Cryptocurrencies, also referred to as virtual and digital currencies or altcoins, are the latest big thing in the world of finance. Like regular paper money, they can be used as a mean of exchange. However, unlike their paper counterparts, cryptocurrencies are decentralized. In other words, they are not regulated by a central body such as a central bank or government agency.
To be more precise, a cryptocurrency is a medium of exchange, created and stored electronically in the so-called blockchain (more about this later), using encryption techniques to control the creation of monetary units and to verify the transfer of funds. The first and most famous example of a cryptocurrency was Bitcoin.
Cryptocurrencies are regulated by the principle of cryptography, which is used to both create the currency and to ensure the security of transactions carried out in the that currency.
Despite a number of earlier attempts to create digital currencies, the first successful candidate was Bitcoin, late in 2008. With its decentralized control and user anonymity, it became the first publicly available digital currency to be used as a means of exchange. The goal of Bitcoin’s inventor was to create what had—until that time—eluded fellow hopefuls: a Electronic Peer-to-Peer Cash System.
The person, or possibly persons, responsible for Bitcoin go by the name of Satoshi Nakamoto—a pseudonym designed to maintain his, her or their anonymity. Since the invention of Bitcoin, the true identity and whereabouts of the so-called Satoshi is still shrouded in mystery.
The way a cryptocurrency is brought into existence is interesting. Unlike gold or silver, which is mined from the ground, a cryptocurrency is a series of entries in a ledger—a virtual ledger that is distributed and stored on various computers around the globe. These ledger entries have to be mined using mathematical algorithms. Individual users or groups of users then run computational analysis to pinpoint particular series of data, called blocks, which make up the blockchain we mentioned above.
Every transaction ever carried out across the peer-to-peer network is recorded in the blockchain. This is the major innovation that allows users to transfer assets without the interference of a centralized third party. The blockchain technology underlying Bitcoin and other cryptocurrencies has the potential to turn complicated global transactions into something simple and straightforward.
From a business perspective, the technology is a type of business process improvement software—a form of collaborative technology that promises the ability to improve business processes and transactions between two entities and radically lower the need for trust.
By late 2010, Bitcoin had been joined by dozens of other cryptocurrencies. These newcomers were referred to as Altcoins (Alternatives to Bitcoin). Altcoins are a fascinating facets of the cryptocurrency world. The term Altcoin encompasses every cryptocurrency apart from Bitcoin. The name was coined, so to speak, in the hope that one or more of these currencies would become a viable alternative to bitcoin, or even replace it altogether.
As it turns out, most altcoins are little more than bitcoin clones, differing only slightly in certain characteristics, such as transactions speeds, hashing algorithms and methods of distribution. Most of them—bar a hardy few—do not survive very long. Here’s the current crop of the top altcoin contenders:
Today, everyone is talking about cryptocurrency—it’s taking the financial world by storm, relegating paper money to the back pages. Cryptocurrency grabs the headlines daily as it surpasses major world currencies in value. It is now widely accepted across the globe as a means of payment and exchange.
Although there have been various highs and lows, as of today’s date, 1BTC is worth around $10,000.
One thing that makes cryptocurrency so strong and appealing is its decentralized nature, giving power to the people rather than to governments and diabolical oligarchs. Since the inception of its circulation is controlled by no one, it poses a very real threat to governments, globalists, and the world banking system.
The future of money is here today, although a lot is yet to unfold. That said, Bitcoin and Altcoin certainly appear to be here to stay. Already used for online purchases and exchanged for paper money, and with cryptocurrency ATMs available too, this digital dosh has already been adopted by the big ecommerce players and many Fortune 400 companies as well.
There are several important things you need to know about cryptocurrency, but there are a lot you don’t really need to bother about to start with. Take cryptocurrency mining for example. The world of mining is complicated to say the least, and only expert programmers have a full grasp of how this works. As a newbie, following the cryptocurrency market trend and learning how to read and interpret the charts is the first thing you need to do. It’s important that you carry out thorough research if you want to have first-hand information about high-performing coins and market metrics.
Market capitalization or market cap is a term that crops up a lot with cryptocurrencies. It denotes the dollar market value of any cryptocurrency as well as the total number of currency units in circulation.
Although cryptocurrencies, especially Bitcoin, are now widely accepted as a means of exchange, their legal status varies from country to country, and in many it is still in a state of flux. While some, like Russia, have explicitly allowed their use and trade, others such as China, have banned them or restricted their use.
It is worth noting that cryptocurrency is volatile, although the volatility index is low. So as much as you will enjoy cryptocurrencies breaking new value records, there will be some days that aren’t so good. However, the potential profit is well worth the trade and investment. Volatility in cryptocurrency is different from that in traditional currencies, where financial crashes can take years to recover from. In cryptoland, this kind of volatility is just part of the game. And the market will bounce back, as it always does.
What are Cryptocurrencies?
How Bitcoin (and other cryptocurrencies) actually work?
Bitcoin is the original cryptocurrency and the one that started it all, it was created and released in 2009 by Satoshi Nakamoto, an anonymous figure. Bitcoin has the biggest market cap to date, overshadowing all other cryptocurrencies in this list, combined.
For most people, an introduction into cryptocurrencies is an introduction to Bitcoin. Other cryptocurrencies are referred to as altcoins – alternatives to bitcoin. It has the widest acceptance of all cryptocurrencies and it is the easiest to get.
Bitcoin has not just been a trendsetter, ushering in a wave of cryptocurrencies built on decentralized peer-to-peer network, it’s become the de facto standard for cryptocurrencies.
Launched in 2015, Ethereum is a decentralized software platform that enables Smart Contracts and Distributed Applications to be built and run without any downtime, fraud, control or interference from a third party.
The applications on Ethereum are run on its platform-specific cryptographic token which is used to codify, decentralize, secure and trade just about anything.”
Following the attack on the DAO in 2016, Ethereum was split into Ethereum (ETH) and Ethereum Classic (ETC).
Ethereum (ETH) has a market capitalization of $4.46 billion, second after Bitcoin among all cryptocurrencies.
Litecoin, launched in the year 2011, is among the top 10 cryptocurrencies and it was often referred to as ‘silver to Bitcoin’s gold.’
It was created by Charlie Lee, a MIT graduate and former Google engineer. This altcoin is based on an open source global payment network that is not controlled by any central authority and uses “scrypt” as a proof of work, which can be decoded with the help of CPUs of consumer grade.
Although Litecoin is like Bitcoin in many ways, it has a faster block generation rate and hence offers a faster transaction confirmation.
Other than developers, there are a growing number of merchants who accept Litecoin.
Ethereum Classic is one of two separate versions of Ethereum’s Blockchain, the other being Ethereum itself.
The split occurred after The DAO, a decentralized autonomous organization based on Ethereum, got hacked in June 2016, and $50 million worth of its funds were stolen.
Because The DAO was crowdfunded, this event has resulted in a large number of people losing their stakes.
After several weeks of heated debate, the community has decided to conduct a “hard fork” of Ethereum’s Blockchain in order to “code” the stolen money back to its owners.
The hardfork resulted in two versions existing simultaneously: Ethereum, which is the new one, and the old one, which was renamed Ethereum Classic.
Dash (originally known as Darkcoin) is a more secretive version of Bitcoin.
Dash offers more anonymity as it works on a decentralized mastercode network that makes transactions almost untraceably.
Launched in January 2014, Dash experienced an increasing fan following in a short span of time. This cryptocurrency was created and developed by Evan Duffield and can be mined using a CPU or GPU.
In March 2015, Darkcoin was rebranded to Dash, which stands for Digital Cash and operates under the ticker – DASH.
Ripple is a real-time global settlement network that offers instant, certain and low-cost international payments.
Ripple “enables banks to settle cross-border payments in real time, with end-to-end transparency, and at lower costs.” Released in 2012, Ripple currency has a market capitalization of $1.26 billion. Ripple’s consensus ledger — its method of conformation — doesn’t need mining, a feature that deviates from bitcoin and altcoins.
Since Ripple’s structure doesn’t require mining, it reduces the usage of computing power, and minimizes network latency.
Bitcoin Cash (BCH)
Bitcoin Cash [BCH] is the first hard-forked cryptocurrency of Bitcoin, and you can also say it is the brother coin of Bitcoin.
Launched on 1st August 2017, this currency was born as a result of a civil war among the Bitcoin community.
The reason of the conflict was the proposition of two solutions for the common problem of improving the efficiency of Bitcoin network. Bitcoin cash has a total supply of 21 milion, same as bitcoin.
It should be noted that everyone who had bitcoins on 1st August, now also has the same amount of bitcoin cash and that is a pretty handsome treasure seeing the current price and expecting its growth in near future.
In a month of its birth, the value of 1 BCH rose near to 1k USD.
Monero is a secure, private and untraceable currency.
This open source cryptocurrency was launched in April 2014 and soon spiked great interest among the cryptography community and enthusiasts.
The development of this cryptocurrency is completely donation-based and community-driven.
Monero has been launched with a strong focus on decentralization and scalability, and enables complete privacy by using a special technique called ‘ring signatures.’
With this technique, there appears a group of cryptographic signatures including at least one real participant – but since they all appear valid, the real one cannot be isolated.