What are cryptocurrencies, what are the types and is it worth investing?
Digging and blockchain litecoin
The total LTC supply is 84 million. At present, new coins created after excavating the block are released into circulation in the amount of 25 pieces. Based on the Scrypt litecoin algorithm in the first phase of existence, it was perfectly suitable for mining for people who did not have specialized equipment. The very process of mining LTC cryptocurrency was also not dominated by large mines. The situation changed when Innosilicon produced the first excavator operating on dedicated ASIC components. Antminer L3 / L3 + devices from Bitmain are currently the most popular excavators used to mine litecoin. The average time between mining blocks is 2.5 minutes. Litecoin blockchain has good scalability. The network can handle a large number of transactions without having to modify the software in the near future.
A cryptocurrency (or crypto currency) is a digital asset designed to work as a medium of exchange that uses strong cryptography to secure financial transactions, control the creation of additional units, and verify the transfer of assets. Cryptocurrencies use decentralized control as opposed to centralized digital currency and central banking systems.
Bitcoin, first released as open-source software in 2009, is generally considered the first decentralized cryptocurrency. Since the release of bitcoin, over 4,000 altcoins (alternative variants of bitcoin, or other cryptocurrencies) have been created.
In 1983, the American cryptographer David Chaum conceived an anonymous cryptographic electronic money called ecash. Later, in 1995, he implemented it through Digicash, an early form of cryptographic electronic payments which required user software in order to withdraw notes from a bank and designate specific encrypted keys before it can be sent to a recipient. This allowed the digital currency to be untraceable by the issuing bank, the government, or any third party.
In 1996, the NSA published a paper entitled How to Make a Mint: the Cryptography of Anonymous Electronic Cash, describing a Cryptocurrency system first publishing it in a MIT mailing list and later in 1997, in The American Law Review (Vol. 46, Issue 4).
In 1998, Wei Dai published a description of "b-money", characterized as an anonymous, distributed electronic cash system. Shortly thereafter, Nick Szabo described bit gold. Like bitcoin and other cryptocurrencies that would follow it, bit gold (not to be confused with the later gold-based exchange, BitGold) was described as an electronic currency system which required users to complete a proof of work function with solutions being cryptographically put together and published. A currency system based on a reusable proof of work was later created by Hal Finney who followed the work of Dai and Szabo.
The first decentralized cryptocurrency, bitcoin, was created in 2009 by pseudonymous developer Satoshi Nakamoto. It used SHA-256, a cryptographic hash function, as its proof-of-work scheme. In April 2011, Namecoin was created as an attempt at forming a decentralized DNS, which would make internet censorship very difficult. Soon after, in October 2011, Litecoin was released. It was the first successful cryptocurrency to use scrypt as its hash function instead of SHA-256. Another notable cryptocurrency, Peercoin was the first to use a proof-of-work/proof-of-stake hybrid.
On 6 August 2014, the UK announced its Treasury had been commissioned to do a study of cryptocurrencies, and what role, if any, they can play in the UK economy. The study was also to report on whether regulation should be considered.
Cryptocurrencies - definition
Cryptocurrency, in other words cryptographic currency, is an innovative, distributed accounting system that stores information about the state of ownership in contractual units.
Cryptocurrencies are a type of digital money based on an algorithm. Cryptocurrencies operate autonomously, except for traditional banking and government systems.
More clearly, one of the main features of cryptocurrency is that it works like a virtual currency. The cryptocurrency holder stores it on his computer or in a smartphone application in the so-called wallet that only he has access to. If he wants to make a transaction, it is done electronically, directly between him and the contractor. Each cryptocurrency unit has a unique code that contains information to prevent copying or re-spending.
The key to the cryptocurrency concept is also that there is no regulator in trading. Therefore, there is no "Central Bank for Cryptocurrency" which may decide, for example, to increase the supply of cryptocurrency and thereby decrease its value. The creator decides how much cryptocurrency will be in circulation at the system creation stage. Its value is in the hands of the free market.
Trading in cryptocurrencies takes place electronically, without the participation of any banking system directly between users of cryptographic currency, i.e. in peer to peer technology. This means that the transaction is not supervised in any way. So there is no entity that will inform the tax authorities if we want to sell a large number of cryptocurrency units, as is the case with banking transactions for an amount exceeding the equivalent of € 15,000. No one can "block" our account.
Given the above, it turns out that the cryptocurrency mission boils down to one word, which is "freedom". Cryptocurrencies are electronic currencies completely free from the control of politicians, national or international financial institutions, whose turnover is not controlled in any way, but is subject only to a strong system of automated electronic security.
Where do cryptocurrencies come from?
The beginnings of theoretical considerations on "Unlinkable divisible digital cash without third party" date back to 2007. At the heart of the monetary system without a central bank and without a management system was the question: "How to allow everyone to produce cash so that others do not feel discriminated / omitted?" - in other words, how to do it fair to others?
It was considered that the performance of some work would entitle its contractor to receive BTC. (Proof-of-work)
Computer and mathematics came to the rescue. After all, computers have a large proportion of society today. Free soft allows you to connect your own computer to the Bitcoin transfer network. Yes - Bitcoins don't exist without the internet. When the last computer is turned off, all BTC extracted so far will disappear from the network.
Well, good - today, however, it is easier to imagine the end of the world than the end of the Internet, so BTC has a future ahead. After installing the software (easy), the computer becomes part of the system and theoretically can generate Bitcoins for us, which will become our property.
Sounds good? Sure, it's just easier to win the lottery today than to generate your own Bitcoins. Why - because there are millions of volunteers ... The secret is in what the bitcoin network really does.
Each computer has access to all transactions on the network. The latest transactions can be verified in a block and "sealed", this block of data will then be publicly available as evidence of concluded transactions. The block closing / verification process is, however, a competition (on the scale of the whole bitcoin network) in which the winner wins the prize. With a huge scale of the network, the chance of hitting is virtually zero. For real extraction, currently organized groups use huge computer farms, the profitability of such projects is non-zero, but very low. Such groups were called mines.
On the other hand, it seems sensible that the owners of computers that maintain the network should have something of it - so they have ... a theoretical chance of reward at BTC. From an economic point of view, their work does not make much sense. The funds invested by them could give greater profit used in other ways. That is why malicious say that Bitcoins arise from senseless work.
As you can see - there are no individual "diggers". The graph shows the shares in global extraction.
It's much easier to mine than buying BTC. I will not advertise exchanges but there are several, although the physical location of such exchanges does not matter because the Bitcoin transfer has no territorial / state restrictions.
Mining cryptocurrencies involves approving new blocks and attaching them to an existing chain (blockchain). Calling this activity digging was adopted because of the analogy to digging gold. The block is a place where new transactions are recorded and where new coins are issued (if provided for in the protocol).
I mentioned Bitcoin, probably because it is the most popular cryptocurrency, but in the following review, I will discuss some cryptocurrencies selected.
How to invest in Bitcoin?
Investing in Bitcoin involves having this cryptocurrency, but investing in this cryptocurrency is not just having it. I mean, having Bitcoin is not the end of the investment.
There are several ways to invest in Bitcoin and other cryptocurrencies. Bitcoin currently has mainly an investment and speculative function.
Bitcoin is used to carry out financial transactions to a very limited extent and is even less used as payment.
Due to the fact that BTC is basically used only for investment and speculation, Bitcoin is characterized by high price volatility, which brings new groups of speculators to this market.
Before I get to the issues related to investing in Bitcoin, we cannot ignore the issue of Bitcoin price formation and other cryptocurrencies.
Along with the growing interest in the cryptocurrency market, the price of these instruments increases, which in turn drives more groups of people interested in trading on cryptocurrencies.
The interest in Bitcoin and other cryptocurrencies at the end of 2017 was so great that it was not uncommon to wait several weeks or even months for verification of accounts on cryptocurrency exchanges.
The Bitcoin volatility cycle is often a strong recovery followed by an economic recession. As a rule, the price increases rapidly and practically constantly until negative information appears or there are no more buyers.
Then the owners of Bitcoin or other cryptocurrencies decide to leave the market and due to its limited liquidity they have to lower their selling prices more and more, which often leads to several dozen percent decreases.
Then comes the wave of apathy, which in the case of the cryptocurrency market can last up to several dozen months. Over the past years, there have been market adjustments.
Corrections from a few, several or several dozen months before now look miserable compared to the current price volatility. However, it is worth remembering that at that time these decreases also reached several dozen percent. It cannot be ruled out that the current correction will look like similar movements in 2015, 2016 or 2017 in the future.
One of the biggest advantages of investing in digital currencies is undoubtedly the possibility of trading 24/7, which allows you to monitor the market at any time convenient for us. Bitcoin is ideal for speculation and investment because of its huge popularity.
There are mainly 3 investment possibilities in Bitcoin. The first of them, still the most popular and oldest is to buy Bitcoin on the cryptocurrency market. In this case, you can only profit from cryptocurrency increases and we become owners of Bitcoin or other cryptocurrencies by buying it, through which we can use its properties. Bitcoin's properties include payment function or transport function, i.e. the ability to make transactions between entities. Often, this feature applies to international transactions. Of course, purchased Bitcoins can be sent to your cryptocurrency wallet.
In the case of investments through the cryptocurrency exchange, it is worth using the services of proven and the largest companies, as well as domestic companies due to the relatively greater investment security.
Investing through contracts
Along with the development and interest in the cryptocurrency market, there have been contracts for the difference to cryptocurrencies, i.e. popular CFDs. In addition, the largest financial institutions in the world, such as CME and CBOE, have begun to offer Bitcoin futures. Nevertheless, the most interesting for an individual investor is investing in contracts for difference. In this case, the potential profit is calculated as the difference between the contract conclusion price and the exit price from the contract. Certainly the big advantage of investing in contracts is the ability to take a position on the decline by selling the contract. At the same time, a great opportunity and a threat is the possibility of investment with financial leverage. Leverage for Bitcoin contracts is often several times smaller than for other financial instruments, which is associated with very high volatility in this market. Using contracts including cranes can give us several times more profit than when investing in Bitcoin on the stock exchange, but at the same time creates the risk of proportional decreases.
Investing using binary options
In the cryptocurrency market, we are also investing in Bitcoin using binary options. This is betting on the course direction in a given time unit with a fixed payout function. This form of investment, however, is the least popular, although on the other hand it is definitely the simplest.
Advice for increasing investment effectiveness
Digital currency investors should follow legal changes, political and economic events, and technological developments around the world - they have a great impact on Bitcoin's value.
The most profitable investments are those that are well matched to our level of knowledge or experience. It is worth mentioning that quick-tempered people who are not risk coping should avoid CFDs or binary options trading.
It's best to spend some time understanding exactly what Bitcoin is and its specifics. Greater knowledge will always be useful to us.
Appropriate Bitcoin security should be a priority for us. It's best to keep our coins on a paper or physical wallet.
It is worth remembering that digital currencies attract a lot of amateurs tempted by the desire for quick profit. They trade emotionally which affects Bitcoin's overvaluation and undervaluation.
Never invest all funds that you can't afford to lose and diversify your money so that any loss is always as painless as possible.
Ripple exchange rate
Ripple is considered a new start up from San Francisco. The designed payment system is similar to blockchain. The payment protocol is almost identical, it is compatible with other cryptocurrencies and paper currencies as well as the commodity market. Ripple allows clients to integrate the protocol on their own system. The National Bank of Abu Dhabi began using this technology for some transactions. It allows its clients to transfer funds in real time.
Cryptocurrency ripple uses a similar blockchain as Bitcoin, except that the cryptocurrency has a different name. When it comes to market capitalization, XRP Ripple is the third largest cryptocurrency after Bitcoin and Ethereum.
The Ripple shortcut is easy to remember: XRP. Ripple can also be linked to other currencies such as USD or EUR. Then we can have Ripple quoted e.g. in USD and it will be XRPUSD (XRP / USD).
We mentioned above the possibility of trading on CFDs based on the cryptocurrency rate. Admiral Markets is currently offering CFD on XRP / USD, which is Ripple quoted in USD. If you have not yet tested trading on Ripple CFD on a demo account, do it now. Registration of the demo account will take you a few minutes! Professional traders before you start trading with a real account recommend checking your skills on a demo account.
As a technology, the Ripple platform can have real value and true history that confirms its claims regarding its effectiveness. However, the XRP token itself appears to have negligible use cases. The fact is that Ripple planned to withdraw it - at least until the interest in 2016 appears in cryptocurrencies. However, as CNBC noted today, if Ripple reaches USD 6.57, its market capitalization will be greater than Bitcoin.
There are 100 billion XRP tokens that have been issued by Ripple. At the moment, the company promises that this is the total number of XRPs that will ever be (though technically, nothing will stop them from issuing more tokens in the future).
Ripple's hub-and-spoke design positions the XRP inside as a replacement tool with any currency or digital resource, such as frequent flyer miles. Ripple can settle a payment in 3.5 seconds via XRP and make it available. The use of XRP is completely independent of Ripple networks in general; that is, banks do not need XRP to transfer money, euros, etc., which many investors may lose by buying a token.
What is the Ripple 2019 value proposition?
The value here is the Ripple network itself and its ability to quickly transfer resources around the world, not to the XRP token.
Banks are able to use Ripple software to transfer money between different currencies. Currently, this is usually done using SWIFT, a system that is cumbersome and based on banks with separate accounts in each country in which it works. Ripple claims to have registered over 100 banks (compared to 11,000 SWIFT financial institutions), including American Express.
A lot of ink has also been used to criticize Ripple. The complaint of Bitcoin and other blockchain enthusiasts is that Ripple's centralized control is directly contrary to the ideals and advantages of decentralized code blocks, such as Bitcoin.
Ripple also maintains a trusted Unique Node List (UNL) to protect against potentially malicious or dangerous validation servers. It is UNL that controls the rules of the network, presenting a puzzle: On the one hand, it protects against problematic verifiers, but in theory a regulatory body or government can enter and force a change that is not necessarily desirable or even invasive. Furthermore, due to FinCEN's breach and fine in 2013, Ripple updated its policies and recognizes and recommends gates that comply with financial regulations.
New York Times reporter Nathaniel Popper commented on Twitter that he has not yet found a bank that significantly predicts the use of the XRP tag. Ripple CEO Brad Garlinghouse has denied Popper's assertion: "In the past few months, I've talked with ACTUAL banks and payment providers. In fact, they plan to use xRapid (our XRP liquidity product) in a serious way. "However, as Popper notes, even the banks he contacted in Ripple's suggestion were not convincing in their plans to implement Ripple in the near future.
According to the Financial Times, of the 18 banks and financial services companies that are publicly affiliated with Ripple, most of them said they had "not yet gone beyond testing," and several of them moved to using Ripple systems. " to carry real money. " However, none of the 16 companies that responded used the XRP token.
What is RippleNet?
RippleNet is a network of institutional payment service providers, such as banks and money service companies, that use solutions developed by Ripple to provide lossless money transfer experience worldwide.
Let's give an example: First, Mr. Jones lives in New York and has a chocolate box he doesn't need. He is very interested in watching a baseball game but he has no ticket. Secondly, Mrs. Smith lives in Los Angeles and has a rare stamp that she would like to give away for a chocolate box. Finally, we have Mr. Brown, who lives in Alaska and is looking for a very rare stamp, and he is a ticket to a New York baseball game.
In our current system, these people will probably never find each other and will stick to their "invaluable" valuables.
But in the Ripple world they could say, "Hey, I have chocolate, I want baseball," and the system will look for the shortest and cheapest combination to make it happen.
Is Ripple a good investment?
Disclaimer: there is no such thing as 100% secure investment, and every decision involves risk. In any case, the decision is yours. Below are some advantages and disadvantages that can help you.
As highlighted above, Ripple is the official organization with the trust of many banks - this is not another Blockchain startup from noname.
No inflation. All tokens are initially mined and already exist.
The more banks use it as a trading platform, the higher the XRP value. If one day all banks decide to start using it as a unified banking currency, instead of processing unnecessary currency exchanges - it will bring a fortune to all early birds that have invested in Ripple.
It is highly centralized. The whole idea of cryptocurrency is to avoid centralized control. Because tokens are already mined, Ripple developers can decide when and how much to spend or not to spend. So it's just like investing in a bank.
In addition to centralization, today it's almost a monopoly because Ripple Labs holds 61 percent of coins.
It's open source - very intelligent, but even though the code is available, there is a good chance that many people will try to hack it. Some of them may even be successful.
How will Ripple use bitcoin users?
In addition to providing Bitcoin with more ways to connect with those who use other forms of currency, Ripple promises accelerated transactions and greater stability. As a distributed network, Ripple does not depend on a single company to manage and secure the transaction database. Therefore, there is no waiting for block confirmations, and transaction confirmations can quickly go through the network.
Another advantage of using peer-to-peer is the lack of a "central target or point of failure in the system," notes Ripple.
Litecoin (LTC) is an open-source cryptocurrency, based on a decentralized blockchain network, ensuring fast transfers with low transaction fees. In its original assumption, Litecoin was to be faster and cheaper to use than its original, which was Bitcoin (BTC). His name also suggested - "lite" means "light". Litecoin is based on modified bitcoin source code, its creator and main developer is Charlie Lee.
LTC is one of the oldest cryptocurrencies and the second altcoin (non-bitcoin cryptocurrency) in history, arising a few months after the cryptocurrency Namecoin (NMC). The first Litecoin block (genesis block) was dug out on October 11, 2011. Litecoin for a long time (until October 2014) was the second-largest cryptocurrency in terms of capitalization, just behind BTC. He was then overtaken by Ripple (XRP) and never returned to second place in the market value ranking.
The development of the project is supervised by the Litecoin Foundation, which is obviously neither the issuer nor the LTC controlling body, because it is decentralized and its emission (more specifically: mining) takes place during the mining process.
Litecoin does not ensure the anonymity of transactions (such as Monero or Zcash), and its blockchain is public and publicly available.
Digging and blockchain litecoin
The total LTC supply is 84 million. At present, new coins created after excavating the block are released into circulation in the amount of 25 pieces. Based on the Scrypt litecoin algorithm in the first phase of existence, it was perfectly suitable for mining for people who did not have specialized equipment. The very process of mining LTC cryptocurrency was also not dominated by large mines. The situation changed when Innosilicon produced the first excavator operating on dedicated ASIC components.
Antminer L3 / L3 + devices from Bitmain are currently the most popular excavators used to mine litecoin. The average time between mining blocks is 2.5 minutes. Litecoin blockchain has good scalability. The network can handle a large number of transactions without having to modify the software in the near future.
Capitalization and market position of litecoin
The value of litecoin has changed over time, however, it has always been at the forefront of cryptocurrencies with the highest market capitalization.
Many experts and litecoin users are wondering if it will repeat the success of its original. In the general opinion, LTC will rather be treated as a bitcoin supplement, facilitating the processing of small transactions, which is in line with the creator's vision. Litecoin has been in the group of the most popular cryptocurrencies since its inception. Despite the rapid development of the industry resulting in the emergence of increasingly modern solutions, its position is still good.
Litecoin as a means of payment
Cryptocurrencies are increasingly appreciated by ordinary network users. They are becoming a good, more and more important alternative to traditional means of payment.
With the growing number of digital currency users, including LTC, more and more stores and service outlets allow their use to make payments. In February 2018, litecoin was recognized as an acceptable payment method by one of Alza's largest online retailers.