A cryptocurrency is a virtual currency that relies on a combination of the decentralized public ledger for transactions, cryptographic peer-to-peer transactions, and anonymous user ID. Cryptocurrencies are being called the currencies of the future due to their ultra-fast transactions, little or no transaction fees, secure network and a distributed ledger called blockchain.
A fiat currency is a paper-based physical currency issued by the central bank of a country or a group of countries. Dollar, Euro, Pound, Rupee, etc, all are fiat currencies. Their liquidity is maintained by the central bank and all the transactions taking place through banks are strictly monitored by the governments and financial departments. The data is also stored centrally and is susceptible to cyber attacks.
A blockchain is a public ledger of transactions and all necessary information that is constantly being updated and maintained in a decentralized network. The blockchain technology allows code to be executed exactly as programmed without any possibility of downtime, censorship, fraud or third-party interference. Think of blockchains like a chain of information that can never be corrupted once it is written down and the only way a new piece is added by universal consensus and repeated confirmations. The blockchain is the future of not only money transactions but the enforcement of contracts, organizational management and even the internet itself. Each cryptocurrency uses its own brand of blockchain technology to record transactions and keep them safe. Some systems like Ethereum and Stratis are offering something different. They have customizable blockchains that the users can use to their advantage and deploy their own apps on it.
Bitcoin is a cryptocurrency that uses blockchain to record its transactions. The system is based on a decentralized consensus network that enables a new payment system and completely digital money. It is the first decentralized peer-to-peer payment network that is operated and maintained by its users with no central authority or middlemen involved.
From a user perspective, Bitcoin is pretty much like cash on the Internet. People can buy and sell goods using Bitcoin as a currency as more than 100,000 stores, outlets and other e-commerce units are now accepting Bitcoin as payment. Since it is a peer-to-peer currency, Bitcoin can be used to avoid the government’s overreach and control. This is why governments are trying very hard to keep the Bitcoin in check by mandating Bitcoin exchanges to register with the government and hand over user data when necessary.
Bitcoin can also be seen as the most prominent triple entry bookkeeping system in existence.
A Bitcoin wallet is a software tool through which you can trade in cryptocurrencies as well as convert them into fiat currencies or vice versa.
Now using Bitcoin and other altcoins can become really easy with the help of a wallet. All you need to do is download an app on your phone or a windows platform version from the coin creator’s official website. Then you login to your account and upload basic mandatory details and your card number which you can use to buy Bitcoin. When you sell Bitcoin, you can accumulate fiat currencies like USD in your account and then cash out when you want. Coinbase, Bitfinex, Bitrex Jaxx wallet, etc is just a few wallets that are extremely easy and useful. A Bitcoin wallet removes several time-taking steps from using Bitcoins. These wallets can be successfully used to make purchases online from a variety of stores.
Bitcoin is the first implementation of a concept called "cryptocurrency", which was first described in 1998 by Wei Dai on the cypherpunks mailing list, suggesting the idea of a new form of money that uses cryptography to control its creation and transactions, rather than a central authority. The first Bitcoin specification and proof of concept were published in 2009 in a cryptography mailing list by Satoshi Nakamoto. Satoshi Nakamoto is often seen by many people as a group of individuals and not just one person. He laid out the blockchain and the plan for it to expand and how to mine on it. Since then, the price of Bitcoin has increased more than 8000 times due to the stellar corruption-free system developed. Satoshi left the project in late 2010 without revealing much about himself. The community has since grown exponentially with many developers working on Bitcoin. However, he has retained Bitcoin worth hundreds of millions of dollars now in the very start when they were just peanuts’ worth. Following this cue, many new coin creators set some coins aside for themselves and their further plans.
Mining is the process through which more Bitcoins can be earned into existence as an incentive for maintaining the system and using resources to process transactions and secure the overall network and help with the synchronization. It can be perceived as working in a Bitcoin data center except that it has been designed to be fully decentralized with miners operating in all countries and no individual having control over the network. The mining process is designed to get more competitive as more people get into it. This helps secure the network even better and allows the blockchain to progress at a steady rate.
Anybody can become a Bitcoin miner by running Bitcoin mining software and Bitcoin mining modules with specialized Bitcoin mining hardware. Mining software listens for transaction broadcasts through the peer-to-peer network and performs appropriate tasks to process and confirm these transactions. Bitcoin miners perform this work because they can earn transaction fees paid by users for faster transaction processing, and newly created Bitcoins issued into existence according to a fixed formula. Bitcoin mining is a resource extensive process. It means that it requires considerable hardware and the right approach to mine more Bitcoins these days as the mining community is so big and competitive. Other cryptocurrencies may not be based on a resource-extensive mining process and instead are based on a kind of guessing game. Both of these methods are secure in their own way but resource extensive method at least guarantees success while the non-resource extensive process does not.
Proof of Work (POW) and Proof of Stake (POS) are two different approaches to mining in a cryptocurrency system. Bitcoin is based on POW while a few other cryptocurrencies are based on the POW option. Both are fundamentally different from each other. POW is a resource-extensive mining system. It requires actual resources being put to use to create virtual currency. For example for a new transaction to be confirmed and recorded in the blockchain, electricity worth quite a few dollars may be needed according to the 2015 data. It may have increased multiple times in recent years alone as it requires more computing power as more number of miners gets into the process. This resource extensive approach has several advantages and several flaws. The major advantage is that the double spending concern is totally avoided due to the nature of the system. The downside is that actual physical resource is being wasted to create a cryptocurrency that should ideally not be resource extensive at all. The POS is a different system altogether, instead of relying on complex mathematical and cryptographic problems to solve, the POS instead relies on a transactional-centered guessing game in which the miners are awarded in a deterministic way, depending on the stake of the transaction itself. There is no block reward for the miners here and instead, they take the transaction fees. This is the reason why miners are also called forgers on a POS option.
A Cryptocurrency is a digital currency that is created through mathematical engineering (algorithm). It is designed to be open, anonymous, secure, fast and bypasses traditional financial structures. Cryptocurrency is a digital currency, based on cryptography and created through a process called 'mining'. Just like the serial number on a paper bill, each digital coin is unique. Bitcoin enables rapid payments (and micropayments) at very low cost, and avoids the need for central authorities and issuers. Unlike money issued by governments, there is a finite number of cryptocurrency, ensuring they cannot be affected by inflation and are impossible to counterfeit. Because cryptocurrencies are not tied to any particular country or central bank, the value of the coin depends on factors such as usability, demand, and supply. When joining Xepay, users become part of a global network of millions of Cryptocurrency miners, who are able to choose among different ways to use their cryptocurrency. You can mine the coin and benefit from its value. You will also be able to make payments and transfer money to and from any part of the world. cryptocurrency's blockchain sets a new industry standard by storing KYC information. It runs every minute and is tailored to meet both customer and merchant needs. With its finite number of 120 billion coins, Cryptocurrency is one of the biggest reserve currencies worldwide. A Cryptocurrency is a digital currency that is created through mathematical engineering (algorithm). Following the popularity of Bitcoin, the world has seen the advent of several cryptocurrencies. The number of merchants who accept cryptocurrencies has steadily increased, and savvy investors have been surfing the digital currency wave. Crypotcurrencies have continued to gain widespread acceptance among consumers across the globe especially in the Asian countries of China, Japan, Philippines, Singapore, Malaysia, and South Korea. It was created for the purpose of making global transactions that are private, secure & anonymous. It is not made or controlled by any central institution, thus making it immune to governmental interference and manipulation. Bitcoin is the world's first digital decentralized currency and payment network. Mining is an essential part of the Bitcoin ecosystem. Mining is the activity that supports the development of Bitcoin and other crypto-currencies. Earnings from mining schemes depend on a lot of factors like the current level of mining competition and the Bitcoin price. Mining is an important and integral part of Bitcoin that ensures fairness while keeping the Bitcoin network stable, safe and secure. Bitcoin miners help keep the Bitcoin network secure by approving transactions. Mining is the process of using hardware power to mine cryptocurrency such as Bitcoin remotely. Mining gives people a unique opportunity to begin mining cryptocurrency without the need for a large initial investment in hardware or technical knowledge.
A Bitcoin cash is a cryptocurrency, is a fork of Bitcoin Classic that was created in August 2017. Bitcoin Cash increases the size of blocks, thereby allowing more transactions to be processed.
A Bitcoin fork is when a part of the blockchain until a certain time breaks away from the system and starts its own currency. It is basically just like a copy paste of the original Bitcoin at a moment of change. The separated currency is a way to introduce an alternative to the original currency in the market and hope people get interested in it. A Bitcoin fork happened three weeks ago when the Bitcoin cash (BCC) was created. It happened when the original Bitcoin was updating to a new system called the segregated witness. Bitcoin cash creators saw this as an opportunity to create an alternative currency and they did that with Bitcoin cash. A hard fork is not a guarantee that people will buy into the new coin because nobody likes duplicates. But, in case of Bitcoin cash, it seems to have worked since they are fundamentally the same thing while Bitcoin cash is much more so because it has the original system of the Bitcoin while the Bitcoin itself has migrated to an updated version. So, this might be the only case of a hard fork being successful. Another reason of Bitcoin cash being successful is the low liquidity of the Bitcoin. Two-thirds of all Bitcoin has already been created and the rest one-third would mean that no more coins will be created by the Bitcoin network. This raises the price of Bitcoin artificially. So, Bitcoin cash might be a way to save Bitcoin from itself!
A Peer-to-Peer, or P2P, network is a decentralized platform wherein the individuals directly interact with each other without an intermediary i.e. no third party involvement. e.g. Bank.
Legal tender is any official medium of payment recognized by a particular government (national currency) to meet financial obligations. Legal tender can only be issued by the nationally-recognized agency that is authorized to do so. e.g. U.S. Treasury (USA); The Royal Canadian Mint (Canada).