Work.

Reward system in Cryptocurrency mining

Mining is a complicated process. Each day, miners commit a thousand watts of electricity towards mining cryptocurrencies. People mine coins though it is an expensive process because they receive a good number of Bitcoins for it, which has value in various markets.

As mentioned above, the reward is released to the miners when they successfully solve a block in the blockchain. The compensation received is pretty decent; in fact, it compensates a thousand watts of electricity. Having that said, the reward cannot be very high, as it could cause an oversupply in the market and depreciate the value of the currency.

Supply and Demand of a Cryptocurrency

Buying and selling cryptocurrencies is different from buying and selling of stocks, bonds, etc. Also, unlike investing in traditional currencies, cryptocurrencies are not issued by the central banks. Therefore, the monetary policy, inflation rates, and other economic factors do not apply to the cryptocurrencies. They are influenced majorly by factors such as the supply of the coins and the demand for it, the number of competing coins, and also the exchanges it trades on.

The supply of cryptocurrencies is impacted by the cryptocurrency protocol, which permits the creation of a new coin (same type) at a fixed rate. A number of coins are introduced into the market when miners verify the blocks of transactions. And the rate at which these new coins are introduced is designed such that it slows down over time. This is done to create a scenario in which the demand for coins increases faster than the supply, which hence causes the prices to shoot up.

Hence we can say that mining & miners have a crucial role in maintaining the supply & demand of any cryptocurrency!

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These Are The Top Cryptocurrency Wallets In The Market (2019)

In our previous articles, we have discussed what a cryptocurrency wallet is and its different types. We also understood their purpose and ranked the various kinds of wallets in terms of security. Quick recap – Hot wallets are the ones that have an internet connection, and cold wallets are the ones that are not connected to the internet. Desktop, Mobile, and Web Wallets are the example of hot wallets; whereas, Hardware and Paper wallets are the well known cold wallets. When it comes to convenience, hot wallets have the upper hand, and in terms of security, cold wallets take the front seat.

In this article, let’s understand the top cryptocurrency wallets that are present in the market as of today. Please note that the order of these wallets is not ranked numerically. We found all of the below wallets to be reliable in terms of price, security, and accessibility. You can choose the ones that fit your purpose and budget.

Top Hot Wallets

Image result for exodus wallet logo png

Exodus is an online cryptocurrency wallet that has both Desktop & Mobile versions. It is a multi-currency wallet as users can store the private keys of different cryptocurrencies in this wallet. The user interface is excellent, with easy navigation. The user experience is brilliant, as a lot of data related to a user’s portfolio is pictographically represented with pie charts. The best part of this wallet is its security. User’s private keys are stored in their local hardware alone. Hence, they have total control over their cryptos. Available versions – Windows, Mac, Linux, Android & IOS.

Download Exodus Wallet here

As the name partially suggests, the USP of this wallet is the number of cryptocurrencies it supports. Users can store most of the top available cryptos in the market in their Infinito mobile wallet. There is no desktop version of this wallet. The transaction processing speed is high when compared to the competitors, and the security is excellent, with regular gateway updates to the blockchain. The private keys of the clients are not stored in their servers hence enhancing the security. Available Versions – Android & IOS.

Download Infinito Wallet here

Related image

Jaxx is one of the new-age cryptocurrency wallets with its availability in both Desktop & Mobile versions. There is also a chrome extension where users can see their balance and perform transactions. Jaxx supports more than 70 cryptocurrencies, and the clients control the private keys. Hence there is no worry of your wallet getting hacked while using this wallet. The only drawback is the user interface. It is a bit fuzzy, which might look complicated for novice crypto traders and investors. Available Versions –  Windows, Mac, Linux, Chrome Extension, Android, Windows Web Store & IOS.

Download Jaxx Wallet here

Top Cold Wallets

Image result for trezor wallet logo png

If you are an investor and want to store large amounts of cryptos, Trezor Model T is the hardware wallet that serves your purpose. More than 500 cryptos can be stored in this wallet with tons of security features. Users can connect this device to their computers by entering a secured pin. However, one should be careful while entering their pin because the wallet gets locked out for a certain amount of time, even if they enter the pin incorrectly once. This wallet comes with a seed recovery card using which clients get to backup their coins. With this feature, users will never have to face the risk of losing their coins permanently.

Price€48.76 for Trezor One & €149 for Trezor Model T

Buy Trezor Wallet here

Related image

Ledger Nano is one of the pioneers of hard wallet service providers. They have sold more than a million hardware wallets, and that explains their domination in the market. This wallet is easy to use and has loads of security features as well. Some of them include Two-Factor Authentication, a secured pin to confirm the transactions, etc. With its preparatory operation system Bolos, this wallet can be connected to the desktops which run on Windows, Mac, and Linux.

Price€59 for Ledger Nano S & €119 for Ledger Nano X

Buy Ledger Wallet here

That’s about the top crypto wallets in the market. Please do your own research before choosing any wallet. Look out for options where there is a mix of security and accessibility for smoother usage. Cheers!

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Comprehending Hot/Cold Wallets & Personal/Hosted Wallets

Introduction

In the previous crypto guides, we have understood what a cryptocurrency wallet is, and its essential purpose. We have also understood the types of crypto wallets and ranked them in terms of security. In this article, let’s see how they are classified.

Quick Recap

As we know, storing cryptocurrencies essentially means storing the corresponding ‘Private Key’ of the crypto coin. Anyone with that key can have control over the respective cryptos. So it is vital to store the private keys in a safe and secure place. Cryptocurrency wallets serve this purpose. There are many types of wallets, and all these types are classified into Hot Wallets & Cold Wallets.

🔴 Hot Wallets

Wallets that are directly connected to the internet are known as Hot wallets. This means the private keys of a coin are stored in a computer, smartphone, or tablet with an internet connection. This kind of wallet is user-friendly and pretty seamless to use as your private keys can be easily accessible to authorize a transaction.

Having said that, hot wallets are not that secure as they are vulnerable to computer hacks. With the advent of technology, there are many hackers out there who can steal private keys despite being stored securely.

🔵 Cold Wallets

In this storage, the private keys are saved on an electronic device not connected to the internet. Even if the key is noted down on a piece of paper and stored it securely, it can be considered as cold storage. It is less convenient to use cold wallets as it is difficult to access your private keys. But these wallets are way too safer the hot wallets.

Which type of wallet is best for me?

Well, it depends on the volume and frequency of the transactions you make. Hot storage is recommended for those users who transact cryptos regularly. Even then, make sure not to store a huge amount of cryptos in hot storage. For typical investors, who are planning to hold their large sum of cryptos for long, they should consider cold storage as it is way too secure.

Personal vs. Hosted Wallets

There are different credible wallet service providers in the market. These providers will take the responsibility of storing your cryptocurrencies. Again, there are personal wallet service providers and hosted wallet service providers. The personal wallet providers are those companies that provide software to store private keys. They do not handle the private keys of their users in any way.

But hosted wallet service providers store the private keys of their users in secured servers. It is always recommended to use a personal wallet over a hosted wallet if you are handling a significant amount of cryptos. Having said that, hosted wallets are way too convenient as transactions can be processed swiftly here due to the ready availability of private keys.

It is essential to take a lot of precautions while storing your cryptos. Let us know if you have any questions in the comments below. Cheers.

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What Is Adaptive Scaling In Cryptocurrency & How Is It Achieved?

Introduction

One of the most important motives behind the invention of cryptocurrencies is that they should have the ability to be an alternative financial system. That is, we, the users, should be able to use them just like how the fiat currencies are being used today, but with many more features and ease. While this thought is very ambitious, the journey has already begun with Bitcoin. The total market capitalization of all the cryptocurrencies combined is around $200 BN as of Dec 2019. 66.4% of this comes from Bitcoin alone.

No matter how many cryptocurrencies have come, the craze for Bitcoin didn’t decrease. As this craze was not anticipated during the inception of Bitcoin, the network had to endure scaling issues, i.e., the number of transactions processed per second. New age cryptos are handling scaling issues by incorporating advanced consensus algorithms. But the Bitcoin network wants to stick to the POW as 18 million Bitcoins are already mined out of the permissible 21 million.

Hence it is essential to make some changes to the Bitcoin network to increase its scalability. In this article, let’s see a couple of techniques that have been incorporated in the Bitcoin network to tackle this issue.

SegWit

SegWit stands for the segregation of witnesses. It is a protocol upgrade that changes the way data is stored in the blockchain network. SegWit was first implemented in Litecoin in May 2017, and later, very shortly, it is also implemented in the Bitcoin network by August 2017. Although the primary intention of this protocol is to fix a bug, the side benefit has taken much more significant importance. When the Bitcoin network started, each block size was limited to only 1 MB. As a result, only seven transactions were processed per second, which limits the potential of Bitcoin in the day to day transactions.

The signatures alone occupy 70% of this 1 MB data in the block. Hence it was proposed to eliminate the signature in the block and increase the number of transactions. By doing this, the number of transactions processed per second is increased while keeping the block size constant. This upgrade also enabled technologists to develop a second layer on the Bitcoin network, which allows smart contract functionality. It is named as the lightning network; let’s understand this concept in detail.

Lightning Network

Lightning network is essentially a system of smart contracts built as a second layer on top of the Bitcoin network. This network allows people to send/receive payments instantaneously with way lower transaction fees by keeping them off the main network.

Working

First and foremost, a payment channel must be set up using a multi-signature wallet. All the involved parties can access this wallet with their respective Private keys. The wallet address is then saved in the public blockchain network. The corresponding parties can make Bitcoin deposits to this wallet.

Once this is done, the parties involved can conduct an unlimited number of transactions without ever touching the main blockchain network. Every time the parties involved conduct a transaction, the balance sheet gets updated with the amounts each party holding.

Though the block size of the Bitcoin network has been increased to further cope up with the scaling issues, these were the two most favorable measures taken at the time when needed to make Bitcoin desirable for day to day transactions. We hope you understood the concept of adaptive scaling in a blockchain network. Stay tuned for more interesting crypto content. Cheers!

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A Simple Guide To Cryptocurrency Wallet & Its Different Types

What is a crypto wallet?

Crypto wallets are software programs that store a user’s public and private keys. These wallets interact with different blockchain networks to send and receive cryptocurrencies. Many have a misconception that crypto wallets literally store digital currencies, but that is not the case. Cryptocurrencies always reside in the native blockchain network, and their ownership is just signed off to others based on their public keys to the address of the crypto wallet. If the owner of the crypto wants to spend the money, they spend the currency using their private key in the wallet. So when we say, the cryptos are stored in the crypto wallet, essentially, we are storing the corresponding public and private keys in them.

Types of crypto wallets

There are different types of crypto wallets, and they are differentiated based on how they can be accessed. The fundamental classification is online and offline wallets. Online wallets are those wallets that can be accessed by connecting them to the internet. Contrarily, offline wallets are those that can never be connected to the internet. Let’s understand each of the types below.

Online Wallets   

Desktop Wallets 

These wallets are installable software packs for operating systems like Windows, MAC, and Linux. Any crypto company which is serious about their outreach would start a desktop wallet on day one of their ICO. Since these are accessible only from the installed device, they are considered to be secure, but there is always a risk of virus attacks on a user’s device. Hence it is advisable to always keep up with the security patches of the device to safeguard cryptos. These wallets stand in third place in terms of security.

Exodus, Bitcoin Core, Electrum are few examples of desktop wallets.

Mobile Wallets

Mobile wallets for different cryptos are the most used digital wallets because of the ease and agility they provide. Most of the mobile wallets available in the market support both Android and IOS. The least famous ones at least support the Android version. One needs to seriously consider the security provided by the application while choosing a mobile wallet. These wallets occupy fourth place when it comes to safety.

Mycelium, Coinomi are examples of mobile wallets.

Web Wallets

These wallets run on the cloud and are accessible through any device which has browser access. These are very convenient but also prone to theft, thus needs multiple layers of security. There are hosted and non-hosted wallets when it comes to online wallets, and it is always recommended to use non-hosted wallets. These wallets occupy fifth, which is the last place in the wallet types available, thus making them the least secure.

MyEther Wallet and Coinbase are examples of online wallets.

Offline Wallets

Hardware Wallets

As the name suggests, these wallets are hardware devices that store public addresses and private keys. It is a USB kind of equipment that can be connected to any computing device, and they come with their native apps. These are the most secure as these are not connected to the internet all the time, making them resistant to hacking. Most hardware wallets allow us to store more than 22 cryptocurrencies.

Ledger Nano S, Ledger Nano X, and Trezor are some of the best examples of hardware wallets available in the market.

Paper Wallets

In paper wallets, one must print the public address and private keys of the user on a paper and store them securely. Not all the cryptos offer paper wallets, but most of the famous cryptos do. These are the second safest option after hardware wallets as these are offline as well.

Security is not the only thing one must consider while choosing a wallet. Because convenience also plays a critical role. It is often advisable to select hardware wallets if a crypto trader wants to store huge quantities of crypto for a long term use. Online or mobile wallets can be used to store smaller amounts of cryptos for short term usage.

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Understanding Public Keys & Private Keys and Their Working

Introduction

Blockchains use public and private key cryptography to perform transactions in a cryptocurrency network. Public keys are generally widely known and used for identification of the person while private keys are secret keys, which is known only to the person who owns it. Private keys must be kept as secret as they are used for authentication of a transaction.

The Difference

Both public and private keys are a part of the asymmetric encryption of cryptography. The fundamental difference between these two is that the former is used for data encryption and the latter for decryption. Simply said, the Public key converts the message to an unreadable format whereas the Private key decrypts that message and converts it back to the original message. Hence, once the message is encrypted, it can never be decrypted without the help of the private key.

Both private and public keys are large integer numbers represented with a combination of numbers and alphabets. Since we understood the concept of public and private keys now, let us see how they are used in the crypto networks.

How does Public and Private key Cryptography work?

We know that digital wallets are used for sending and receiving cryptocurrencies. Digital wallets are not traditional wallets that store money in a digital format, but they store only public and private keys of the owner of the wallet. Private keys are used to sign the transaction through which the cryptos are transferred digitally. This digital signature is used to confirm the transaction was indeed send by the user who claims to have done the transaction, and no one can alter the same once the transaction is issued.

If someone were to have your private key, they could easily send the money from your wallet to their wallet by verifying the private key. Hence private keys are to be kept a secret from others. This is why it is said if the private key is lost, you lose all your money unless you have a technique to regenerate the private key and transfer it to a replica of your wallet or a new one.

The public key is generated using the private key and some additional information using cryptographic algorithms. This public key is widely known to all the people so that the transactions can be done. One may question if the public key is generated from a private key, can’t we reverse engineer and generate the private key from the public key? The answer is NO. The generation of keys is only one way, but the reverse is not possible since we are using asymmetric cryptographic encryption techniques designed by the National Security Agency of the USA.

Thus, using a combination of public and private keys, one can send and receive the money in digital wallets. Using a public key, one can easily decrypt the digital signature of the user signed using the private key.

Bottom Line

This is how transferring of digital currencies generally works. To end it with a simple example, if Nick wants to send some money say in Bitcoins/Ethereum/Litecoin etc. using his hardware wallet ‘Ledger Nano S’ or any online wallet like Coinbase, what should he actually do? He accesses his private key from the wallet and digitally sign the transaction, and this transaction is sent to the blockchain network. This transaction is verified using the public key to validate if the transaction is indeed being done by the wallet that it is being said, and thus the transaction is successful.

We hope you got a clear idea of what Public and Private keys are. In the upcoming articles, let’s discuss what crypto wallets are and their types. Cheers!

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Consensus & Its Importance In Any Existing Cryptocurrency

Introduction

In most of our previous articles, we have discussed a lot of topics regarding cryptocurrencies. We now know the properties of cryptos, advantages, and their fundamental purpose. In this article, let’s discuss the concept of consensus and why it is essential for the existence of any cryptocurrency.

The consensus algorithm plays a vital role in validating the transactions of any crypto network. One of the crucial reasons for the success of cryptos is its ability to handle the problem of double-spending adequately. And this also an important reason for the failure of digital currencies before Bitcoin; they weren’t able to solve the problem of double-spending. So let’s see what this problem is about.

Double Spending

Double spending is a fraud where the same money is promised for two different transactions but is spent on making only one transaction in real. This is a significant problem for digital currencies because the entire system is decentralized, and there is no entity confirming the authenticity of the transactions. The cryptos after Bitcoin alleviate this problem by waiting for the confirmation of the payments. During this wait time (which is very minimal in general), the transactions are validated by the users present in the blockchain network using the ‘consensus’ algorithms.

The consensus here is nothing but a mutual agreement within all the partiers that are present in a cryptocurrency network. The majority of the validators must approve the transactions, and this is made possible by the consensus algorithm. Also, because of this protocol, a crypto network cannot be controlled by a single person or a group of people. Now, let’s look at two of the most important and equally reliable consensus mechanisms – Proof of Work & Proof of Stake.

Proof of Work (POW)

Proof of Work is used by Bitcoin blockchain. This consensus algorithm proposes a mathematical problem for the miners in the network. To solve this challenge, high power computing devices are used, and thereby a lot of electricity is consumed. The first one to solve the problem gets to validate the transactions and communicate the same to all the other miners in the network through gossip protocol. Then all the other miners verify the transactions and seal them in a block.

The crux here is this. To solve this challenge, the miner uses a considerable amount of power and hardware, which is a costly process. Hence, one would be honest enough to not validate faulty transactions as a lot of stake from the user side is already expended. This is how POW makes the miners be reliable and run the blockchain efficiently. They are rewarded with the in-house cryptos for doing this work. Though the POW consensus algorithm is the most efficient one out there, it is the costliest of all the consensus algorithms and not eco-friendly, which is the need of the hour.

Proof of Stake (POS)

In this consensus protocol, the participants who want to be the validators must stake some of the native cryptocurrency in a virtual safe for a specified period. The network randomly picks the validators based on certain methods. The two most used methods are ‘Randomized Block Selection’ and ‘Coin Age Selection.’ In Randomized block selection, the validator is chosen based on the highest stake and lowest hash value. While in the Coin Age Selection, the validators are picked based on the duration of the native currency staked in the virtual safe. Dash and Peer coin are examples of cryptos that use POS.

Why is POS more reliable than POW? 

POS algorithm uses considerably less energy compared to POW. Hence, the process is less expensive, and most importantly, it is eco-friendly. Also, the POS protocol fulfills the fundamental property of blockchain as it serves the purpose of complete decentralization. This is not the case in POW because currently, there are large mining pools who mine cryptos (Bitcoins, for example) and get the maximum reward. But that’s not possible in POS, making them truly decentralized.

Conclusion

Apart from these two, there are other major consensuses like Delegated Proof of Stake (DPOS), Proof of Burn (PoB), Proof of Elapsed Time (PoET), and Proof of Activity (PoA). These protocols are gaining momentum because of their efficiency and eco-friendly nature. However, a lot of research is still happening to develop more efficient and cost-effective consensuses. We hope you find this article worthful. Let us know if you have any questions in the comments below.

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Blockchain Technology – The Fundamental Aspect Of Most Of The Cryptocurrencies

Introduction

In this crypto guide, we have seen various articles about cryptocurrencies so far. In this article, let us examine the underlying technology, which essentially enables the working of these cryptocurrencies. It is none other than the revolutionary blockchain technology. Bitcoin and blockchain terminologies have been synonymous for a long time, but not anymore. The true potential of blockchain is realized in the past decade, and its applications are being widespread in many industries currently. The adoption is still in its nascent stage, like any other new technology in its initial days. The industries which have adopted the technology are reaping benefits in millions if not in billions already. So, it is important for us to understand what this technology is all about.

What is blockchain?

Blockchains are open global distributed ledgers, which are necessarily a chain of blocks. These blocks contain transactions or records bundled together with encryption techniques called cryptographic hash functions to form a blockchain. This is the simple definition of blockchain. The concept is as simple as it sounds, but it revolutionized the way the records are maintained in any industry.

Blockchain platforms are peer-to-peer networks. Making the ledger open and distributed; this means everyone involved in the system will have a copy of the ledger. The transactions being committed in the network are validated using a consensus algorithm. Say a block has a capacity of 1 MB of transactions, these transactions are verified and sealed in a block. This new block is linked to its previous block using cryptographic techniques. Once the block is linked in the blockchain to the last block, the contents of this block can never be changed. This property is called ‘immutability,’ a significant feature of blockchain.

What are these cryptographic hash functions?

Cryptographic hash functions are standard algorithms designed by the National Security Agency (NSA) of the USA. Any information can be sent through this algorithm, and the output we get is the hash of the input, and it is a unique value. Every block in the blockchain is linked to its previous block using the hash value of the last block. This hash value of a block is generated by all the transactions of a block plus the hash of the previous block. Thus, if we make any change in a block that is mined already, the hash value of that block is changed. All the blocks before that block would be disturbed. Thus, the property of immutability comes into the picture. This is the basics of how blockchain technology works in general.

Different blockchain platforms:

Since realizing the true potential of blockchain, different blockchain platforms are developed for various industrial use cases.

Hyperledger platforms: These platforms are developed for cross-industry applications. It is an umbrella of open source platforms like Hyperledger Fabric, Hyperledger Sawtooth, Hyperledger Iroha, and so on, designed for each industrial use.

Ethereum: Ethereum is, again, a platform developed to deploy self-executed contracts known as smart contracts. Also, a platform to create decentralized apps (Dapps) to use the blockchain functionalities in everyday apps we use.

R3 Corda: This is a consortium of around 300 different firms working together in the financial background to nurture and develop the technology to revolutionize the financial sector.

These are only some of the various platforms in use today.

Bottom line

Blockchain, as a technology, has a vast potential to revolutionize many industries. Blockchain developers will be required on a massive scale in the coming future to bridge the gap and to fulfill the requirements. The world where privacy is at stake at the moment, blockchain is a savior to ensure our privacy and security of digital information.

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Which kind of Problems can be Solved by Cryptocurrencies?

Introduction

Cryptocurrencies have made an impact on the world’s financial system in an unprecedented way. The speed and agility of global transactions have changed with the advent of cryptos. At present, there are around 3053 cryptocurrencies trading across the world, with a market cap of more than $246 billion. Many global companies around the globe have started to accept cryptos as a mode of payment for the products and services they provide. Bitcoin atm’s and debit cards are making the widespread adoption of cryptocurrencies easy and worthwhile. In this article, let us understand the reason for this wide adoption of these cryptos by looking at some of the problems they solve.

🏳️ Centralization: Cryptocurrencies are built on blockchain platforms enabling them to adopt all the features of the blockchain technology. The fiat currency we use today is minted by the central banks of the respective countries. The presence of a central entity to control something is called centralization. Banks play a significant role in the financial status of any country. It is well known that the financial crisis of 2008 is due to the banking crisis. That was the time when Bitcoin came into the picture, paving the way for the decentralized currency. Cryptocurrencies are decentralized with no third-party control. They run on blockchain technology as per the network setup initially. The network is maintained and run by different entities mining the native currency. Thus by no one controlling the money, they remain unique and stable. This is the prominent problem that cryptocurrencies solve over fiat currency.

🏳️ Intermediary costs: The transaction costs to send money between different countries is too high. The respective entities charge a certain percentage of the transaction amount, and it depends on the amount we send and the service we utilize. Also, it takes more time to settle transactions across different countries. There is no limit for cryptocurrency transfer across the world. It is instantaneous with a minimal amount as a transaction fee when compared with the standard bank wire transfers.

🏳️ Privacy: The transactions you make in cryptos are semi-anonymous; some cryptos even ensure complete anonymity. Each of the users will have their crypto addresses, which are used to make transactions. These addresses ensure privacy while transacting cryptos. Having said that, the level of privacy varies from one crypto to others.

🏳️ Security: Blockchain assures the utmost protection when it comes to cryptocurrency transactions. The transactions in the blockchain cannot be reversed; once committed, they are committed for a lifetime. The cryptographic techniques used to secure the transactions are almost impossible to hack.

🏳️ Inflation: Any cryptocurrency has a limit of coins that it can ever have or in some coins, the number of coins that can be mined per year will be capped. In the case of fiat currency, the government can issue bonds and manipulate interest rates to increase the circulating money, thus decreasing its value leading to inflation. Since the number of coins that ever will be available is capped in the case of crypto, inflation can be effectively handled.

These are only a few problems that cryptocurrencies can solve, but with the widespread usage, there would be solutions for problems that we don’t even see now. We hope you find this article informative. Cheers!

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Monero – One Of Those Cryptocurrencies That Ensure 100% Privacy!

Introduction

We have seen the in-depth analysis of different cryptos so far and understood that new coins keep coming up, improvising the shortcomings of the previous ones. Monero is such cryptocurrency.

Monero was launched in 2014 as an open-source, privacy-oriented crypto, operating on the concept of blockchain technology to completely anonymize the transactions in the network. Monero literally means coin in Esperanto. This crypto was initially named BitMonero, forked from the codebase of Bytecoin. Later it was renamed as Monero after a different group led by Johnny Mnemonic took over the project.

Objective

Monero aims to make the platform opaque for outside observers completely. The transactions are made entirely obscured by anonymizing the sender and receiver details. This is done by disguising the addresses used by the users transacting on the platform. While all the cryptocurrencies promise the future of privacy, the degree of confidentiality varies. But Monero achieves the full level of privacy, making it a widely used currency in the dark web.

Mining process

Mining Monero doesn’t need any specialized hardware; hence, there is no need for any significant initial investments in mining the coin. Anyone with a computer can mine the coin and earn rewards.  The founders believe that everyone is equal, and they didn’t even allocate any percentage of coins for them during its inception. They have just used the funds volunteered by the community to develop the currency.

How is the complete privacy ensured?

To ensure complete privacy, Monero uses features such as ring signatures, stealth addresses, and ring confidential transactions. Let us look at the below briefly.

Ring Signatures: While making a transaction in the blockchain network, one must sign the transaction using his private key. In the case of ring signatures, the private sign of the user transacting is combined with the signatures of the other ten users in the network, thus making a ring signature genuinely anonymous.

Stealth Addresses: These are randomly generated one time used addresses for a transaction using the public key of the user making a transaction. Since these are only used one time, the outside observers will have no idea about the transactions.

Ring Confidential Transactions: Ring CT was introduced in January 2017 to conceal the number of coins being transacted in a transaction. They stopped using Ring CT in October 2018.

Market Cap

Monero stands at 13th place in the world of cryptocurrencies, with the market value of around $1.06 Billion, while the value of each coin is at $61.60 as on 03/11/2019. The 24-hour trading volume is approximately $191 Million, with ~17 Million coins circulating in the market. Monero is traded with the ticker symbol ‘XMR’ in all of the cryptocurrency exchanges.

Challenges faced by Monero

Since Monero ensures complete privacy for the transactions, the usage of the currency is particularly popular in the dark web. While, still Bitcoin holds prominence in both the legitimate and illegitimate transactions across the world, owing to its knowledge amongst the people, there is a slow shift towards Monero with the people who wants to cover their tracks. Certain ransomware attackers demand the money exclusively in Monero to decrypt the encrypted files.

The rich privacy feature has made Monero a popular coin shortly after its inception, while its usage in the dark web markets is widely questioned. That’s about Monero. If you have any questions, let us know in the comments below. Cheers!

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Knowing About the EOS Cryptocurrency & Its Blockchain

Introduction

EOS is the native cryptocurrency of the EOS blockchain. EOS blockchain is a decentralized open-source platform built to support the development of decentralized apps (DApps) with core functionalities helping to develop industrial-scale applications.

The EOS blockchain platform was announced its white paper in 2017 by a private company called block.one. The platform came into the market as an open-source platform in June 2018. The EOS is informally called the ‘Ethereum Killer’ in the crypto community. That is because this platform offers almost all the features of the original Ethereum platform but with a lot of improvements. These improvements enable DApp developers to build industrial level applications with ease.

Objective

While there are many blockchain platforms in action now, we can say each one has its unique features suitable to different industries in the market. Each platform is developed to overcome the shortcomings of its predecessor. EOS platform has been introduced to improve functionalities offered by Bitcoin and Ethereum platforms. EOS whitepaper says it is possible to run 1000 transactions per second during the initial stages, and later it aims to run a million transactions per second. Thus enabling industrial level applications to be run on the platform without scaling issues. Moreover, the platform has made transaction fees-free, making people choose EOS over other cryptos.

Consensus

So how does the EOS work to hit a million transactions per second? EOS uses the Delegated Proof of Stake (DPoS) as its consensus algorithm. There will be only 21 block producing nodes in the network. These blocking producing nodes are chosen by the people in the network who hold EOS cryptocurrency on a voting process, which happens continuously. Thus, maintaining the integrity of the users in the system is of utmost importance to the block producing nodes. Hence the transaction should be validated by only these 21 nodes to get confirmed in a block, and it is a relatively straightforward process. The block producing nodes are rewarded with EOS for validating the nodes.

EOS ICO

To ensure the native currency of the platform (EOS) is widely available, a billion coins were sold on the Ethereum platform as ERC 20 tokens. The ICO was held for an entire year. 10% of these tokens are reserved for Block.one, the founding company. EOS raised a record amount of $4 billion in its ICO, although the working product wasn’t available in the market then.

Market Cap

EOS stands at seventh place in the crypto world with close to $3 Billion in value. The price of each coin is $3.25 as of 30/10/2019. The 24-hour trading volume is around $2.5 billion, with 938 Million coins circulating in the market.

Price History

EOS began trading with a price of $1.03 in July 2017. The coin didn’t get much attention for the first four months, and the price started slumping. By November 2017, it was trading at $1.21, and by January 2018, it is traded at $18.06. Then from a peak of $18.06, it fell to $4.08 by March 2019. It slowly increased and decreased from then without a very drastic change, and the price as on 30th October 2019 is $3.25.

Conclusion

There has been a lot of negative talk about EOS, but crypto enthusiasts see high potential in the EOS platform because of the promising features it offers. Applications can be written in any language on EOS, unlike the Ethereum platform, which allows only its native programming language, Solidity. Hence not only crypto enthusiasts but also industry experts believe that the EOS platform is revolutionary due to its scaling and flexibility options.

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Learning The Fundamentals Of ‘Tether’ – The Stable Cryptocurrency!

Introduction

Tether is a cryptocurrency founded in 2015, and it was initially known as ‘Realcoin.’ Tether tokens are issued by Tether Limited, a company based in the British Virgin Islands as per the New York Times. The official website says the company is incorporated in Hong Kong, with offices in the US. This company is associated with the Bitfinex, a Hong Kong-based cryptocurrency exchange, which is also one of the biggest in the world. Many members who are on the board of Tether Limited are associated with Bitfinex exchange, as well.

Objective

The value of any cryptocurrency is volatile. We can see the steep increases and decreases in the value of any crypto within a matter of days or hours, as well. We know that these Cryptocurrencies offer a wide range of features that fiat currencies don’t assure.  Therefore, Tether was designed as a stable coin promising the stability of fiat currency with the features of a cryptocurrency as well. Tether is meant to be backed one for one by some of the major fiat currencies like USD, Euro, JPY, etc. If we take the example of USD, the value of each Tether is always one dollar (USDT). For every one tether created, one US dollar is stored as a reserve.

Importance of Tether in the crypto world

Many crypto exchanges across the globe find it extremely difficult to work with traditional banks. The exchanges find it challenging to store USD or any conventional fiat currency as reserves for the payments. Hence major crypto exchanges like Bitfinex hold clients balance in Tether rather than in USD. This means, if the clients hold any money in the exchange and don’t have any open positions, that money is held as Tether in the exchange. It is converted into USD only when the client wants to redeem the cash. Hence Tether offers to be a stable alternative for USD for the crypto exchanges across the world.

Market Cap

Tether is in the fifth position in terms of market cap in the crypto world with a value of more than $4 billion. The price of each Tether is stable and is one dollar or Euro, etc. as described above. The average 24-hour trading volume is just above $43 billion, while the circulating supply is around $4.1 billion in the market as on 1st Nov 2019.

Controversies

Tether has a fair share of controversies in its kitty. As the central banks hold the appropriate amount of gold reserves equivalent to the new currency issued in the market, Tether Limited holds the equivalent amount of US Dollars in its reserve for the Tether coins circulated in the market. Lately, there are claims that the company doesn’t hold enough reserves in USD, claiming Tether Ltd haven’t been too transparent with the audits as to where and how much of the reserves have been stored in different places.

The December 2017 Bitcoin price surge is also attributed to be the work of the Tether limited. It is alleged that the company has created Tether coins out of thin air and bought Bitcoin at a lower price, eventually attributing the price surge of the currency. Thus, there are growing fears in the crypto market that if there are no adequate reserves of USD backing the Tether, the value of the coin should be determined by the market rather than maintaining it stable. Despite all these controversies, this cryptocurrency is still one of the most traded ones in the crypto space because of its stability factor.

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Understanding The Basics Of Binance Coin

Introduction

For crypto enthusiasts, Binance is a well-known word as it is one of the largest cryptocurrency exchanges. The word Binance is a portmanteau of Binary and Finance. Binance coin was initially launched on the Ethereum platform and later was moved on to the Binance’s proprietary blockchain (Binance Chain).

Binance was founded by its CEO Changpeng Zhao who is known as CZ in the world of cryptocurrency, with co-founder & CTO Roger Wang.

Objective

The objective of the Binance coin creation was to serve as a medium for transaction fees, which includes trading fees, exchange fees, and listing fees on the Binance exchange. Just like Ether fuels the Ethereum blockchain platform, Binance coin fuels the Binance exchange. Like any other cryptocurrency, this coin can be traded as well in many of the cryptocurrency exchanges. Binance initially had its headquarters in China, and then in Japan, because of local government regulations. Finally, it had to move its headquarters to Malta.

Binance Coin ICO

Binance coin had its Initial Coin Offering from June 14th to June 27th in 2017. Before the  ICO happened, the network minted a total of 200 million tokens. 50% of the total tokens mined (100 million) were reserved for the ICO, and they raised approximately $15 million. The funds raised are used in three different ways; 35% of the funds raised were used to build and maintain the platform. 50% of the funds were used for branding and marketing the platform. The remaining 15% are reserved for emergency contingencies.

Fee model of the exchange

As mentioned earlier, in Binance exchange, BNB acts as a token for transaction fees. There is a benefit for using BNB token for transaction fees in the exchange. At present, Binance charges 0.1% on each trade, but if we use BNB token for transacting, the exchange offers a discount. For the first year, the concession stands at 50%, and from there on, it will be halved till the 4th year. That means, for the second year the discount would be at 25%, the third year it is 12.5% and 6.75% for the fourth year. From the fifth year onwards there wouldn’t be any discounts. Hence, there are high chances of the coin value to get depreciated as the discount decreases for each passing year. Therefore to combat the depreciation, Binance plans to burn 50% of its coins, i.e., a total of 100 million coins overtime to stabilize the currency.

Consensus 

Binance Chain uses the Tendermint Byzantine fault tolerance (BFT) consensus mechanism. The network uses different types of nodes in the system to validate and broadcast the transactions to other nodes. Validator nodes, as the name suggests, validate the transactions in the network. Witness nodes act as a witness for the consensus process and broadcast transactions to all the nodes involved in the network. Finally, the accelerator nodes are owned by the organization to speed up the validation process.

Market Cap

Binance coin stands in eighth place in terms of market cap with a value of approximately 3 billion dollars. Each coin is traded at $19.91 as of 28/10/2019. The 24-hour trading volume is $353 million, while a total of 155 million BNB’s are available in the market as of now.

Conclusion

Binance coin is one of the most innovative cryptos out there in terms of its consensus and usage. As discussed, the founders plan to burn 50% of their coins to stabilize the value of the currency. 20% of the profits are to be burnt every quarter, eventually burning 100 million of the existing tokens. By looking at the history of the coin, the industry experts believe that the currency will sustain the market and emerge as one of the leading cryptocurrencies due to its strong backing and security.

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Litecoin – Short guide to The Bitcoin Of Altcoins!

Introduction

Litecoin is an early Bitcoin spinoff as it was started in October 2011. It was created by Charlie Lee, who was a Google employee and a former director at Coinbase. Litecoin is a peer to peer cryptocurrency released via an open-source client through Github under the MIT/X11 license. It is one of the most commonly traded coins in the world of cryptocurrency and has a market value of billions. Forked initially from Bitcoin protocol, Litecoin takes the underlying source code from Bitcoin and making specific changes to increase the transaction speed of the network.

Objective

Litecoin is famously called silver to the bitcoin’s gold, i.e., in the world of cryptocurrency; if bitcoin is gold, then Litecoin is like silver. Mainly Litecoin was developed to overcome the shortcomings of Bitcoin. When it comes to the block time (the time taken to generate a block), Litecoin takes 2.5 mins to create a block while bitcoin takes 10 mins for the same. Hence, the Litecoin network is four times faster than the Bitcoin network.

Consensus Used

Litecoin uses a proof of work algorithm called Scrypt. Unlike Bitcoin’s Proof of work algorithm (SHA 256), Scrypt is more efficient as it prevents customization for hardware solutions and favors high-speed random-access memory. Hence miners find it easy to mine without much complexity as this algorithm allows them to use central processing units or graphics processing units.

Market Capitalization

Litecoin is in sixth place in terms of market cap in the cryptocurrency world with $3.9 Billion value while the price of each coin is at $61.70 as of October 27th, 2019. 63.5 million number of coins are in circulation in the market with 24-hour trading volume as $4.3 Billion.

Price History

Litecoin was traded first with a price of $4.30 in April 2013. By November 2013, it was selling at a double-digit price of $35.78. The form then has seen a continuous downfall and maintained a moderate standard rate until April 2017. It had seen a slow and steady rise from April 2017 with $10.28 to $297.18 in Jan 2018. The coin has yet again seen a downfall in 2018, with a price of $30.99 by December 31st, 2018. This crypto has been performing well in 2019 when compared to the previous year, with its highest rate in the year with $145.45 in June 2019. Industry experts are bullish about the growth of the coin due to its transaction speed and other vital properties.

Total number of Coins

Cryptocurrencies have a cap when it comes to production. While Bitcoin has a cap of 21 million coins, Litecoin has a cap of 84 million coins, which means only 84 million Litecoins can be ever mined from the network.

Rewards

For running and maintaining the network, the miners are rewarded for each block generated. Litecoin network rewards the miners with 25 Litecoins for every block generated. However, the reward gets halved for every 8,40,000 blocks made. In August 2019, the network halved the rewards as the milestone was reached, and hence the reward as of now per block is only 12.5 LTC.

Bottom line

The main aim of any cryptocurrency is to stabilize itself as a medium of exchange. While Litecoin has approximately around 100,000 users, it is nowhere near to be the standard medium of exchange amongst the cryptocurrencies. Still, as the usage of cryptocurrencies increases, Litecoin holds an excellent position to attain the place due to its transaction speed.

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Understanding The Basics Of Bitcoin Cash

Introduction 

As the name suggests, one can easily conclude that Bitcoin Cash is forked from the original Bitcoin protocol. It is also called as Bcash and is created in 2017. A Mining pool known as ‘ViaBTC’ proposed the name Bitcoin Cash for this cryptocurrency. In 2018, Bcash was further split into Bitcoin Cash ABC and Bitcoin SV (Satoshi Vision). This coin is traded in the cryptocurrency exchanges with BCH as the symbol.

Objective

The central vision of Satoshi Nakamoto to invent cryptocurrency is to enable the usage of the cryptos in day to day transactions. That, too, without any central authority having control over the same. As Bitcoin gained traction, the transaction fees, and the validation of the transaction started taking longer than usual. This unusual time to validate the transaction didn’t make it suitable for the day to day transactions. Hence the industry experts, after much deliberation, decided to fork the original Bitcoin protocol and create a new coin.

How is the BCH different from Bitcoin?

The block time, i.e., the time take for the generation of each block by validating the transactions, is 10 minutes, which is typically the same as Bitcoin protocol. But the block size, i.e., the number of transactions that a block can hold is around 1 MB for the Bitcoin network at the time in 2017 (when the network was forked to create BCH), but the block size of a block in BCH is designed to be 8 MB to 32 MB. The number of transactions that the BCH protocol can hold during a test in September 2018 surged to more than 25,000 transactions per second, giving fierce competition to traditional operations performed by VISA and Mastercard per second. Bitcoin Cash also doesn’t incorporate Segregated Witness (SegWit), a protocol in which the Bitcoin network used to increase the number of transactions per block. (Segregated Witness is an implementation in the system to remove metadata of the block to increase the block size)

Consensus

BCH also uses a POW consensus algorithm, just like Bitcoin protocol. Both Bitcoin and BCH are capped at 21 million coins. The complexity of the challenge proposed by the network changes for every 2016 blocks as they both use an algorithm with similar complexity for mining the coins.

Market Capitalization

Bitcoin Cash stands at the fifth place in terms of market cap with $3.8 Billion in value while the price of each coin being $210.51 (as on 23/10/2019). The 24-hour trading volume is $1.6 Billion, with a supply of ~18 Million BCH coins in the market.

Price History

In August 2017, the coin started trading for the first time at $294.60. By January 1st, 2018, it was trading at $2534.82, which is around 760% increase compared with the initial inception. The surge in pricing is due to the crypto boom between November and December 2017. By January 16th, it saw a decline of 26% and traded at $1,772. From then on, this coin had a continuous decrease till November 2018, when the currency split into two medals.

BCH had a tremendous growth as the block size started at 8 MB and reached 32 MB at present as per the plan during its inception. This makes this crypto, a viable currency for day to day transactions.

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DASH – Everything You Should Know About This New Age Cryptocurrency

Introduction

The word “Dash” is created from Digital Cash, thus signifying it is a virtual currency in its name itself. This coin was introduced by Evan Duffield in 2014, initially naming it as Xcoin. Later it got rebranded as Darkcoin as it was being used in the dark web for illegal activities due to its inherent features. The coin finally got renamed as Dash in March 2015. Dash is significantly different from the other cryptocurrencies in the market. It is an open-source cryptocurrency run in the form of DAO – Decentralized Autonomous Organization. We ll understand what a DAO in the latter part of the article.

Objective

Dash is created by forking the bitcoin network. Evan Duffield thought the bitcoin protocol could be improvised, especially the transaction speed and the governance structure, and thus started dash as an altcoin to bitcoin. The source code for the coin was taken from the bitcoin itself. Some tweaks were made to improvise the functioning as required. The block timing, i.e., the time taken to mine a single block, is 2.5 minutes compared to 13 minutes of bitcoin, thus making it four times faster. Apart from the transaction speed, the transaction in DASH is more private than the original bitcoin protocol.

Consensus

Dash uses a combination of Proof of Work (POW) and Proof of Stake (POS) mechanisms. Primarily it uses POW using a hash function called “X11”. While POS functionalities are used to reward its miners for hosting, maintaining, and updating the blockchain. Every cryptocurrency must have nodes to perform different activities in the network, but dash has two types of nodes, masternodes and normal nodes.

Difference between masternodes and normal nodes

Nodes are nothing but computational devices in the network used to host, validate, maintain the ledger copies, and secure the system. The masternodes perform all these duties while also having the vote function for the governance of the network. Masternodes contain the complete copy of the ledger, while normal nodes can have a partial copy. Normal nodes help in mining more coins as they concentrate on only mining. To be a masternode, one should deposit an upfront sum of 1000 Dash coins with a specific set of hardware requirements like RAM, hard disk space, CPU, and network bandwidth.

Masternodes help in the special transactions that DASH has to offers. They are PrivateSend and InstaSend.

PrivateSend

PrivateSend is used if the transactions need to be untraceable. This is achieved by dividing the entire size of the transaction to the small similar size transactions and mix them before executing a transaction. This makes the transaction untraceable as the senders and receiver’s accounts are not noticeable.

InstaSend

InstaSend feature is the extraordinary feature offered by the Dash. The validation process is done by only masternodes, thus making them instantaneous in real-time. This enables real transactions using Dash and can be used with merchants.

DAO

Decentralized Autonomous Organizations are the ones that work autonomously based on the precoded set of rules during the company’s inception. The founders and shareholders make decisions based on the voting process, and hence they are very transparent. DASH is essentially a DAO.

Market Cap

Dash currently occupies 18th position in the market cap with $625 million in value. The current trading price of the dash is $68.67, with a 24-hour trading volume of $216 million.

With all these features, Dash is amongst the most distinguishable cryptocurrencies out there, which proves that real-time usage of cryptocurrencies in our day to day life is indeed possible.

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What Should You Know About Ripple? The Most Centralized Cryptocurrency!

Introduction 

In our previous articles, we have seen that Bitcoin has inspired and paved the way for a multitude of new and affordable platforms using cryptocurrencies. Ripple is one such platform developed by Ripple Lab’s incorporation, a US-based company in 2012. It is a payment platform built upon a distributed open-source protocol. This best part about this cryptocurrency is that it is backed by major Banking and financial institutions. They use Ripple for transferring money, commodities, cryptocurrencies, or any other units of value like flier miles or free mobile minutes.

Objective

The Objective of Ripple is to rule over all the international transactions worldwide. They have come up with this objective as the cost of international transactions is too high if we transact using traditional means. It also takes days to settle the transaction. The most innovative idea behind this platform is that we can use the network to transfer any currency, not only cryptocurrency, to be more specific. Thus, making the platform currency independent. Ripple Network, also knows as RippleNet, enables many banks and financial institutions to send and receive money smoothly throughout the world.

How is Ripple different from other cryptocurrencies?

In the world of blockchain, the upcoming networks or platforms are trying to eradicate the existing systems. Ripple is doing precisely the opposite. Instead of trying to remove them, this technology is trying to cooperate with them to make them better. Several products by Ripple Labs (XCurremt, XVia, and XRapid) are being used by several banks to perform transactions globally. The native cryptocurrency of the platform XRP plays an essential role in the system.

Let us see how the transactions are performed globally using Ripple technology. The currency which is being transacted is converted into XRP before the transaction. As the recipient receives the money, the user will have an option to convert the XRP into his/her desired currency. Thus, XRP plays a bridge between two different currencies in this case. The transaction fees for this transaction is as less as $0.00001. This transaction fee disappears from the network after the transaction is processed.

Market Capitalization 

Ripple’s XRP is in third place in terms of market capitalization amongst Cryptocurrencies. Currently, this crypto is trading at $0.295, while the total market cap is around 12 billion dollars. The 24-hour trading volume is $1,729,560,739. The maximum number of coins the XRP ever can have is 100,000,000,000, while 43,242,653,330 out of them are already in circulation (43.2%).

Pros and Cons of Ripple

We have already seen that many banks have trust in Ripple technology and started using this network. By using this technology, some world-renowned banks claim that they are potentially saving 70% of the transaction costs annually. Since all the coins are minted already, inflation i.e., the value of Ripple, remains stable over the period.

Ripple is highly centralized, unlike other cryptocurrencies. 61% of the coins minted are in control of the founders of the Ripple Labs. They decide when and how much of the coins are released. Hence centralization is the major con. In May 2018, Ripple was accused of alleged cheating through its ICO.

Conclusion

Since 2013, many traditional platforms that serve international transactions have adopted Ripple as an alternative remittance option to its customers. By December 2014, Ripple combined its services with Earhports payments systems, making it the first-ever partnership of Ripple with a giant payments network. Western Union, American Express, and Unicredit are some of the largest customers of this technology, making the technology achieve its goal closer every passing day.

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Understanding The Basics Of ‘Ethereum’ – A Revolutionary Cryptocurrency

Introduction

The most talked-about cryptocurrency after Bitcoin is Ether. Ether is second in market capitalization after Bitcoin. While the Bitcoin network is only about minting Bitcoins using the POW consensus algorithm, the Ethereum platform is much more than just the cryptocurrency that the network helps in minting. Vitalik Buterin developed the Ethereum platform by taking inspiration from Bitcoin whitepaper. He wants Ethereum to be something called ‘World Computer.’

Objective

The worldwide web(www), which came into existence with the advent of the internet, transformed our lives completely. To login to different websites, we store our email id’s and passwords in various machines, though the devices may be personal. Still, the credential information is stored in the servers of different websites around the world. Hackers make these servers as targets and steal our information, which results in a breathtaking loss. Hence Ethereum’s goal is to protect user’s data. Ethereum wants to disrupt the client-server model by using thousands of nodes across the globe run by individual volunteers.

Ether

So, where does Ether come into picture amidst all this? It is the cryptocurrency of the Ethereum platform. Ether is generated when each block of transactions gets added to the existing blocks in the Ethereum network. The number of coins made every year is a fixed amount as per the determination of the network. By now, we understand that the Ethereum platform offers decentralized internet or DApps – decentralized apps. As the services cannot be taken free of cost, Ether also helps in fueling the performance of these apps. To perform any transactions in the decentralized apps functioning on the Ethereum platform, one must pay in Ether. The transaction fees are also called as gas as it is the fuel to perform transactions.

Market Capitalization 

Ether is traded under the name of ETH in cryptocurrency exchanges. Each Ether costs about $172.49, while the market cap of Ethereum is around 18 billion dollars. The 24-hour trading volume is approximately 7 billion dollars.

Consensus Used

Consensus algorithms are the backbone of any blockchain network. Bitcoin and Ethereum both use Proof of Work (POW) as a consensus algorithm today. But Ethereum aims to move to Proof of Stake (POS) as POW is very costly concerning the power consumption and computational resources consumption as well. Ethereum hard fork is impending where the significant change is going to be the switch from POW to POS.

Price History

Ether started with zero price on July 30, 2015. 2016 was a slow-growth year for ETH, while 2017 saw tremendous gains beginning from the start of the year itself. By December 2017, the price was around $800. By January 2018, it achieved its highest rate ever with 1,261.03 dollars. A severe downfall has been seen in the same year; by June, it halved the value to $531.15 by December; it even reduced to $141.33. 2019 has been somewhat stable year compared to the previous years. In July 2019, the price was around $300, and at present, the price is at $172.49.

Conclusion

While Bitcoin has given birth to the concept of cryptocurrency, Ethereum went a bit ahead and explored the true potential of blockchain technology with decentralized apps. After Bitcoin, Ethereum is the next go-to cryptocurrency concerning any measure one can check. Ether price has been kind of stable this year, and investors can hold on to it for the long term as the hard fork of the Ethereum is only going to make the coin even better. Stay tuned for more informative content on individual cryptos.

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What Is Market Capitalization? Top Cryptocurrencies With Highest Market Cap!

Introduction

Market capitalization is estimated for publicly traded companies in general to determine the value of that company. The value is calculated based on the total number of outstanding shares in the market multiplied by the individual share price. In simple words, the market cap is nothing but the market value of a publicly trading company.

Initial Public Offering (IPO)

Initial Public Offering or IPO’s are widely known. Companys which issue IPOs are publicly trading companies willing to raise capital for investing in the business to diversify and expand the company. When a company issues IPO, it agrees to sell a certain stake of the company to the public to raise the company. There are many successful IPO’s since 1602, when the first-ever IPO was recorded. Global companies like Amazon and Apple crossed one trillion-dollar in market cap, making them powerful than some smaller countries.

Initial Coin Offering (ICO)

Similar to IPOs, we have ICOs called Initial Coin offering with regards to cryptocurrencies. ICOs help crypto companies to raise funds that will be invested in creating a new coin, service, or dApps. These companies generally release a white paper detailing the aim of the ICO, minimum capital they intend to raise, and the basic design and properties of the product they are trying to create. Many investors plan to invest in ICOs to make quick bucks and earn tremendous profits. The result of some of the prominent ICOs promises the same.

Hence, the market cap of a cryptocurrency is determined by the number of outstanding coins in the market multiplied by the individual value of a coin.

Now, let’s look at the top 10 cryptocurrencies in terms of market capitalization.

  1. Bitcoin (Market Cap – $146.1 BN)

Bitcoin is the first-ever cryptocurrency, and it is obvious that this crypto tops the list in terms of market cap. The market cap of Bitcoin is $146,141,293,771, with the total number of coins in circulation being almost 18 million. As we all know, only 21 million Bitcoins can ever be mined.

  1. Ethereum (Market Cap – $19.1 BN)

Ethereum rightly earned its second place as it was developed to overcome the limitations of bitcoin, and it has become the second favorite amongst the investors. The market cap of Ethereum is around $19,191,075,792 with 108,182,195 coins in circulation.

  1. Ripple (Market Cap – $12.8 BN)

Ripples XRP takes third place with $12,833,995,058 as a market cap. The total number of coins in circulation is around 43,166,787,298. This crypto earned its credibility by gaining support from some of the most powerful centralized institutions like Federal Reserva.

  1. Tether (Market Cap – $4.1 BN)

Tether has been developed to be a stable coin, i.e., the price will always be maintained as one dollar. This coin has been developed to have the stability of fiat currency while having the key properties of cryptocurrency. The market cap of Tether is $4,121,497,986, with 4,108,044,456 coins being circulated in the market.

  1. Bitcoin Cash (Market Cap – $3.9 BN)

Bitcoin cash is created by forking the main Bitcoin platform. The market cap is around $3,956,035,700 with 18,061,950 number of coins in the market.

  1. Litecoin (Market Cap – $3.4 BN)

Litecoin is a spinoff of Bitcoin, thus earning the name of altcoin, which means alternate coin (to bitcoin). Around 63,484,804 Litecoins are currently circulating in the market.

Some of the other cryptos with high market cap include

Binance Coin (Market Cap – $2.8 BN)

EOS (Market Cap – $2.7 BN)

Bitcoin SV (Market Cap – $1.5 BN)

Stellar (Market Cap – $1.3 BN)

All the above information is as of 16th October 2019. For real-time figures, you can visit this website.

The adoption and usage of cryptocurrencies will only increase in the future as they are here to stay. At the peak of the bitcoin price in December 2017, the market cap of all the cryptocurrencies was around 125 billion dollars, and as of today, it is 221.3 billion dollars. Given the history, the market cap of all the cryptocurrencies can quickly reach a trillion dollars in the near future.

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What Is A Bitcoin Address & Why Should You Know About Them?

Introduction

In our previous articles, we have seen the properties, purpose, and working of cryptocurrencies taking bitcoin as an example. Now, let’s understand what a Bitcoin address is. This topic is vital since It is this address that enables Bitcoin to hold the property of Psuedonomity.

The transactions of Bitcoins are stored in a public decentralized distributed ledger. When we say its a public ledger, anyone can go to the Bitcoin website and check the transactions which are validated in the blockchain platform in real-time. One might wonder, in such case, how the pseudonymity of the user is ensured? Here comes the role of the Bitcoin address.

What is a Bitcoin address?

Two people transact Bitcoins using the Bitcoin address of each other. If we take the analogy of a bank, a Bitcoin address can be compared to the bank account number of a person. One should let the other person know their Bitcoin address for the transaction to happen. A typical Bitcoin address is alphanumeric, with 16-35 characters.

Currently, there are three types of address formats. The address formats only differ with respect to the characters which they begin with. The addresses start with either 1, 3, or bc1. Below are some of the examples of standard Bitcoin addresses.

1BvB6SEYstWetqTFn5Au8m6GFg7xJaNVN2

3J9891WpEZ73CNmQviecrn7iWrnqR4WNLy

bc1qar6srrr78fkvy5l643ly9nw9re59gtzzwf5mdq

Generating a Bitcoin Address

To generate a Bitcoin address, you should first download a bitcoin wallet. A Bitcoin wallet is a software that allows users to send, receive, and store Bitcoins securely. Storing Bitcoins is nothing but storing the private keys of that Bitcoin. These private keys are used to authorize a transaction and thereby unlocking the Bitcoins. More about Private keys and types of wallets will be discussed in further articles. So basically, once you download the wallet, you can generate a countless number of Bitcoin addresses. Every time you want to sell or receive Bitcoins, you can request a new Bitcoin address.

How to use the Bitcoin address effectively?

Even though your identity is not mentioned upfront, you can be traced by your Bitcoin address. Some wallet providers might ask for your identities while creating a Bitcoin wallet. Some times, even your e-mail ID will be linked to your Bitcoin address. So it is always advisable to generate a new Bitcoin address for each transaction you choose to do. Since Bitcoin is a public ledger, anyone can know how many Bitcoins you hold using your Bitcoin address. It is a time-consuming process, but there is a possibility. That is what we are trying to say. However, if a single-use address is used, they can’t know the exact amount you hold.

Since the Bitcoin address is long with alphanumeric characters, it gets difficult for someone to actually type out the entire address to send Bitcoins to you. So the best way to share your Bitcoin address is by getting a relevant QR code. Using a QR code to represent your address is the best way to make your address easily accessible to anyone. Anyone can scan and process the payments just by scanning the QR code without any hiccups.

Conclusion

The Bitcoin address plays an essential role in the entire Bitcoin functionality as it is the face of any Bitcoin transaction. One thing a person will know through your Bitcoin address is the account balance associated with that address. So it is not recommended to share your address publically on any of the social media platforms. As discussed, try to use different Bitcoin addresses every time you transact. However, you can publically share any one of your addresses in order to be extra secure. Cheers!

 

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How Does A Cryptocurrency Work? (Example – Bitcoin)

In the previous articles, we have learned the definition, properties, and purpose of cryptocurrency. But it is vital for us to know how cryptocurrencies work. In this article, let us find out that by taking the example of Bitcoin.

Below are some of the important terminologies you should know before going further.

Peer to Peer Network (P2P) – The networks where computational devices are joined together with the internet instead of using a central server are called peer to peer networks. Hence there is less chance of a network failure than the standard server model to form a network.

Miners – Miners are the participants in the network who validate transactions. Thus, the creation of new Bitcoins is often referred to as the mining of bitcoins.

Nodes – The individual computational devices in the network are called nodes. The nodes are joined to form a P2P network.

Consensus algorithms – To validate the transactions, the miners in the network should agree whether a transaction is valid or not. The blockchain network uses consensus algorithms to get this job done.

How does the Bitcoin network work?

The blockchain network is set up in a peer to peer way, enabling decentralization of the network effectively, removing the server model. Bitcoin network bundles a certain number of transactions into a block, and these blocks are linked using cryptographic hashing techniques. The miner should validate these blocks for the authenticity of the transactions. To confirm them, the system proposes a challenge to the miners, and the first miner to solve the problem, propagates the message throughout the network. The solution to the challenge is called ‘nonce.’ The complexity of finding this nonce increase as the number of blocks keeps increasing in the system. The other miners validate and approve the transactions if the transactions are not fraudulent.

Bitcoin as reward

The miner who achieves the solution first gets rewarded in the network in the form of Bitcoins. This is how and why the Bitcoins are generated in the network. The miners should be rewarded to keep them motivated and committed to the network. Without miners, the network wouldn’t be sustainable.

To transact Bitcoins in the network, users must pay transaction fees as well. These transaction fees are also in Bitcoin. Hence these transaction fees and Bitcoins generated are paid as a reward to the miners for validating the transactions.

POW as a consensus algorithm

Bitcoin uses Proof of Work (POW) as a consensus algorithm. POW proposes a challenge to the network, which is to be solved to validate the transactions. But why is it necessary? Because POW discourages denial of service. Below are the steps involved in POW in general.

  • The service requester requests service from the service provider.
  • The service provider gives a challenge that should be a bit complex for the service requester to resolve but easy enough for the service provider to check.
  • The service provider proposes this challenge to avoid the exploitation of the service from the service requester.

The exact same concept is used in the Bitcoin network, as well. The miner must expend a considerable amount of computational energy and electricity to solve the challenge. Because by doing this, he/she will not validate fraudulent transactions to be accurate. If they do validate fake transactions, they will lose all the time and computational power they spent and also the chance of gaining a reward. POW is the most efficient consensus algorithm so far, and it makes the Bitcoin network efficient.

We hope you understood the working of Bitcoin. Cryptocurrencies other than Bitcoin with different blockchains and consensus work in a different way. You will know about each of them in the upcoming articles. Let us know if you have any questions in the comments below. Cheers!

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Why Do We Need Cryptocurrencies? What Is Their Purpose?

Introduction

Cryptocurrencies are digital tokens used in the place of conventional fiat currency for the exchange of goods and services. The digital tokens are generated and regulated using encryption techniques called cryptographic hash functions, ensuring security and anonymity.

Why do we need cryptocurrency?

We are living in the digital era, where everything around us is changing swiftly. Not only our phones are smart now, but also our homes. We can speak and see people using video calls at a very cheap rate now. With virtual reality, we can create a different world around us by sitting on a couch. All of these weren’t even possible just a decade ago. But technological innovation has bought us to where we are today. We are amid the fourth industrial revolution today, which fundamentally changes the way we live, work, and relate to each other. Artificial Intelligence, Machine Learning, and Blockchain technologies pave the way for the same. Hence came the age of digital currencies, and they are transforming the way we transact with each other throughout the world.

Let us see in a particular way below on how cryptocurrencies can solve the problems that our traditional fiat currencies cannot solve.

Fraudulent currency

Cryptocurrencies solve the issue of fraudulent currencies. As they are generated and regulated using cryptographic hashing techniques, it is highly impossible to create counterfeit currencies. They are not being minted to create a hard copy of the same type with the same feature. These digital tokens are stored in the blockchain platform, where there is no worry of duplicity.

Double spending

The concept of digital currencies was there even before Bitcoin, but they couldn’t be attained in reality. The obstacle was the double-spending. A digital asset shouldn’t be spent twice to different persons at the same time. Today’s cryptocurrencies operate on blockchain technology. Blockchain technology effectively deals with the double-spending problem as there is a validation procedure involved using a consensus mechanism.

Transferring funds

We can transfer vast amounts of funds to any country around the world in less than 10 minutes. There is no limit to the transaction. The transaction fees are low when we compare with the traditional transaction charges. It takes around 3 to 5 days when we transact using a fiat currency of that size. Taking this much time is not efficient in this age of digital, and cryptocurrencies came to the rescue.

Decentralized network

Cryptocurrencies are generated in a decentralized network without any central bank controlling the system. Since there is no one controlling it, the currency will be stable if the credibility and maintenance of the system are good.

Bottom line

It is time for us to at least try using these cryptocurrencies. Traditional currencies are not going anywhere in the near future, but some credible cryptos are already proving their purpose by solving the problems that fiat currencies couldn’t solve.  Governments have also recognized the huge benefits that these currencies offer and are making or changing laws to favor cryptocurrencies. Not many governments have regulated these digital tokens yet, but the move has started.

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Bitcoin – The First Scalable Cryptocurrency Ever!

In the previous article, we have discussed the evolution and properties of cryptocurrencies. Now, let’s understand Bitcoin, which is the first scalable cryptocurrency.

Introduction

It has been around 11 years since Bitcoin has come into our lives. I am saying that because everyone who knows about bitcoin, at some point, would have wondered should they invest in it or not. Some have invested and gained so much from it. I’m sure you would have heard of the term Bitcoin millionaires. Of course, some have seen losses as well. Ever since the inception of Bitcoin, there is so much talk and hype about cryptocurrencies. Some governments have even made some changes to the existing laws to support cryptocurrencies. While some governments made laws against this digital currency. It all began with one crypto, Bitcoin. Hence, it is important for us to know the evolution of Bitcoin, which is still considered as a synonym of cryptocurrency.

How it all began?

It all began when a pseudonymous person called Satoshi Nakamoto released a whitepaper on October 31, 2008. The white paper described the blockchain technology and the Bitcoin cryptocurrency. When the technologists read the document, many thought it is ground-breaking technology and wanted to see it working in rea, while some wanted to explore the properties of blockchain other than cryptocurrencies. Nakamoto not only released the white paper but also mined the first block of the Bitcoin network in Jan 2009. Thus, he began the journey of Bitcoin.

The first-ever recorded transaction

The first recorded purchase transaction using Bitcoin happened in May 2010. Laszlo Hanyecz, a computer programmer,  paid 10,000 BTC for 2 Pizzas, and it was merely $25 back then. At today’s price of the bitcoin, the pizzas cost around $80 million. Cryptonizers celebrate that day as Bitcoin Pizza day to date.

Price history

In July 2010, the price of one Bitcoin was at $0.08. In February of 2011, the price came up to $1. Then it gradually started increasing as more and more people came to know of it and started investing. By June 2011, the price surged to $11. By April 2013, the bitcoin achieved a three-digit rate of $266. By November, the same year, it reached a four-digit figure of $1242.

Picture Credits – bitcoinwiki.org

From there on, there have been fluctuations depending on the demand and various rumors about the coin. In 2017 December, the price rose to $19,783.06, the highest ever. As of October 2019, the price of one Bitcoin is $8,300.

Birth of new coins from Bitcoin

Bitcoin Cash and Bitcoin Gold are two coins forked from the Bitcoin blockchain. These are some of the major altcoins (alternate coins) in today’s cryptocurrency market. Bitcoin inspired the birth of many other cryptocurrencies. We can say that these altcoins emerged only after Bitcoin proved the market potential. Ethereum, Litecoin, XRP are some of the examples.

Emergence of the cryptocurrency market

Cryptocurrency exchanges started their operations after the rise of new cryptos in the market. Bitcoinmarket.com is the first exchange ever. However, the exchange is defunct now. In July of the same year, Mt.Gox was launched as well. Around 2013 and in early 2014, nearly 75% of the Bitcoins transaction across the world happened through Mt.Gox. In 2014, they had to liquidate the funds because nearly 850,000 bitcoins were stolen from the exchange. This is the biggest disaster in Bitcoin history ever.

Bottom line

At present, everything in our life is getting digitalized. So why not the currency we use? Bitcoin is that new-age digital currency which has a massive potential to transform the currency space. It is not too much to say that it has achieved the same already. Let’s see what more wonders this crypto can create in the near future. Stay tuned for more exciting and engaging content. Cheers!

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The Evolution & Properties Of Cryptocurrency!

Introduction

We could say that the type of currencies we use today is employed as a medium of exchange for goods and services. In the olden days, transactions used to happen in the barter system. Barter system implies that goods are exchanged for goods. With this system, it took time to trade products and services as it is challenging to find people to accept their goods for the goods they want. Hence came the era of coins in gold or some other metal with a denomination printed on it. As some standard is associated with it, the trading of goods and services has become easy. Then came the paper notes making it easy to carry large amounts of cash, which was not possible with coins. We are this point where these paper notes are known as currencies. Each country has its respective currency (The US Dollar, Japanese Yen, Indian Rupee, etc.)

Evolution Of Cryptocurrency

Even though the purpose of the money didn’t change much, the way we use it kept changing throughout history. Banks came into existence to ease out the financial transactions. They played a significant role in global trade in terms of transferring money across different countries, thus improving the economy of each country. Physically minted cash would be less than 10% of the entire currency in the world. Remaining exists in the form of virtual currency as electronic money in online accounts. Central banks in each country control these accounts. Since power is vested within these financial institutions, the entire banking process is centralized. Hence the necessity of an alternative currency has emerged. These are termed as cryptocurrencies, and the primary purpose of their invention is to create a decentralized currency system where the entire network is not controlled by anyone at all.

What Are Cryptocurrencies?

Cryptocurrencies are digital or virtual currencies where cryptographic techniques are used to generate the units of currency and monitor the transfer of funds without a central bank. Thus, making it a decentralized way of producing and using money.

Cryptocurrencies are generated by using a blockchain platform that uses distributed ledger technology. The first-ever cryptocurrency that has come into existence is The Bitcoin in 2009, though the white paper related to this concept was released in October of 2008. Thus, 2009 signals the beginning of the era of cryptocurrency. There has been no looking back since then.

Properties Of Cryptocurrency

The three fundamental features of cryptocurrencies are Trustlessness, Immutability, and Decentralization. Let us understand these properties using the example of Bitcoin.

Trustless

Though the word trustless creates confusion to the readers, it merely means there is no need not trust anyone or anything to send or accept a cryptocurrency. If we say an environment is trustless, that means there is no need for you to trust anyone in the network. The Bitcoin network is a trustless environment. There was no currency before Bitcoin that was not monitored by a central bank. Every node in the blockchain network has a copy of the ledger; thus, there is no need to trust any authority.

Immutability

Immutability means that it cannot be undone. It is highly improbable to rewrite the history of the transactions in Bitcoin blockchain. Since all the transactions are recorded in the blockchain, the cryptographic techniques make it highly impossible to change any transactions. If any fraudulent transactions happen in the case of our bank accounts, the banks have the authority to change the transaction. But in the case of cryptocurrency, it is not possible. Thus, removing the concept of centralization and trust from these digital currencies.

Decentralization

It is the keyword when it comes to cryptocurrencies. Decentralization offers different types of tolerances. Tolerance concerning the infrastructure, component failures, hacking, and collusions. In the Bitcoin network, the ledger where the transactions are recorded is distributed among every node in the network. Any component failures don’t cause any problem to the functioning of the network. Hacking the blockchain is extremely difficult and a costly process. When it comes to traditional banking, individual entities can collide with each other to make profits at the expense of loss to others. This plot is not possible in the case of a cryptocurrency network, thus offering tolerance to collusion. Apart from all of these, there are many more advantages of a decentralized system over a centralized banking network.

Bottom Line

Therefore, Cryptocurrencies offer plenty of opportunities in today’s digital world, which traditional currency couldn’t provide. We will be further discussing the purpose of cryptocurrency and more properties of cryptocurrency in our upcoming articles. Stay Tuned. Cheers!