The Crypto Digest – Volume 1<I need a better title.
Hey Readers! At the time of this writing, this is my first article! Hopefully this will get somewhere and help you guys out :)
This one is mostly for those who don't know exactly what they're dealing with. For all you vets, let me know if i missed anything. I’ll be making a new article giving an update on crypto every once in a while depending on how it goes. (P.S- I don’t have a better idea for a Title. If someone else is using this title, please let me know. Otherwise, Any suggestions work!)
So here’s the lowdown!
With the end of 2017 having given Rise to Bitcoin and bringing Cryptocurrency back into the spotlight, signups on Cryptocurrency exchanges have hit 100,000 in one day, everyone seems to be lured to this new digital technology with the siren call of money.
Before we get into the Lambos and Ferraris to discuss the huge profits that can be made from these currencies – let’s first lay down some groundwork.
“Ferraris? Lambos!? What exactly is Cryptocurrency?”, Just keep reading.
“Cryptocurrency”: is a digital asset where all transactions are recorded on its digital ledger called a ‘blockchain’ where every process is secured by cryptography. This blockchain also controls the creation of additional units of currency, as well as the verification of transactions- again, every process is secured by cryptography.
- Cryptocurrencies are classified under digital currencies, as well as alternative currencies and virtual currencies.
This means that a cryptocurrency is almost like a debit card, or using PayPal. Except, the currency is not fiat. The major difference between cryptocurrencies and fiat currencies is that instead of banks and governments being in control of the currency, an algorithm (the blockchain) does it all. In addition to that, some cryptocurrencies are ‘decentralized’ Which means that it is not backed by a central government, thus it is controlled by users and the algorithm (the blockchain).
“But what is this ‘blockchain’ thingy?”, You ask.
Let’s get to that.
“Blockchain”: is the continually growing list of records (transactions), called ‘blocks’. These blocks are linked and secured by using cryptography. Each block will usually contain a link to the previous block, a timestamp, and transaction data. This data contains the amount, but the sender of the transaction is encrypted. Multiple transactions are added to the blockchain at once, this makes ‘blocks’ of transactions. Each of these blocks is sequentially added to the chain. This is what gives blockchain its name as it is a ‘chain’ of ‘blocks’ (transactions).
Blockchains are secure by design due to the fact that they are a form of ‘decentralized computing’. When transactions are made, the requested transactions are broadcasted to users in a peer-to-peer network consisting of computers- these computers are called nodes. The network of users then validates the transactions using known algorithms. The users who do the validating are called ‘Miners’ –this will be discussed in a separate article-. The algorithms used by miners rely on consensus – If the majority of users trying to validate the transaction submit the same data, then it confirms the transactions and adds the block to the chain.
This system is what prevents people from using the same ‘coin’ in 2 different transactions (this would be called forgery). Since blockchain is decentralized, no one person has the authority to validate their transaction as the algorithms require a consensus from the majority of users. The larger the network, the more secure it can be.
To summarize, blockchain is the digital ledger of economic transactions which serves as the basis of cryptocurrencies. The use of blockchain not only helps make cryptocurrencies more secure, but it also removes the need for third parties in the exchange, like banks. Think about that for a second.
But! This is the beauty of cryptocurrencies. The rise of Bitcoin and its friends has not only shown the value of Cryptocurrencies, but it has shown the true potential of the breakthrough that is blockchain. The use of blockchain completely disrupts the current system used in the financial world. And that’s just the start... blockchain could be used for much more than storing and validating financial transactions. The security of blockchain means that it could be used to record just about everything of value. Think big – medical records, and just about any other data.
Tada! You now understand Cryptocurrencies. This brings us to now, well not quite. Rewind a bit to 2017- China has banned ICOs and Bitcoin trading, Charlie Lee (the founder of Litecoin) sold all his Litecoin, Ethereum got ahead of itself, FUD took hold and Boom! Bitcoin had its worst crash so far, losing about a quarter of its value in just a few days and subsequently, many other cryptos crashed as well. End of the year, And the cryptos recover- Ripple* surged to the moon and other cryptos have started to follow.
Now you’re mostly updated- With the cryptos having recovered from their previous crash, we have entered another ‘cycle’ of the crypto exchange. Congratulations, we have entered 2018!
Now, some of you might think it’s a bit late to hop on this train… but you’ve never been more wrong. With the current evolution of the blockchain system -advances in security, transaction speeds, and much more- Bitcoin has become Archaic. The market is diversifying, and investors are looking for the new Bitcoin. This is where ‘Altcoins’, possible alternatives to Bitcoin, come in.
While no current altcoin is close to the blockchain network of Bitcoin, investors are flocking to exchanges like Binance and Coinbase to look for their new digital gold.
I will eventually put up my analysis of some of the altcoins I have seen that look promising, if you guys have any requests please do let me know!
Great promise for cryptocurrency this year holds, yound Padawans.. (imagine a pic of Yoda)