“Blockchain” and “cryptocurrency” are among some of the most-searched terms in Google recently thanks to news about BitCoin’s price surging. Most people don’t have a clue about what these terms are (hence the searches) but they do know that cryptocurrencies are a form of investment like forex. Unfortunately, while the principle is similar because cryptocurrencies are a traded form of currency, the way BitCoin works is completely different to any kind of currency pair that you can find.
To help you out, we’re going to talk about blockchains and cryptocurrencies to help you achieve a better understanding of what it’s all about.
Defining Blockchains and Cryptocurrencies
Let’s start with the basics and explain what these two terms mean.
- Blockchains are essentially digital edgers where transactions in cryptocurrencies are recorded. It’s a form of technology that enables cryptocurrencies to exist in the first place. Think of it as a gigantic database where every single transaction is kept in chronological order. You don’t need to understand how it works if you’re interested in BitCoin or another cryptocurrency, but it’s nice to get a general overview of what it implies.
- Cryptocurrencies are digital currencies that utilize encryption techniques to safely regulate their value and also validate transfers. These cryptocurrencies are independent of banks and they’re generated digitally. Two good examples of popular cryptocurrencies are BitCoin and Ethereum. There are many different advantages to both the currencies and their values fluctuate drastically over the years. Ethereum, for instance, was worth $10 per unit in 2017. Currently, they are quoted at around $800. Ripple is another popular cryptocurrency that has recently grown in popularity.
Now that you have a basic understanding of blockchains and cryptocurrencies, let’s see what the fuss is all about and why it’s making waves in the news.
Advantages of Cryptocurrencies
So why use cryptocurrencies over regular currency? Here are just a couple of the most popular advantages:
- Lower transaction fees. Unlike other currencies, there are lower fees involved when making payments with cryptocurrencies.
- Immediate transactions. Transactions are immediately resolved when using cryptocurrencies unless a third-party is involved.
- No risk of fraud. Cryptocurrencies are completely digital and, unlike paper money, cannot be counterfeited.
- No risk of identity theft. Since your personal information isn’t handed out when making payments with cryptocurrencies (unlike credit and debit cards) you’re not at risk of identity theft.
- Decentralized currencies. Cryptocurrencies are decentralized which means that there isn’t a single source or authority that governs it.
- Universal use. Virtually every country can adopt cryptocurrencies because they are not bound by various rates like exchange rates. They can be universally used as long as a cash system supports it.
Industries That Use Cryptocurrencies
As you might expect, cryptocurrencies are slowly becoming more mainstream and being used in all kinds of different industries. One of the first industries to adopt the use of cryptocurrency is the technology industry. Early uses of cryptocurrencies involved being able to purchase goods on the internet or trade digital items and pay for services. There are now many uses for cryptocurrency on the web, such as being able to make donations with it or accept crowdfunding payment.
Nowadays, the use of cryptocurrency is widespread and marketers are all over it, using social media, blogs, lead generation pages to spread the word. So which industries are using it right now? Some car dealerships offer vehicles for BitCoins and there are even some realtors that accept BitCoin payments. With the use of BitCoin expanding so rapidly, don’t be surprised to see your local coffee shop offering goods for cryptocurrency in a few years or even months.
Here’s some information on two of the most popular cryptocurrencies: Bitcoin and Etherum and why you should take notice of Ripple…
Bitcoin is the world’s first and top cryptocurrency that had gained popularity and a huge increase in value. It was created in 2009 by a person under the alias Satoshi Nakamoto. Its main feature is that transactions can be made without the middle man – meaning that no banks are involved!
You can use Bitcoin to book hotels, pay for Xbox games, and buy furniture. But most of its hype has recently come from people trading it. As of now, its price is $8207.77 whose price used to be past the $10,000 mark in 2017.
Another reason why Bitcoin is amazing is because it can be mined. A person (company or group) can mine Bitcoin through record-keeping and advanced math. This is how it works, when someone sends Bitcoin to someone else, the network records it and then records the other transactions and places them on a “block.”
Miners use powerful hardware and specialized software to convert the blocks into code sequences known as “hash.” Once a new has is made, the miners who found it are awarded in Bitcoin. As of now, miners can obtain 12.5 Bitcoins which worth around $225,000 at this time.
Bitcoin is ranked first because it started new concepts such as “decentralization” and “peer to peer trading.” We would see other cryptocurrencies, such as Ethereum use this concept to help users make apps and trade their currencies at a rate that’s faster than Bitcoin.
Speaking of Ethereum…
Ranked second on our list is Ethereum. Like Bitcoin, Ethereum is running on a public blockchain network. While Bitcoin and Ethereum are completely different in technology, their largest distinction is their difference in capability and purpose.
Ethereum’s blockchain is used to run program code for any decentralized application. Instead of miners obtaining Bitcoin, they receive Ether, the main currency that fuels the network.
Ethereum also has smart contracts, which acts like a self-ran computer program that automatically execute once specific guidelines are met. Since they are running on the blockchain, the code can run without downtime, third party interference, and without censorship.
What makes Ethereum a top cryptocurrency is its ability to let startups create decentralized apps. They can receive funding from other Ether owners to help power their app without the long process of seeking a venture capitalist to invest in them. Ethereum is now priced at $857.70, which we can only expect it to grow due to the development apps on its platform.
Ripple is the third top cryptocurrency on our list. Like other cryptos, Ripple has a distributed ledger network that allows users to help each other validate transactions. This makes it more efficient and faster than traditional centralized authorities.
What stands Ripple apart is its transaction speed. On average, Bitcoin takes about 10 minutes to complete a transaction. Ripple can accomplish this task in under 60 seconds. This makes Ripple more appealing to a mass market, who needs a faster network to help them pay for goods.
Ripple is currently developed by Ripple Labs. As of now, they have of 100 billion XRP available, as its unable to be mined. Ripple’s current price is now $.73, making it the cheapest option on this list.
While other cryptos are used for separating financial transactions from centralized banking, Ripple seems to do the opposite.
To conclude, we believe that each of these cryptocurrencies provides a lot of value into today’s current market. Not only are they bringing in new financial options for users, but their combined technology helps make transactions safer and faster. Ultimately, it will be interesting to see how these cryptocurrencies will act as blockchain technology continues to evolve.
Disclaimer: This post was made to educate users on cryptocurrency. Don’t take it as investment advice.