BLOCKCHAIN: The Complete Guide For Beginners (Bitcoin, Cryptocurrency, Ethereum, Smart Contracts, Mining And All That You Want To Know About Blockchain Technology) by Michael Horsley

Author:Michael Horsley
Language: eng
Format: azw3, epub
Published: 2017-09-05T07:00:00+00:00

Cryptocurrencies sound the same as tokens. How are they different?

As explained above, tokens act as stocks or shares in projects funded by project contributors. Cryptocurrencies, on the other hand, have dual functions: they can act as assets just like stocks, and they can also be used as a store for value, much like gold and silver. They can also be traded by users just like ordinary for goods and services. In fact, it was the possibility of having cryptocurrencies function as a medium of exchange that initially generated the most interest and investment to this new market, but it was also this feature that created obstacles to the cryptocurrency world from world banks and governments who did not want to see their stranglehold on world currencies and financial power reduced by decentralized and authority-free cryptocurrency solutions.

When talking about cryptocurrencies, the two heavyweights are bitcoin and ethereum. The difference between the two is that bitcoin is pretty much just a currency, and it acts as a store of value and can be traded for goods and services.

Ethereum, on the other hand, although it is also an open-source, public, blockchain-based distributed computing platform, it features smart contract functionality, as explained above. It provides the Ethereum Virtual Machine (EVM), which can execute commands using a network of public nodes. Ethereum also provides a cryptocurrency called ether which can be transferred between accounts and used to compensate participating nodes for computations that they perform. Ether is currently the second-most valuable cryptocurrency in terms of market cap, and it supports hundreds of projects that run on the ether blockchain. Many of these projects were described in the section above on disruptive blockchain projects reimagining countless industries today.

Another popular cryptocurrency is litecoin, which is a peer-to-peer cryptocurrency in which the creation and transfer of coins are based on an open-source cryptographic protocol and is not managed by any central authority, true to the central theme behind blockchain in general. While technically nearly identical to bitcoin, litecoin allows for more transactions to be processed by the network per unit time, reducing bottlenecks that are common with bitcoin. Litecoin also has almost zero payment cost and facilitates payments approximately four times faster than bitcoin.

There are many different examples of smaller currencies on the market. Bitcoin and litecoin are definitely the most well-known and popular ones, and with ethereum they carry the majority of the value of cryptocurrencies, but the many crypts described throughout this book all have distinct features and advantages, so they are each worth looking into individually.

One thing to know about cryptocurrencies is where they are stored, since there is no central authority that oversees the transfer, trade, exchange, or storage of cryptocurrencies. As such, investors who purchase coins in the market or invest in an ICO are expected to store their coins in an online or offline wallet.

A cryptocurrency wallet is a secure digital wallet that is used to store, send, and receive digital currencies such as bitcoin or ether. Most run on an officially recommended wallet or a few compatible recommended third party wallets.

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