Bitcoin is an exchangeable digital currency that uses blockchain to validate and verify transactions. It provides users with immutability – transactions cannot be reversed, and all exchanges of Bitcoin are recorded on a decentralized ledger.
Bitcoin is the first version of a new category of digital money called cryptocurrency.
Bitcoin is decentralized which means that no central authority controls it. This means that bitcoin is not able to be printed by a central bank. In recent years central banks and governments have been printing money globally, which has destabilized fiat currencies and led to hyper inflation in some extreme cases. This is not an issue with Bitcoin as the maximum circulating supply is 21 million.
Bitcoin’s purpose is to be a secure currency independent of governments, that is easily transferable with low fees.
The pros of bitcoin compared to US dollars are that is more secure, easier to send internationally, cheaper to send in certain instances, and independent of government policy. The cons of bitcoin is that it is currently more volatile than the dollar (but not all government currencies!) and is not accepted in as many places as the dollar.
No, the blockchain technology that supports the bitcoin network has never been hacked. However, bitcoin storages, exchanges, or banks, have been hacked. Most notoriously, Mt. Gox was an exchange that got hacked and bitcoins that were on that exchange were lost. The takeaway from Mt. Gox is to be careful where you store your bitcoin and digital currencies. Similarly, you have to be careful with your US dollars. You should always be careful where you store your dollars and who you share your bank account information with, as there have been incidences where dollars have also been stolen or lost.
In short, it is a new way of book keeping. Blocks are packets of information that show transaction history (who was participating in the transaction, for how much it was, and when it occurred). This transaction history cannot be changed. The records get linked together and form an unchangeable ledger (a chain of transactions). This ledger is distributed onto many different computers in the network called nodes. These computers collectively validate the transactions to update the ledger. This means that no one person controls the ledger, so no fraud or manipulation can take place by one entity. The ledger is public and fully available for anyone to see.
Blockchain revolutionizes the way that value is transferred. If I want to send money to a friend in a different country without blockchain, I would send money to a trusted third party (paypal, moneygram, etc.) That third party then would locate my friend’s account and deposit the money into their account. However, the third party would take a substantial fee for this service. Also, this process takes quite a bit of time. Enter blockchain. For the first time ever, we do not need a trusted third party. I can send value to my friend directly cheaper and quicker than before. Now take that example about my friend and I and apply it to how value is transferred between institutions and between everyone in the world.
Cryptocurrency is a combination of two words: cryptography, which means that art of writing or solving codes, and currency, which means a system of money. A cryptocurrency is a digital currency that uses cryptography to verify transactions. Bitcoin was the first cryptocurrency but over 1000 exist today. Traditionally, cryptocurrencies do not require a central authority to operate, have a software encoded system that defines when new units can be created or destroyed, and allows exclusive ownership to be transferred.
Cryptocurrencies have attracted a lot of people’s attention because they are math-based currencies that are governed by software algorithms and not central third parties, such as governments. Instead of relying on a government that may be affected by external factors to control the supply of a currency, the supply of cryptocurrency is controlled by its unchangeable software code. For example, nobody has to worry that the supply of Bitcoins will inflate out of control, because they know that Bitcoin’s code limits its total circulation to 21 million Bitcoins.
Mining is the process that allows Bitcoin to reach distributed consensus. In layman’s terms, there is an executable code (value), that when executed (hashed), produces a string of text. The miners know what string of text they are looking for, but they need to guess the executable code. Once somebody finds out the code that creates that proper string of text, everybody can test that code and see that it works. Once there is a consensus, that code is added to the blockchain, a block reward is awarded to the user who found the code, and the cycle repeats itself.
An altcoin, which is short for alternative coin, is any cryptocurrency other than bitcoin. Bitcoin’s dominance in the cryptocurrency industry started to decline in March 2017, and since then it has become increasingly important to be attuned with other coins in the market. Blockwolf’s mission is to help you stay as informed as possible about different alt coins so that you can make an educated decision about investing in cryptocurrency.
The safest way to store a crypto currency is on a hard wallet, which is similar to a USB flash drive. The Nano Ledger S and the Trezor wallet are the two most popular versions of hard wallets. There are other more common options that are not as secure, like storing them on a wallet on the internet (a soft wallet), or on a trusted exchange
Simply put, Ethereum offers blockchain as a service, and Ether is required to use that blockchain.
More specifically, Ethereum is a network that uses Ether as a digital currency that is used for operating smart contracts. A smart contract is computer code that can facilitate the exchange of money, content, property, or anything of value. A smart contract executes automatically when certain conditions are met.
Because smart contracts run on the blockchain, they run exactly as programmed without any possibility of censorship, downtime, fraud, or third party interference.
Additionally, Ethereum’s Virtual Machine enables developers to use Ethereum’s existing blockchain technology to host their own decentralized applications, instead of creating a whole new blockchain. Decentralized applications (Dapps) that are built on the Ethereum platform use Ether to pay for transaction fees and services . As of January 2018, 93 of the top 100 Dapps use the Ethereum network.
Similar to Bitcoin, Bitcoin Cash is a digital currency that uses cryptography to secure and validate its network. Bitcoin Cash is a fork of Bitcoin, which means that Bitcoin Cash split from Bitcoin’s existing code to create its own cryptocurrency with some different protocols.
The most notable change with Bitcoin Cash was that it increased block sizes from 1MB to 8MB. This means that Bitcoin Cash can fit more transactions inside each block in its blockchain. Consequently, this should mean that Bitcoin Cash should be able to process about 8 times more transactions per second than Bitcoin.