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- Blockchain also has potential applications far beyond bitcoin and cryptocurrency.
- Bitcoin vs. Bitcoin Cash: What Is the Difference?
- Compare Cryptocurrencies | Bitcoin vs Other Cryptos
Bitcoin created a lot of buzz on the Internet. It was ridiculed, it was attacked, and eventually it was accepted and became a part of our lives. However, Bitcoin is not alone. At this moment, there are over AltCoin implementations, which use similar principles and various cryptocurrency algorithms. Fulfilling the first two requirements from our list, removing a central authority for information exchange over the Internet, is already possible. What you need is a peer-to-peer P2P network.
Information sharing in P2P networks is similar to information sharing among friends and family. If you share information with at least one member of the network, eventually this information will reach every other member of the network. The only difference is that in digital networks this information will not be altered in any way.
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You have probably heard of BitTorrent, one of the most popular P2P file sharing content delivery systems. Another popular application for P2P sharing is Skype, as well as other chat systems. To understand digital identities, we need to understand how cryptographic hashing works. Hashing is the process of mapping digital data of any arbitrary size to data of a fixed size.
In simpler words, hashing is a process of taking some information that is readable and making something that makes no sense at all. You can compare hashing to getting answers from politicians. Information you provide to them is clear and understandable, while the output they provide looks like random stream of words. If you take a look at the simple statistics, we will have a limited but huge number of possible HASH values, simply because our HASH length is limited.
If you think Hamlet is just a name or a word, please stop reading now, or read about the Infinite Monkey Theorem.
Blockchain also has potential applications far beyond bitcoin and cryptocurrency.
When signing a paper, all you need to do is append your signature to the text of a document. A digital signature is similar: you just need to append your personal data to the document you are signing. If you understand that the hashing algorithm adheres to the rule where even the smallest change in input data must produce significant difference in output , then it is obvious that the HASH value created for the original document will be different from the HASH value created for the document with the appended signature.
A combination of the original document and the HASH value produced for the document with your personal data appended is a digitally signed document. And this is how we get to your virtual identity , which is defined as the data you appended to the document before you created that HASH value.
Bitcoin vs. Bitcoin Cash: What Is the Difference?
Next, you need to make sure that your signature cannot be copied, and no one can execute any transaction on your behalf. The best way to make sure that your signature is secured, is to keep it yourself, and provide a different method for someone else to validate the signed document. Again, we can fall back on technology and algorithms that are readily available. What we need to use is public-key cryptography also known as asymmetric cryptography. To make this work, you need to create a private key and a public key. These two keys will be in some kind of mathematical correlation and will depend on each other.
The algorithm that you will use to make these keys will assure that each private key will have a different public key. As their names suggest, a private key is information that you will keep just for yourself, while a public key is information that you will share. If you use your private key your identity and original document as input values for the signing algorithm to create a HASH value, assuming you kept your key secret, you can be sure that no one else can produce the same HASH value for that document. If anyone needs to validate your signature, he or she will use the original document, the HASH value you produced, and your public key as inputs for the signature verifying algorithm to verify that these values match.
Assuming that you have implemented P2P communication, mechanisms for creating digital identities private and public keys , and provided ways for users to sign documents using their private keys, you are ready to start sending information to your peers. Since we do not have a central authority that will validate how much money you have, the system will have to ask you about it every time, and then check if you lied or not.
Compare Cryptocurrencies | Bitcoin vs Other Cryptos
So, your transaction record might contain the following information:. The only thing left to do is digitally sign the transaction record with your private key and transmit the transaction record to your peers in the network. And lagging transaction times present huge obstacles to scaling. This limitation is why Bitcoin Cash was developed with a significantly bigger block. Bitcoin Cash has an 8MB block.
That offramp then goes to an express lane that only carries high-capacity vehicles. This allows many more transactions per second to be processed on Bitcoin Cash than on Bitcoin itself. Right now, all three of these types of Bitcoin currencies are being traded on lots of exchanges , with Bitcoin being the most popular and available in most places.
This has caused the main version of Bitcoin production to land more and more in the hands of the elite.
Bitcoin Gold is meant to put mining back into the hands of regular people. Instead of needing specialized equipment, Bitcoin Gold is meant to be mined by regular computers. This allows anyone with a regular computer to mine Bitcoin Gold, much like Bitcoin was in the beginning. They are related, but not the same. You can also have investments across all three. All three types of Bitcoin come from the same basic programming. You can own one, two, or all three types. However, they trade at very different prices. All three of these cryptocurrencies are available on various exchanges.
And you can buy them in nearly any currency from throughout the world. This includes the U. Coinbase is one of the more popular exchanges. You can buy Bitcoin and Bitcoin Cash at Coinbase.
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In order to buy Bitcoin Gold you need to go to a different exchange— Bitfinex is one of the many that buy and sell Bitcoin Gold. Like most other stock trading applications, you do pay a fee for every transaction that you make on these platforms. The table below shows how the cryptocurrencies IG offers compare. Cryptocurrencies are virtual currencies which operate independently of banks and governments but can still be exchanged — or speculated on — just like any physical currency.
Launched in , bitcoin was the first decentralised cryptocurrency. Since then, thousands more cryptocurrencies, known as altcoins, have launched. While bitcoin remains the market leader, cryptocurrencies including bitcoin cash , bitcoin gold, ether , litecoin , ripple, EOS , stellar XLM and NEO could challenge in the future because of rising demand, expanded applications, and technological advances. The original, and for now the biggest by market capitalisation. It was launched in by Satoshi Nakamoto, a pseudonym for the mysterious person or group who created it, to secure payments across a peer-to-peer network.
It aims to eliminate the need for a trusted third party, democratise money and ensure that transactions are anonymous. Biggest pro : best known cryptocurrency Biggest con : slow transaction speeds, requires specialist mining equipment. Biggest pro : faster transaction times than bitcoin Biggest con : requires specialist mining equipment. Ripple is a cryptocurrency that underpins a payment network called RippleNet — used by major banks and financial institutions including Santander and American Express.
Ripple operates in a very different way to other digital currencies, which has led some to question its credentials as a true decentralised cryptocurrency. Biggest pro : lightning fast transaction speeds Biggest con : RippleNet can be used without its underlying cryptocurrency, ripple. Stellar is a payment network that operates in a similar way to RippleNet and can process transactions in multiple currencies.
Lumens can be used for payments on the network but also play an anti-spam role, as each transaction requires a small transaction fee, which is paid for in the cryptocurrency. Biggest pro : integrates with banks, used to process transactions in multiple currencies Biggest con : cryptocurrency not as widely recognised as some other. Small amounts of ether are destroyed as transactions are processed, preventing hackers from spamming the network.