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What Are Stablecoins? – The Crypto Safe Haven

What are stablecoins?

Cryptocurrency and blockchain both have the potential to change how we see the world. However, cryptocurrencies are still young and too volatile on every single time-frame. Crypto investors have become millionaires overnight, only to lose a sizable portion of the earnings just a month or two later. Even though some see volatility as an opportunity, it mainly shows how cryptocurrencies are still unreliable and how their price is not yet determined by society. This is how the idea of stablecoins came to life.
Stablecoins are cryptocurrencies that have a much more fixed price when compared to the regular cryptocurrencies. The fixed price most often comes from pegging stablecoin’s price to other assets such as the US dollar or gold. This lets stablecoins retain most of the attributes of a cryptocurrency (transparency, security, privacy, etc.) without extreme volatility. Stablecoins were created with the intention of people using them, just like any other cryptocurrency. They are meant to be a simplistic, stable, easy to use, scalable, and secure means of transactions.
Many stablecoin projects have been released lately. This so-called “stablecoin invasion” brought at least 57 stablecoins to the market, according to a recent report. Out of the 57, Paxos Standard (PAX) and Gemini Dollar (GUSD) have even been approved and regulated by the New York State Department of Financial Services.

Why do we need stablecoins?

Stablecoin is a cryptocurrency that was created with the aim to mimic traditional, stable currencies. A stablecoin is collateralized to the value of an underlying asset, which can vary from one stablecoin to another. Many stablecoins are pegged to certain fiat currencies, such as the US dollar or the Euro, while other stablecoins are pegged to other kinds of assets, such as precious metals, real estate, or even other cryptocurrencies.

The primary characteristic of stablecoins is that they are not subject to the extreme price volatility that affects other cryptocurrencies. Stablecoins leverage the benefits of cryptocurrencies (transparency, security, immutability, fast transactions, low fees, privacy, etc.) while keeping the expected value that the market expects from it in order to be a viable means of payment as well as a unit of account
Stablecoins can be used in many cases to improve the state of finance all around the world:

They could benefit many industries and individuals that need to make international payments quickly as well as securely. Stablecoin users could range from migrant workers that want to send some money back to their families all the way to big businesses looking for a more efficient way of paying their international suppliers.

Many people all across the globe are underbanked, meaning that they don’t have sufficient access to mainstream financial services. People in underbanked communities can transact using stablecoins.
Stablecoins could help in areas where economic uncertainty is a regular concern, and inflation is extremely high. Using stablecoins will bring safety to its users as it will have no notable inflation regardless of the local laws, news, or conditions.

Using stablecoins globally could drastically improve the financial industry. This could range from cross-border lending to financial planning. Broadly, this could transform those involved with applications across the cryptocurrency space, such as traders, investors, and blockchain-based businesses.

Stablecoins are mainly used as a safety net for crypto investors at the moment. By acting as a safe haven in the event of a market crash, cryptocurrency investors can move their funds from regular cryptocurrencies into stablecoins without ever having to move their capital back into fiat currencies. This reduces exchange costs and cuts back on time required to leave cryptocurrency positions.
Types of stablecoins

There are four types of stablecoins based on how what they are backed by:
Fiat-backed stablecoins;
Commodity-backed stablecoins;
Cryptocurrency-backed stablecoins;
Stablecoins with no collateral (algorithm-backed stablecoins).

Fiat-backed stablecoins

Fiat-backed stablecoins are backed by fiat currency in a 1-1 ratio. This way, the stablecoin’s value always stays roughly around $1 (as most stablecoins are backed by USD). Fiat-backed stablecoins are the most common stablecoins.
Some of the most popular fiat-backed stablecoins are USDT (Tether), TrueUSD (TrustToken), PAX (Paxos), etc.

Commodity-backed stablecoins

Commodity-backed stablecoins backed by any interchangeable commodity. These stablecoins could be backed by oil, precious metal, or grain. Most commodity-backed stablecoins are using either gold or oil as their collateral.
Some of the most popular commodity-backed stablecoins are DGX (Digix) and Gcoin (G-Coin). Cryptocurrency-backed stablecoins
Cryptocurrency-backed stablecoins backed by other cryptocurrencies, usually the ones with the largest market caps. These stablecoins almost always use Bitcoin or Ethereum as their collateral. They can, however, be backed by more than one cryptocurrency to avoid extreme volatility. Crypto backed stablecoins are usually overcollateralized as they need to take into consideration the price fluctuations of the native cryptocurrencies.

Some of the most popular cryptocurrency-backed stablecoins are DAI (Maker DAO), bitUSD (BitShares), and sUSD (Synthetix).
Stablecoins with no collateral (algorithm-backed stablecoins)
Noncollateralized stablecoins are stablecoins that are not backed by any asset. Instead, they use certain algorithms to adjust the supply and demand of the stablecoin itself. That way, they can keep the stablecoin’s value stable.
Some of the most popular non-collateralized stablecoins are CarbonUSD (Carbon) and kUSD (Kowala).

Conclusion
Stablecoins bring a completely new aspect of complete stability to cryptocurrencies, but will that be enough for them to become popular and widely-used? Only time can tell.

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The Ultimate Guide To Hardware Wallets – Keep Your Crypto Secure

What are hardware wallets and how to use them?

Cryptocurrencies are becoming a global phenomenon, and it is becoming more apparent that they are not just a phase, but a thing that might actually change the world. The more people invest in digital assets, the more important it becomes to have a safe way to store the crypto portfolio. The current cryptocurrency wallet market is huge, and picking the right one can be tricky. The sheer supply of wallets on the market can cause “analysis paralysis” with the potential users. This article will hopefully help people make the right choice in picking their wallet.

Hardware wallets

A hardware wallet is a special type of Bitcoin wallet (as most wallets are so-called software wallets). Hardware wallets are special because they store the user’s private keys in a secure hardware device. This is providing a major advantage over standard software wallets as it grants its user much-needed security.
More and more companies started offering hardware wallets, but the two companies that always stay one step ahead in features and marketing are Ledger and Trezor.

Ledger

Ledger was created launched in 2014 by eight cryptocurrency/security experts. As previously said, Ledger is one of the two most popular hardware wallet companies, with the other one being TREZOR. That being said, there are a lot of companies offering their iterations of hardware wallets, but these two came out on top due to what they have to offer to their users (in terms of hardware, features, and pricing). Ledger currently offers three hardware devices:
Ledger Nano S – Small and secure;
Ledger Nano X – Ledger’s upgraded version of the Nano S, more features but also bulkier;
Ledger Blue – tablet-like device with a touchscreen. It offers the most options and features, but it is also the priciest out of the three.

All of the Ledger devices are multi-currency wallets as they support over 1,000 cryptocurrencies. They do, however, are slightly different. The difference comes in the form of which coins they support. Ledger Nano S and Nano X support the exact same cryptocurrencies except “The Validator” cryptocurrency, which Nano S supports. Ledger Blue offers support to less cryptocurrencies but offers more features overall.

Ledger Live

All Ledger devices are powered by software called Ledger Live, which acts as its main wallet. The Ledger Live app/program is supported by these operating systems:
Mac OS;
Windows;
Linux;
iOS;
Android.

Ledger Live natively supports only 22 cryptocurrencies, but that’s far from what it can do. Ledger devices offer support to far more cryptocurrencies by using the Ledger Live feature of integrating other wallets. That way, Ledger live can integrate third-party wallets that offer support to other cryptocurrencies. Less popular cryptocurrencies and ERC20 tokens are supported by Ledger only by integrating their respective wallets. Ledger supports smaller and less popular cryptocurrencies by integrating MyEtherWallet and MyCryptoWallet in most cases.
When all adds up, Ledger supports over 1150 cryptocurrencies, which makes it a multi-currency wallet by definition.

Trezor

Trezor is a hardware wallet created by Satoshi Labs in 2012. This company is also responsible for several well-known cryptocurrency projects (such as Slush Pool – a Bitcoin mining pool and CoinMap – a map of establishments that accept Bitcoin). Trezor has been developed by Satoshi Labs CEO and CTO, which go under the pseudonym Slush and Stick.
Besides Ledger, Trezor is currently the other most popular hardware wallet in the world. Trezor has two options to choose when it comes to hardware wallet devices:
Trezor One – has buttons to operate it;
Trezor Model T – a newer version, has a touchscreen but is pricier.
Trezor hardware wallet, unlike Ledger Live, offers native support to over 1000 cryptocurrencies right off the bat. There is no need for integration of any wallet whatsoever. This makes Trezor wallet the only wallet in the industry that offers native support to all ERC20 tokens. Even though most users do not seem to care whether the support comes natively or by the integration of other wallets, this should be a significant thing. This feature alone greatly improves on the wallet security, making it safer than other hardware wallets.
Many wallets offer support to more than one cryptocurrency, which gives them the right to be called “multi-currency wallets,” but Trezor shows the true meaning of the word.

Conclusion

Hardware wallets should be used for their safety and security, as well as their sturdiness and durability. Each and every cryptocurrency investor (no matter how insignificant their funds are) should think about investing in buying a hardware wallet. As for the ultimate decision of which hardware wallet is better: Ledger, TREZOR, or some other company’s wallet, there is no final answer. It mainly comes down to the personal preference of the buyer themselves.

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The Best Way To Send & Receive Altcoins Through Multi-currency Wallets

How to send and receive altcoins through multicurrency wallets?

In order to send or receive a cryptocurrency, first, you need a cryptocurrency wallet that supports that cryptocurrency. Many wallets that support quite a few cryptocurrencies are currently on the market. The decision of which wallet to use comes down mostly to which cryptocurrencies the wallet supports. If more wallets support the wanted cryptocurrency, then the decision comes down to smaller features such as user interface, the option to reduce/increase transaction cost etc.

Sending and Receiving Cryptocurrencies

After deciding which wallet to use, all that’s needed is to put in the public address recipient when sending cryptocurrencies or to send out the address to the sender as a recipient. This can often be as easy as scanning a QR code and typing in the cryptocurrency amount.
Of course, the process of sending and receiving cryptocurrencies can differ slightly between wallets as each wallet has a different interface. However, there are a few general guidelines that are the same with all wallets:

Log into your wallet – Some wallets may have a 2FA (two-factor authentication), PIN code, phone verification or other kinds of security options enabled;
Go to the send/receive screen depending on whether you are sending or receiving cryptocurrency (that’s simply done by clicking the tab or button that says “send” or “receive”);
Choose whether you want to send or receive cryptocurrency. It is important to know that even though wallets can support many cryptocurrencies, each address is bound to one cryptocurrency (unless the coins are Ethereum tokens or a part of a similar ecosystem). This means that Bitcoin can only be sent to a Bitcoin address, Litecoin to Litecoin, XRP to XRP etc.
When sending: Enter the public wallet address (of the corresponding cryptocurrency) of the recipient and choose the amount that you want to send them. The specified amount should also include transaction fees. After double-checking and confirming that the address is correct (as a mistake cannot be undone after sending), click send and the transaction is done.
When receiving: Receiving cryptocurrencies is as simple as sharing the public wallet address (for the coin that will be sent) with the sender. It is even easier in person, as the sender can scan the QR code right from the recipient’s wallet.
Cryptocurrency transaction tips and tricks
Before sending a lot of cryptocurrencies, it’s good to try sending a small amount to the address as a test to make sure everything is working properly.

Sending and receiving cryptocurrency on/from exchanges might be a bit different than how simple wallets work. Sending between exchanges will require using the “withdraw” and “deposit” buttons on the exchange which will be located right next to the token. Each exchange has its own protocol which has to be followed. This means that directions must be followed carefully, as exchanges might require senders to include a message in the transaction or to send a whole number of the coin/token. They will also most likely require some form of transaction verification (2FA, email verification or phone verification).

Crypto-to-crypto exchange lets its users turn one cryptocurrency into another. Using a platform such as Shapeshift could be helpful if the transaction should happen in altcoins but all you currently have is Bitcoin.
You should not be afraid if the transaction does not appear on the recipient side instantly. Sending cryptocurrency may take some time for the transaction to go through (especially if the sender is sending from an exchange wallet, in which case it may take some time for the transaction to be included in a “transaction batch”). The sent transactions can be almost instant, but they could also take a few minutes or even hours (depending on the traffic). Most wallets, however, have the feature where users can see their pending transactions.

ERC20 tokens

ERC20 tokens are cryptocurrencies made on the Ethereum protocol and they are a bit different than other altcoins. These tokens are compatible with the Ethereum protocol as they follow the ERC20 guidelines. To send any ERC20 token to another wallet, the sender has to hold enough Ether to cover the transaction fees. Transaction fee depends on the complexity of the transaction. This fee is called Gas.
Other than the fact that each ERC20 wallet needs to have enough Ether to cover transaction fees, there is no other difference from the other altcoins wallets.

Conclusion

One big thing to point out when transacting cryptocurrencies is to never share private keys. Private keys should be differentiated from public keys and should never be seen by anyone other than the account owner. Sharing it would be the equivalent of sharing the wallet password with a stranger.

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The Ultimate Guide to Altcoins

What are altcoins?

Altcoins are, simply put, the cryptocurrencies that launched after Bitcoin. Altcoins are made to either do the things Bitcoin does but better or to fill some other gap in the market. Bitcoins’s success created a whole industry where people are trying to solve world problems using blockchain and cryptocurrency tech. As Bitcoin itself is not a complete project yet, some altcoins are trying to become a “better version of Bitcoin.” Others want to improve other industries and have no intention of being Bitcoin’s competition. As the term ‘altcoins’ represents all other cryptocurrencies other than Bitcoin, there are thousands of altcoins out there.
Why are non-Bitcoin cryptocurrencies called “Altcoins”?

“Altcoin” is a word combined from the words: “alt” and “coin.” “Alt” is a short term for “alternative,” while “coin” is a jargon term for cryptocurrency. Together, they represent alternative cryptocurrencies as they are not Bitcoin. However, many (if not all) altcoins are influenced by Bitcoin in many ways. While many came to life directly by forking off from Bitcoin’s blockchain, others created their own blockchains.

Many altcoins are built on the framework provided by Bitcoin, which means that most of them have similar characteristics. They have a peer-to-peer network and use Proof of Work concept to incentivize transaction validation through mining. However, there are a lot of altcoins, and almost all of them have a special feature or a set of features that differentiates them from the rest. They differ from Bitcoin with a range of variations which range from including different validation incentive algorithms to security and anonymity features.

The first Altcoins

The earliest notable altcoin is Namecoin, and it was almost an exact copy of Bitcoin. They had the same code as well as Proof of Work algorithm. They also had the same maximum amount of coins, namely 21 million coins. Namecoin was created in April 2011 with the main purpose of improving on privacy features. Namecoin tried to make user domains less visible, which allowed them to mine using their own .bit domains.

Namecoin was not a successful project, but many others were. Current leading examples of altcoins are :
Litecoin;
Ethereum and
XRP/Ripple.

Right after Namecoin’s launch, Litecoin came out and was branded as the “silver to Bitcoin’s gold.” Litecoin is another project that is extremely similar in code and functionality to Bitcoin. However, Litecoin differs from Bitcoin in several essential ways: It allows mining transactions to be approved four times faster than Bitcoin and has a supply that’s 4 times bigger. It also uses a different proof-of-work algorithm than Bitcoin that’s called Scrypt.

As of October 2019, there are more than 3,000 cryptocurrencies available over the internet, and they are all considered altcoins, except Bitcoin. New cryptocurrencies can be created at any time and by anyone. However, not all of them are successful. Many of them will not find their place in the market and will eventually fail, as many older cryptocurrencies already did.
Biggest Altcoins explained

Ethereum

Companies such as J.P Morgan Chase, Microsoft, and Intel gathered up in order to create the fiercest rival to Bitcoin in terms of market capitalization, Ethereum. The main purpose of Ethereum was not to directly compete with Bitcoin but to rather program binding agreements (which are called smart-contracts) into the blockchain itself. This incarnated into the now-popular smart contract feature that many cryptocurrencies use.

It should be noted that Ethereum is not just a currency as it did not copy its code from Bitcoin. It is also a blockchain platform that’s powered by its cryptocurrency: Ether. Ethereum has the potential to revolutionize many industries with its smart-contract feature as these contracts can be used to improve how we store medical records, how we do property sales and leasing etc.

XRP/Ripple

XRP attracted a great deal of venture capital during its inception, as it was the first cryptocurrency that had a plan to revolutionize the banking industry rather than turning it upside down. This altcoin startup managed to raise $50 million from banking institutions, gathering $90 million in total funding. The project is even backed by Google. XRP has a unique feature of allowing transacting with any unit of value, from fiat currency to frequent flier miles.

Ripple tries to improve the outdated SWIFT transfers, which are costly and slow. Using XRP would lower the total cost of international settlement by enabling banks to transact directly, instantly, and with a certainty of settlement. XRP quickly took its spot as the 3rd largest cryptocurrency and 2nd largest altcoins on the market.
However, many influential people think that XRP is not a real cryptocurrency and that all its value lies in the company that created it instead of the cryptocurrency, which was not being used all that much. Only time will tell whether this statement is true or false.

Litecoin

Former Google engineer Charles Lee created Litecoin in order to improve on how Bitcoin is used. His idea was that Bitcoin should be considered the “internet gold” while Litecoin would be used for smaller purchases as it was faster and cheaper, but less safe due to its network size. The block-generation speed is improved dramatically, and this resulted in much faster transactions. This speed, however, makes Litecoin’s blockchain much larger and more prone to producing orphaned blocks. Litecoin is often used for testing Bitcoin’s new features and their value.

Conclusion

While the altcoins mentioned above are out there to perform useful tasks (example: acting as a testnet capacity or offering greater anonymity than Bitcoin). There are, however, many other altcoins that are created to scam people and are completely driven by speculation. Not all projects are created equal, so check all the fundamentals before investing and beware.

 

 

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The Best Way To Send & Receive Bitcoin

How to send and receive Bitcoin

Bitcoin is one of the biggest, if not the biggest financial innovation in this century. The technology behind Bitcoin has the potential to improve the world’s financial system as well as solve many problems. Some of the conveniences that Bitcoin offers are fast, cheap, safe, and secure transactions, all while removing third-party intermediaries and putting the power back in the hands of the people. Using Bitcoin, anyone can send value anywhere in the world in a blink of an eye.

However, as Bitcoin is still a new concept, many people do not know how to make a wallet, send or receive it. Hopefully, this article will help with that and make things easier to understand.

How to get a Bitcoin address

In order to get a Bitcoin address, you must create a Bitcoin wallet. Bitcoin wallets are, simply put, software used for sending, receiving, and keeping Bitcoin. Each wallet provides the user with a private and a public key. A public key is a way to confirm ownership of an account and of the address that sends and receives funds. A private key, on the other hand, is a “password” that signs transactions, and it is related to the public key.

A Bitcoin address is a version of a public key that acts as an “account number.” This Bitcoin address can be used by anybody to send Bitcoin to your wallet.
There are many wallets on the market, each bringing their own features. The two most important distinctions to make are:

  • Hardware vs. software vs. paper wallet;
  • Exchange wallet vs. a regular wallet.

Hardware wallets are a safer alternative to software wallets as there is an actual device that is used to store the wallet keys. This way, users are more secure as these devices are safer from security breaches that can happen to phone-app wallets or computer program wallets. They are a bit more costly, but anyone that has cryptocurrencies should be as safe as possible, no matter how much value the wallet holds.
On the other hand, paper wallets or “cold storage” wallets are a mechanism that stores Bitcoin offline. They are made by printing the private keys as well as Bitcoin addresses onto paper, making it impossible to hack. Physical wallets are considered the safest way to store Bitcoin.

Exchange wallets are wallets that let you keep, send, receive, and exchange funds on an exchange. This is considered the most unsafe way of storing Bitcoin (or any cryptocurrency) as the wallet keys are not in the hands of the end-user, rather in the hands of the exchange. Storing funds on an exchange is not advised, as it is far safer to store them anywhere else. Exchanges should only be used for trading and exchanging funds and not for simply storing cryptocurrencies, no matter how user-friendly it seems.

How to Receive Bitcoin

Once a wallet is created, receiving Bitcoin is fairly straightforward. Every wallet will have a receive tab where an address will be shown:

Using this address, anyone can send funds to the wallet. Wallets also provide their users with a QR code which can easily be scanned, which makes in-person transfers that much easier.
Once the sender puts in the receiving address and specifies the amount, the receiving account will be credited with the amount sent. It may take some time to confirm that transaction by the network.

How to Send Bitcoin

While all wallets are different, they all are pretty much alike when it comes to sending Bitcoin. Clicking on the “send” tab will lead the user to a page asking for a receiving address, amount of funds to send, and transaction fees. Not every wallet has the feature to let their users choose transaction fees themselves, but it is becoming a core feature in almost every wallet, so it is included in the guide.

 

Once the recipient’s address has been put in, the sender should choose the amount that they wish to send, as well as transaction fees. Choosing a transaction fee comes down to the urgency of the transaction itself. If it needs to arrive as fast as possible, the user will choose a higher transaction fee, which will incentivize the miners to verify it faster. If time is not as important, users have the option to choose a lower-than-usual fee which will make transactions cheaper, but slower. Once everything is set, clicking the send button will finish the transaction.

Summary

Every wallet has its advantages and disadvantages, so it all comes down to personal preference. Choosing a wallet should be based on security, ease of use, and its other features. All of Bitcoin wallets can send and receive funds, so any wallet a user chooses will be a good choice (as long as the other features suit the needs of the user themselves).
As far as sending and receiving Bitcoin, it is (as proven above) extremely easy, which is one of many features Bitcoin has to offer. Hopefully, this guide will show people that they should not be afraid to step into the cryptocurrency world.

 

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How To Identify A True Crypto Currency

What are the main attributes of a cryptocurrency?

With the Financial Crisis in 2008 knocking at the doors of world finance, an anonymous individual known by the name “Satoshi Nakamoto” invented the first cryptocurrency, Bitcoin. With the cryptocurrency came a publication of a white paper titled “Bitcoin: A Peer-to-Peer Electronic Cash System.” Only a few people got interested in this life-changing event initially, but as time passed, more and more people realized how important this invention is. Many people could not even imagine a global decentralized monetary system.

Interest in Bitcoin and other cryptocurrencies skyrocketed in the past few years. However, many investors and supporters do not know what a true cryptocurrency should be, which caused a lot of new so-called cryptocurrencies to immerge. In order to truly believe in the cryptocurrencies and what they represent, it’s important to understand the fundamental aspects of both cryptocurrencies and blockchain technology.
Characteristics of an open blockchain
Andreas M. Antonopoulos, an author, speaker, educator, and one of the world’s Bitcoin and open blockchain experts, said that five characteristics that a truly open blockchain must be: Open, Public, Neutral, Censorship-resistant, Borderless.

A true cryptocurrency does not know about borders and does not discriminate. A transaction is a transaction, no matter who it comes from. It is irreversible and cannot be stopped or changed once the sending is over. It should be neutral, and it should be completely open. Its code should be free to be seen and used by anyone. One beautiful thing about cryptocurrencies is that they are constantly improved by its users, rather than the government or corporations.
Many companies tried to start their blockchain projects and created their cryptocurrencies. However, their systems are closed and governed by the makers rather than the users. These projects should be differentiated and separated from the true cryptocurrency projects which stand on a different side of the field, representing decentralization.
Cryptocurrencies that do not possess these characteristics are either centralized, non-immutable, influenced by a third-party, or a closed system. Therefore, they are not what a true cryptocurrency represents, but just use the hype created around the crypto and blockchain sector to gain fame and quick money.
Characteristics of a cryptocurrency
Besides the five major characteristics that a cryptocurrency must possess, it has to have these characteristics as well to be considered money.

Demand

The value of a cryptocurrency is directly related to its demand. Put simply, the greater the demand, the higher the value. Demand can be based on many traits that a cryptocurrency offers, but it has to also come naturally from real buyer’s interest.

Usability

Each cryptocurrency is made with a purpose. They can act as money or have some other utility. The more usable a cryptocurrency is, the more people will be interested in it. It is one thing to have demand based on profit expectations and a whole another thing to have people buying a cryptocurrency to use it.

Transferability

A cryptocurrency has to be fast and cheap to use, or it will not be accepted by the market. Many cryptocurrencies have built their entire project around them being fast, cheap, and safe. Another thing is also how fast a cryptocurrency can be exchanged for non-cryptocurrency money.

Ease of Acquisition

Cryptocurrencies are mainly acquired by mining, purchases, and through faucets and other reward systems. The easier it is to acquire a cryptocurrency and a lot of it, the less valuable it will be. However, price increases should not be considered a primary objective when investing in crypto, rather their usability and the market gap they are filling.

Community

As cryptocurrencies are open systems that build their value purely around the support of their users, the community behind it can greatly impact its growth. Having a powerful and big community behind the project gives it credibility.

Security

Cryptocurrencies are secured by the cryptography codes. Every owner should have their private key. Another thing to consider when looking for how safe a cryptocurrency is is its mining system. The more people mine it, the harder it is to perform network attacks. That’s why Bitcoin is still the safest cryptocurrency around.

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What Is Blockchain – Common Mistakes Traders Make

What is Blockchain, and how is it different from cryptocurrencies?

As both the concept of blockchain and cryptocurrency are new to the general public, many people started to use it interchangeably. However, using them in this manner is wrong. Part of this confusion can be attributed to how these terms came into use, instead of being introduced by their formal definition and distinguished as different. Let’s delve deeper into how these two terms are different and what they mean exactly.

What is blockchain?
Blockchain (originally blockchain) is a distributed ledger technology. It is basically a list of records called blocks, which are linked using cryptography. Each block has transaction and message information bundled within it. These blocks are then validated and posted on a transaction chain next to the previous blocks in the chain. Blockchain permanently records every single detail, and stores it.
When Bitcoin was the only blockchain as well as the only cryptocurrency, there wasn’t much of a need to make a distinction between the terms. For this reason and for people to understand the concept and what it represented easier, the terms “blockchain” and “cryptocurrency” were used interchangeably. As time passed and the technology matured, the distinction had to be made. The uses of blockchain quickly diverged from the pure money aspect to ideas such as decentralized name registry, delivering messages in a discrete way, etc.

What is cryptocurrency?
Unlike blockchain, cryptocurrency is not a distributed ledger, rather a user of the technology. A Cryptocurrency can be regarded as a tool or resource on a blockchain network. Cryptocurrency is a digital currency created on the basis of cryptography. Describing what blockchain is when Bitcoin is given as an example is easy, but the story takes a shift when Ethereum becomes an example.
Cryptocurrencies are considered a future of the world’s monetary system, while blockchain is the technology that powers it. However, without other features that cryptocurrencies themselves offer, blockchain is nothing more than a ledger.

The difference between cryptocurrency and blockchain.

The differences between cryptocurrencies (Bitcoin will be taken as an example), and blockchain can be shown in this comparison:
Definition – Bitcoin is a cryptocurrency. A bit over a decade has passed after Bitcoin was created, and the world is full of altcoins, all trying to add value to the market by trying to fix a problem in the world.

Blockchain, on the other hand, is a kind of distributed ledger technology which records transactions between efficiently and permanently. Blockchain became known as the technology that enables the existence of cryptocurrency as we know it.
Main aim – Bitcoin’s whitepaper clearly states the intents of Satoshi Nakamoto for this cryptocurrency. It was created so it could speed up the cross-border transactions while reducing the government’s control over the transaction and simplifying the process by removing the third-party intermediaries.
Blockchain is a technology that should be used to provide a cheap, safe, secure, and transparent environment for peer-to-peer transactions. As a distributed ledger, blockchain offers a reliable way to store data as well as to access it.
Use-case – Bitcoin is a cryptocurrency that intends to be used as a medium of exchange, store of value, unit of account, and standard of deferred payment. However, it is not there yet, but it might be in the future. Even so, Bitcoin is a currency and can only be used for transacting itself.

Blockchain has a much wider range of usability as it can be used for transacting information, property titles, stocks, etc. Many industries are exploring blockchain as a valid upgrade to their existing systems.

Why people abuse and overuse the term blockchain
With so many projects looking for a solid marketing strategy, blockchain came at the right time. Many companies have used the word “blockchain” to describe their new business model improvements. This brought them immense popularity on the stock market and in general. However, is this increase in the popularity of these companies justified, or just based on a buzzword?
Blockchain is an amazing concept and an overall improvement in almost every way when compared to what companies work with nowadays. However, it does require a couple of key factors that cryptocurrencies such as Bitcoin offer and add to it.
Bitcoin is trustless, borderless, immutable, decentralized, and transparent. Blockchain and Bitcoin work together to create all of these characteristics. However, they do not work as well without each other. Blockchain would not be trustless or decentralized if it would be used by companies, as they would control it and its transactions. Blockchain turns into nothing but an online ledger. It does not get supported by all of the aforementioned characteristics.

Conclusion

Both Bitcoin and Blockchain can be considered revolutionary and a step ahead in the development of society as a whole. These two innovations cannot be used interchangeably, but they should surely work together to bring their best to the game.

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Understanding Bitcoin, The People’s Currency

What is Bitcoin, and where did it come from?

Finance is an industry that constantly changes and evolves. It all started with trading food for livestock and livestock for other resources such as wood. However, it quickly evolved to using precious metals, such as silver and gold, for everyday transactions. After that, came the credit cards and e-banking. Finally, we came to the most recent stage, the last step in the evolution of the financial industry.

A new form of currency has been brought to the world, and it turned the world of finance upside-down. It was developed by an unknown person or a group of people and maintained by a collective group of the brightest minds in IT and finance. It’s a new form of money which is completely digital, fully autonomous, and not controlled by any government or central bank. The whole “monetary policy” of this new money is governed by the peer-to-peer network, which means that the market and its users decide how much it is worth. There is no money printing, diluting, or other form of government and central bank interference. This new money is called “Bitcoin.”


What is Bitcoin exactly?

Bitcoin is a decentralized currency that “lives” outside of the traditional financial system. As mentioned before, its network is fully peer-to-peer, which means that there are no intermediaries or centralized control. Many people see Bitcoin as the first truly “free” money as it is not controlled by centralized institutions.
Bitcoin, however, is not alone. It has sparked the growth of an entire industry, the industry of cryptocurrencies. Many of these cryptocurrencies started by leaving (forking from) the Bitcoin protocol, but some have created their own platforms.

Who made Bitcoin?

Bitcoin was created by a person or group of people, which, to this day, remained anonymous. All the public knows is the name “Satoshi Nakamoto” that stands behind making Bitcoin.
So who is Satoshi really? Is he even real? Despite various investigations happening, trying to unmask the mysterious veil of “Satoshi Nakamoto,” there is still no conclusive evidence of who they are. However, many people do not care who he is, as the reality is: It doesn’t matter. The mystery surrounding Satoshi Nakamoto is completely fitting, as their main goal was to achieve privacy for Bitcoin as well as its users. Bitcoin was made to work in an open-source manner, which makes the source code entirely available for anyone to see or use. There are no secrets or influences from its maker. Many people have worked on the Bitcoin project since its inception.

Many people also tried to claim Satoshi’s name, but have failed to prove it beyond any doubt. While we may never know who created Bitcoin, we surely do know that the technology he started made waves in the financial industry. It’s also worth mentioning that Satoshi did not invent Bitcoin all by himself. His creation was built on the foundation of many top scientists’, engineers’ and mathematicians’ work. Satoshi was, however, the first one that managed to put the breakthroughs in cryptography and economics theory together into one plan.
Who controls Bitcoin?


The main goal of Bitcoin is decentralization and autonomy. Bitcoin will remain to exist even if its makers and current developers never touched its code again. One of the main Bitcoin’s attributes is its independence from world governments, banks, and corporations. No authority can interfere with the Bitcoin protocol and its transactions. This means that there are no additional transaction fees or taking people’s money away. Bitcoin is also incredibly transparent, as every single transaction is being stored in a massive distributed public ledger called the Blockchain.
To sum it all up, Bitcoin is not being controlled as a network and gives its users complete control over their finances.

How does it work?

A user has a digital wallet where all their Bitcoins are stored. This wallet, besides showing the funds stored on it, shows all the transactions that happened that included this particular wallet. Users can send and receive Bitcoin to and from one-another fast and safe, all thanks to Bitcoin’s infrastructure. The Bitcoin network uses Blockchain, which is nothing but a public ledger. This ledger contains every transaction ever processed on the network and is completely transparent. New transactions are combined into “blocks” and processed that way.
If someone tries to change any part of the block, it will also affect all of the following blocks. However, that cannot happen due to it being a public ledger, as the attempt of changing a block can easily be spotted, and then corrected by anyone.

As every transaction requires to be validated by its users, the verification process may take a few minutes to be completed. The Bitcoin protocol is designed so that each block takes around 10 minutes to validate (mine).
Characteristics of Bitcoin
Here is the list of the most important characteristics of Bitcoin. Bitcoin is:
Decentralized
The main vision of Satoshi Nakamoto’s when creating Bitcoin was the network’s independence from any governing authorities. Even if a part of the network goes down, Bitcoin will still be alive.
Anonymous and transparent at the same time
Bitcoin gives the ability not to link the wallet to a person’s identity. This is especially important in the times when banks know every single detail about their clients.
However, the anonymity of Bitcoin only goes as far as not linking a wallet to a person. Every single transaction that ever happened is stored in the Blockchain and can be viewed by anybody at any time.

Fast

The Bitcoin network processes payments almost instantaneously as opposed to bank transfers, which may take a considerable amount of time to complete.

Non-repudiable

Once Bitcoins are sent to another wallet, there is no way of forcing them back. This characteristic of Bitcoin ensures that the parties to a transaction cannot deny that a transaction occurred and makes sure that no one gets scammed in the process of transacting with anonymous accounts.