Mar 28, 2018
Lets talk about tokens and coins! In this episode you will hear about different coins and tokens, we will explain what they are and how are they used.
Bitcoin is the world’s first cryptocurrency, described on 2008 by an unknown person or a group called Satoshi Nakamoto.
The purpose of Bitcoin is to become an alternative to traditional payment solutions, offering worldwide payments incredibly fast and cheap, without having a central authority, like the bank, controlling the transactions. Instead it is controlled by computers around the world who validate all of the transactions in a P2P (Peer to Peer) fashion.
A lot of people have heard about Bitcoin, but have never heard about other cryptocurrencies. Many people treat Bitcoin and cryptocurrency as synonyms.
There’s a finite number of Bitcoins – 21,000,000BTC. They are being mined and it’s calculated that the last Bitcoin will be mined on 2140.
The first real world Bitcoin transaction happened on May 2010, when Laszlo Hanyecz bought 2 pizzas for 10,000BTC.
Bitcoin’s team has developed a concept called Lightning Network that will hopefully solve the scalability problems as well as high fees and slow speeds;
While the information about the users is kept secret, the history of Bitcoin transactions is completely transparent, and everyone can see the amounts sent.
Bitcoin mining uses enough energy annually to power almost 4,000,000 average US households.
Ethereum is one of the top cryptocurrencies, proposed by Vitalik Buterin on 2013, as a next step in cryptocurrencies and blockchain. Ethereum is a blockchain-based, open-source smart contract platform. While the early cryptocurrencies, like Bitcoin, had only one functionality, P2P payments, Ethereum allows users to create smart contracts, issue their own tokens and run decentralized apps (DApps), making it possible to do a lot more things on the blockchain than before. Ethereum’s open-source nature means that anyone can take the source code and build off of it.
Smart contracts are basically programs that run on the blockchain and they make it possible for people to issue their own cryptocurrencies, launch ICOs (initial coin offerings), create apps that run on the blockchain and even automated companies, capable of functioning without human intervention. Interesting facts:
Ripple is the world’s first enterprise blockchain solution for global payments. It connects banks, payment providers, digital asset exchanges and corporates through its network to provide frictionless global payments.
Instead payments going through multiple banks when making an international payment (which could take days to finally be confirmed and are quite expensive), the transaction will go through the Ripple network. This means that all transactions take place directly between the sender’s and recipient’s banks, making the process a lot cheaper and faster.
One thing to note is that Ripple can mean three separate things. There’s the Ripple platform for payments, then there’s Ripple, the company that manages the Ripple platform, and finally there’s Ripple [XRP], the native currency of the Ripple network. That’s a lot to digest!
Ripple doesn’t use Proof-of-Work to validate transactions. Running a Ripple node for validating transactions is not open to everybody like it is with most cryptocurrencies. Ripple chooses the nodes they trust to process these transactions. This means it’s not truly decentralized like all of the other cryptocurrencies, but on the other hand, it makes the transactions a lot faster.
Bitcoin Cash is a Bitcoin hard-fork that happened on the 1st of August, 2017. The fork was initiated because of the scalability issues of the classic Bitcoin. Bitcoin Cash changed the size of the blocks from 1MB to 8MB, making it possible to process roughly around 60 transactions per second, compared to the 7 transactions per second of the classic Bitcoin, including the SegWit update. It also has lower transaction fees, compared to Bitcoin.
In addition, Bitcoin Cash didn’t integrate the Segregated Witnesses (SegWit) protocol, it has a stronger protection against replay attacks, and the difficulty of the block mining is adjusted faster than with Bitcoin.
One main problem with Bitcoin Cash is that the increased block size makes it difficult for smaller miners (computers) to contribute, because they are not able to process this amount of data. The size of Bitcoin Cash’s block sizes are 8MB compared to Bitcoin’s 1MB and both have 10 minute block times, so every 10 minutes there is eight times more information saved on Bitcoin Cash’s blockchain, making it faster than the traditional Bitcoin blockchain. This could mean over 1GB of new data every day.
Bitcoin Cash is the first successful Bitcoin hard-fork.
Bitcoin Cash’s transactions are currently 100x’s cheaper than Bitcoin transactions.
Cardano is considered a 3rd generation cryptocurrency, led by one of the founders of Ethereum, Charles Hoskinson. Cardano is a smart contract platform like Ethereum, but takes the idea to a new level by trying to solve issues with scalability, interoperability and sustainability of current cryptocurrencies. It is labelled as the first blockchain project that is based on scientific philosophy and built on academic research that has gone through detailed academic review and analysis.
Cardano is building its platform with both end-users and regulators in mind, by trying to find the middle ground between regulations, privacy and decentralization. The platform uniquely uses Haskel programming language that offers high degree of fault tolerance, which ensures that the code stays relevant and usable in the future.
Cardano is built on two layers – one is for registering the movement of ADA and the other one is for running smart contracts, which means more flexibility and security. Cardano is using their own Proof-of-Stake algorithm called Ouroboros, which will make transactions a lot faster as well as eliminating the need of storing the whole blockchain on every node. Ouroboros instead generates leader nodes who push the transactions.
Whitepaper: As Litecoin started off as a clone of Bitcoin, they haven’t written a whitepaper
Litecoin is a cryptocurrency that like Bitcoin, offering peer-to-peer, near-instant, and almost zero cost payments to anyone in the world. Created by Charlie Lee who has worked for Google and Coinbase, Litecoin is an open source global payment network that is fully decentralized without any central authority. The network is secured by cryptography and empowers individuals to control their own finances.
Litecoin was inspired by Bitcoin and in technical details is nearly identical to the ‘King of Cryptocurrencies’. The main differences between Litecoin and Bitcoin are in the confirmation time and the consensus algorithm used.
Historically, the average confirmation time for a Bitcoin transaction has been around 10 minutes, while Litecoin boasts an average confirmation time of 2.5 minutes.
While Bitcoin uses the longstanding SHA-256 consensus algorithm, Litecoin uses a relatively new algorithm called Scrypt. The main difference in these algorithms is in the mining of coins. Bitcoin miners can use dedicated and efficient mining machines called ASICs, while Litecoin can’t be mined with ASICs, encouraging mining with traditional CPUs and GPUs, making mining more accessible.
Litecoin is called the silver to Bitcoin’s gold.
At the end of 2017 Charlie Lee sold all of his LTC, as he was often accused of using his strong influence on social media to manipulate the price of LTC for his own benefit.
Litecoin is able to handle higher transaction volume. The network is thus planned to produce 84 million Litecoins, which are four times as many currency units as Bitcoin.
Like Bitcoin, Litecoin has also integrated the SegWit protocol, mainly because it allows Lightning Network (LN) to be built on top of it.
In February 2018, Litecoin had a hard-fork and Litecoin Cash was created. Litecoin Cash moved from Scrypt algorithm back to SHA-256 algorithm, and the founders expect to become faster than the original Litecoin in the future.
Listen to this episode to find out more!