Crypto Lessons

TEACH INDIA – FUTURE MONEY

Equip your cryptocurrency knowledge and be the winner in this competitive digital world

Crypto Packages 1 to 8

An Introduction to Cryptocurrency and blockchain

 

1. Blockchain

Blockchain is an especially promising and revolutionary technology because it helps reduce risk, stamps out fraud and brings transparency in a scaleable way for myriad uses.

A blockchain is a time-stamped series of immutable records of data managed by a cluster of computers but not owned by any single entity. Each of these blocks of data (i.e. block) is secured and bound to each other using cryptographic principles (i.e. chain).

Blockchain consists of three important concepts: blocks, nodes and miners.

Blocks

Every chain consists of multiple blocks and each block has three basic elements:

  • The data in the block.
  • A 32-bit whole number called a nonce. The nonce is randomly generated when a block is created, which then generates a block header hash.
  • The hash is a 256-bit number wedded to the nonce. It must start with a huge number of zeroes (i.e., be extremely small).

When the first block of a chain is created, a nonce generates the cryptographic hash. The data in the block is considered signed and forever tied to the nonce and hash unless it is mined.

Miners

Miners create new blocks on the chain through a process called mining.

In a blockchain every block has its own unique nonce and hash, but also references the hash of the previous block in the chain, so mining a block isn’t easy, especially on large chains.

Miners use special software to solve the incredibly complex math problem of finding a nonce that generates an accepted hash. Because the nonce is only 32 bits and the hash is 256, there are roughly four billion possible nonce-hash combinations that must be mined before the right one is found. When that happens miners are said to have found the “golden nonce” and their block is added to the chain.

Making a change to any block earlier in the chain requires re-mining not just the block with the change, but all of the blocks that come after. This is why it’s extremely difficult to manipulate blockchain technology. Think of it is as “safety in math” since finding golden nonces requires an enormous amount of time and computing power.

When a block is successfully mined, the change is accepted by all of the nodes on the network and the miner is rewarded financially.

Nodes

One of the most important concepts in blockchain technology is decentralization. No one computer or organization can own the chain. Instead, it is a distributed ledger via the nodes connected to the chain. Nodes can be any kind of electronic device that maintains copies of the blockchain and keeps the network functioning.

Every node has its own copy of the blockchain and the network must algorithmically approve any newly mined block for the chain to be updated, trusted and verified. Since blockchains are transparent, every action in the ledger can be easily checked and viewed. Each participant is given a unique alphanumeric identification number that shows their transactions.

Combining public information with a system of checks-and-balances helps the blockchain maintain integrity and creates trust among users. Essentially, blockchains can be thought of as the scaleability of trust via technology.

 

2. What is cryptocurrency?

A cryptocurrency is a digital or virtual currency designed to work as a medium of exchange. It uses cryptography to secure and verify transactions as well as to control the creation of new units of a particular cryptocurrency. Essentially, cryptocurrencies are limited entries in a database that no one can change unless specific conditions are fulfilled.

Key Takeaways

  • A cryptocurrency is a new form of digital asset based on a network that is distributed across a large number of computers. This decentralized structure allows them to exist outside the control of governments and central authorities.
  • The word “cryptocurrency” is derived from the encryption techniques which are used to secure the network.
  • Blockchains, which are organizational methods for ensuring the integrity of transactional data, is an essential component of many cryptocurrencies.
  • Many experts believe that blockchain and related technology will disrupt many industries, including finance and law.
  • Cryptocurrencies face criticism for a number of reasons, including their use for illegal activities, exchange rate volatility, and vulnerabilities of the infrastructure underlying them. However, they also have been praised for their portability, divisibility, inflation resistance, and transparency.

Understanding Cryptocurrencies

Cryptocurrencies are systems that allow for the secure payments online which are denominated in terms of virtual “tokens,” which are represented by ledger entries internal to the system. “Crypto” refers to the various encryption algorithms and cryptographic techniques that safeguard these entries, such as elliptical curve encryption, public-private key pairs, and hashing functions.

Different types of Blockchain Technologies, Public, private, Hybrid

What is Bitcoin?

Bitcoin (BTC) is a digital currency, which is used and distributed electronically. Bitcoin is a decentralized peer-to-peer network. No single institution or person controls it. Bitcoins can’t be printed and their amount is very limited – only 21 mln Bitcoins can ever be created.

What is Ethereum?

Ethereum is an open-source, public, blockchain-based distributed computing platform and operating system featuring smart contract (scripting) functionality. It supports a modified version of the Nakamoto consensus via transaction-based state transitions.

Difference between Bitcoin and Ethereum?

Bitcoin is nothing more than a currency, whereas Ethereum is a ledger technology that companies are using to build new programs. Both Bitcoin and Ethereum operate on what is called “blockchain” technology, however Ethereum’s is far more robust.

Ether

Ether is a decentralized digital currency, also known as ETH. In addition to being a tradeable cryptocurrency, ether powers the Ethereum network by paying for transaction fees and computational services. Ether is paving the way for a more intelligent financial platform.

Smart Contracts

A smart contract is a self-executing contract with the terms of the agreement between buyer and seller being directly written into lines of code. The code and the agreements contained therein exist across a distributed, decentralized blockchain network. The code controls the execution, and transactions are trackable and irreversible.

What is Gas in Ethereum?

Gas refers to the fee, or pricing value, required to successfully conduct a transaction or execute a contract on the Ethereum blockchain platform.

Cryptocurrency Wallet

A cryptocurrency wallet is a software program that stores private and public keys and interacts with various blockchain to enable users to send and receive digital currency and monitor their balance. If you want to use Bitcoin or any other cryptocurrency, you will need to have a digital wallet.

Network

A network refers to all the Nodes committed to helping the operation of a blockchain at any given moment in time.

Gas Limit

Gas limit refers to the maximum amount of gas you’re willing to spend on a particular transaction. A higher gas limit means that more computational work must be done to execute the smart contract. A standard ETH transfer requires a gas limit of 21,000 units of gas.

Ticker

Each cryptocurrency has its own ‘ticker’ or abbreviated symbol that is used to identify it when trading on an exchange or viewing a trading chart. Bitcoin has the ticker ‘BTC’, Ethereum has the ticker ‘ETH’, Litecoin’s ticker is ‘LTC’, and so on. You can find out a cryptocurrency’s ticker simply by searching for it on Coinmarketcap.com or any other coin listing website.

Any computer that is connected to a blockchain’s network is referred to as a Node.

Usually, a node consists of a physical network device, but there are some specific cases where virtual nodes are used.

What is a Hash?

A hash is a function that converts an input of letters and numbers into an encrypted output of a fixed length. A hash is created using an algorithm and is essential to blockchain management in cryptocurrency.

Difference between Private and Public Key?

Private Key: A string of numbers and letters that are used to access your wallet. While your wallet is represented by a public key, the private key is the password you should protect (with your life). You need your private key when selling or withdrawing cryptocurrencies as it acts as your digital signature.

Public Key: This is your unique wallet address, which appears as a long string of numbers and letters. It is used to receive cryptocurrencies.

In Public key, two keys are used one key is used for encryption and another key is used for decryption. One key (public key) is used for encrypting the plain text to convert it into ciphertext and another key (private key) is used by the receiver to decrypt the ciphertext to read the message.

 Few Famous Cryptocurrencies

There are over 2,000 cryptocurrencies currently available to traders and investors makes it even harder to know the best ones to bet your money on.

Top 20 cryptocurrencies are as below:

S.No.                      Name

1                              Bitcoin

2                              Ethereum

3                              XRP

4                              Tether

5                              Bitcoin Cash

6                              Bitcoin SV

7                              Litecoin

8                              EOS

9                              Binance Coin

10                            Tezos

11                            Huobi Token

12                            Stellar

13                            Cardano

14                            Monero

15                            NEO

16                            TRON

17                            USD Coin

18                            Ethereum Classic

19                            Dash

20                            IOTA

Importance of the Blockchain and Cryptocurrencies for the future India

Many people indeed have reasons to believe Cryptocurrency will soon become a part of history. Nevertheless, there are abundant pieces of evidence to show it has come to stay.

An increasing number of individuals and organizations accept Cryptocurrency for their daily transactions. Inventors are exploring other hidden potentials of this technology. They may come up with outstanding uses of digital currencies in the future.

If this trend continues, it is safe to admit that Cryptocurrency has come to stay. It is the currency of the future.

1. It is Immutable

Cryptocurrency is created on Blockchain technology, an innovation that is known for its immutability. This implies that Cryptocurrency literally can’t die.

This technology will continue to exist for as long as the computers that are running its nodes are doing their jobs. Only the destruction of electricity and the Internet can kill the Blockchain technology. This is unlikely to happen.

2. An Alternative to Fiat Money

Cryptocurrency also plays the role of fiat currencies such as the British Pounds, the US dollars, Euro, and a host of others.

As a means of exchange, cryptocurrency offers some benefits that are alien to fiat currency. These are low fees, instant money transfer, absence of a third party, and several other benefits.

Payment with Cryptocurrency spares you the stress of making a manual payment that will take days. This is especially challenging when making international payments that may take weeks to confirm.

The several benefits of Cryptocurrency make it a perfect payment alternative to regular currencies. Both the sender and receiver can get their transactions over in a couple of minutes.

3. High Volatility

While some people consider Cryptocurrency’s volatility as a disadvantage, it’s actually one of its advantages. It is a plus for investors who are following the trend in the Cryptocurrency space.

Such investors can invest when digital currencies hit the bottom low. They stand a chance to make a reasonable ROI once the market picks.

4. Growing Investment in Cryptocurrency

Recently, Facebook launched its digital currency, Libra. Before this, several other enterprises that were previously not involved in Cryptocurrency are currently investing in their digital coin.

Notable examples include JP Morgan, Amazon, Walmart, Air Asia, and what have you. These enterprises are creating their cryptocurrency because they are fully aware of its long lifespan.

5. Awesome Innovation Potentials

Are you aware of the potentials hidden in Cryptocurrency? Perhaps you are not. It’s good to note that digital currencies are not used as a means of exchange only. Some of them are built on Blockchain technologies that allowed them to explore. A typical example is Ethereum. It is the brain behind several innovations such as Smart Contracts. This special technology has touched multiple areas of human endeavors. It covers health, insurance, education, politics, and an array of other applications. All thanks to cryptocurrency and Blockchain technology.

6. It Prevents Inflation

One of the several disadvantages of fiat currencies is inflation. From Zimbabwe to Venezuela, the story remains the same. For decades, powerful bodies have failed to find a lasting solution to this problem. The UN, World Bank, and the UN have been unable to solve inflation challenges.

Digital currencies solve this issue.

7. It Eliminates Third-Party

Cryptocurrency also offers transaction freedom by eliminating third-party intervention. Without digital currency, business owners and their customers alike depend on third-parties. It was impossible to conduct international or intercontinental businesses without an intermediary.

Such an arrangement came with tons of challenges. The intermediary’s fee will hike up the cost of a transaction. This will also increase the purchasing cost of the product or service. As a result, the selling price will increase to accommodate the extra cost.

Cryptocurrency, however, eliminates reliance on third parties. Transactions can be done without passing through a medium. The result is cheaper products and items.

8. It Creates Employment Opportunities

Through Cryptocurrency, hundreds of thousands of people are fully engaged. The digital currency boom created the need for developers to create more coins. Several Cryptocurrency exchanges were created to attend to the needs of crypto enthusiasts.

This is aside from the several institutes that provide investment training in digital currency. These are some of the crypto-based employment opportunities people are taking full advantage of.

9. It Makes Online Shopping Safer

Fraud risk is one of the reasons many shoppers limit their online shopping engagements. As hackers target debit/credit cards, people became more conscious of their activities. This hurts both the consumers and e-commerce operators.

Digital currencies are safer. They are not prone to hacking and other illegal activities like their competitors. Once digital currency removes the fear of fraud, shoppers are more willing to make purchases. They are comfortable doing that in the knowledge that their transactions are safe.

10. It is Ideal for Crowdfunding

Through ICOs, cryptocurrency has surpassed every other fundraising means. It is currently the most widely used means by startups for raising capital for projects.

Since its release, Ethereum has helped startups to raise more than $18 million. A 2016 report shows that it reached some $1 billion market cap in that year. Thus, startups are looking for opportunities to raise the needed fun through digital currencies. They are leveraging the ease at which they can use the platform to raise capital. Since it is safer than fiat currencies, they feel comfortable with Cryptocurrency.

Value of Money – How its determined

The value of money is determined by the demand for it, just like the value of goods and services. There are three ways to measure the value of the dollar. The first is how much the dollar will buy in foreign currencies. That’s what the exchange rate measures. Forex traders on the foreign exchange market determine exchange rates. They take into account supply and demand, and then factor in their expectations for the future.

For this reason, the value of money fluctuates throughout the trading day.12 The second method is the value of Treasury notes. They can be converted easily into dollars through the secondary market for Treasurys.3

When the demand for Treasurys is high, the value of the U.S. dollar rises.

The third way is through foreign exchange reserves. That is the amount of dollars held by foreign governments.4 The more they hold, the lower the supply. That makes U.S. money more valuable. If foreign governments were to sell all their dollar and Treasury holdings, the dollar would collapse. U.S. money would be worth a lot less.

No matter how it’s measured, the dollar’s value declined from 2000 to 2011. That was due to a relatively low fed funds rate, a high federal debt, and a slow-growth economy. Since 2011, the U.S. dollar has risen in value despite these factors.5 Why? Most of the economies in the world had even slower growth. That made traders want to invest in the dollar as a safe haven. As a result, the dollar strengthened against the euro.6

How It Affects

The value of money affects you every day at the gas pump and the grocery store. Demand for gas and food is inelastic.7 Producers know you have to buy gas and food every week. It’s not always possible to delay purchases when the price rises. Producers will pass on any of their extra costs. You will buy it at the higher price for a while until you can change your habits.

When the price of gas or food goes up, you are experiencing the reduced value of money.

When the Value of Money Steadily Declines

Inflation is when the value of money steadily declines over time. Once people expect that prices will rise, they are more likely to buy now, before prices go higher. That increases demand, which tells producers they can safely pass on more costs. They drive prices up more, and inflation becomes a self-fulfilling prophecy.

That’s why the Federal Reserve watches inflation like a hawk. It will reduce the money supply or raise interest rates to curb inflation. A healthy economy can sustain a core inflation rate of 2%.8 Core inflation is the price of everything except food and gas prices, which are very volatile. The Consumer Price Index is the most common measure of inflation.9

When It Increases

Federal Reserve Bank of San Francisco.10 That sounds like a great thing, but it is worse for the economy than inflation. Why? Think about what happened to the housing market from 2007 to 2011. That was massive deflation. Prices dropped more than 20%.1112 Many people could not sell their houses for what they owed on their mortgage. Buyers were afraid that the price would drop right after they purchased it. No one knew when prices would turn back up.

True, the value of money increased. You received more house for the dollar in 2011 than in 2006. But families lost homes. Construction workers lost jobs. Builders went bankrupt. That’s what makes deflation so dangerous. It’s a fear-driven downward spiral.

How the Value of Money Has Changed Over Time

In 1913, money was worth a lot more. A dollar then could buy what $26.07 could purchase in 2020. The dollar lost value slowly. By 1920, it could buy what $12.91 could in 2020.

During the Great Depression, money gained in value as a result of deflation. A dollar in 1930 could buy what $15.46 could in 2020. By 1950, money had lost some value. A dollar could buy what $10.71 could buy in 2020.

Money has been losing value ever since. In 1970, it could only buy $6.65 in 2020 terms. By 1990, it was only worth $1.97, also in 2020 terms. In 2000, it was worth $1.50 in 2020 terms.13

The Bottom Line

Because of inflation, your dollar today is worth more than it will be in the future. But the day-to-day value of money fluctuates as well because of the volume of demand for it. Dollar demand is measured by these factors:

  • Exchange rate value.
  • Value of Treasury notes.
  • Amount in foreign exchange reserves.

Although rising prices will lessen the purchasing power of money, generalized decreasing prices or deflation can be bad for the economy.14 Yes, deflation will certainly raise the value of money or its purchasing power. But it’s the fear of rapidly plunging prices that will make people hold on to their money, lessen aggregate demand for goods and services, and cause a serious slowdown in economic activity. This makes monitoring and managing inflation and deflation one of the Federal Reserve’s most important functions.

Evolution of Money: The history of money Barter to Bank Notes

Money is valuable merely because everyone knows everyone else will accept it as a form of payment—so let’s take a look at where it has been, how it evolved and how it is used today.

Briefly, evolution of money was mainly through Barter System, commodity money, metallic money, paper money and bank money.

Barter System

Before formal currency existed, most ancient societies used an exchange and barter system.

Human beings passed through a stage when money was not in use and goods were exchanged directly for one another. Such exchange of goods for goods was called Barter Exchange.

Commodity Money

The inconveniences and drawbacks of barter led to the gradual use of a medium of exchange. If we study history of money we shall find that all sorts of commodities like seashells, pearls, precious stones, tea, tobacco, cow, leather, cloth, salt, wine, etc. have been used as a medium of exchange

It is called Commodity Money.

Metalic Money

Inadequacy of commodity money led to the evolution of metallic money (gold and silver). The problem of uniformity of weight and purity of precious metals led to private and public coinage.

Paper Currency

Metalic money process was finally taken over by the state as one of its essential features and ultimately commodity money gave way to Paper Money which means currency notes. Nowadays, use of paper money has almost become universal along with coins made of copper, bronze or nickel, etc.

However, as humans started to develop more complex societies, they needed a way to keep track of transactions. Furthermore, finding the right craftsperson or farmer willing and able to make a suitable exchange grew increasingly difficult when people started adopting more varied occupations, such as building and serving as professional soldiers.

Evolution of Currencies – Bank Notes to Crypto

Fiat money

  1. Paper Currency (fiat currency)
  2. Checks / Money Orders / COD’s (paper representation of paper currency)
  3. Credit, Debit, PayPal & EBT (digital representation of paper currency)
  4. Cryptocurrency (digital representation of market value)

Over time, Western countries moved away from using banknotes that could be traded in for a specified amount of gold or silver. Instead, governments began to issue fiat currencies. By the 20th century, they had started issuing coins and notes. This form of legal tender did not entitle the bearer to any specific amount of metal; modern coins and notes simply represent a particular value.

In the West, fiat currencies were first used in 18th-century France and in the American colonies. In Great Britain, fiat currency was first used during 1797-1815 so that the government could use gold stored in banks to finance the Napoleonic War. Since then, fiat currencies have resulted in periods of inflation and depression. It is currently used all over the globe.

Modern banknotes

Today’s banknotes include sophisticated mechanisms that make them hard to copy. For example, if you hold a Euro note up to the light, you should see a security thread, a watermark, and a portrait window.

Early banknotes were printed on bark, and later on regular paper. However, many contemporary banknotes are made from cotton paper and weigh approximately 85 grams per square meter. They are usually reinforced with materials, such as polyvinyl alcohol, that give it additional strength.

The introduction of credit and debit cards

Cards have been used as an alternative to cash since 1914 when Western Union offered cards that permitted some customers to defer payments. In 1950, Diners Club charge cards came into effect, with 20,000 individuals using the cards by 1951.

In the same year, the first charge card was introduced to the UK. In 1958, American Express produced a deferred payment card, which was launched in the UK in 1963. The 1960s saw the first modern credit card, and by the 1980s, debit cards and cash machines were becoming increasingly common. By 2001, debit cards were used more frequently than credit cards.

The future of money

Westerners now regard online banking as normal, and it seems inevitable that the trend of digital transactions will continue. It is likely that they will become commonplace around the world.

Cryptocurrency is digital money. That means there’s no physical coin or bill — it’s all online. You can transfer cryptocurrency to someone online without a go-between, like a bank. Bitcoin and Ether are well-known cryptocurrencies, but new cryptocurrencies continue to be created.

List of Countries with National Cryptocurrencies

  1. Dubai (UAE)

Dubai launched the world’s first state-backed cryptocurrency in 2017 known as Emcash. Emcash tokens run on their own native blockchain and can be used for various government and non-government services, such as daily coffee, children’s school fee, utility charges, and money transfers.

With this step, Dubai is all set to become the world’s first blockchain-powered government by 2020.

  1. Venezuela
  • Cryptocurrency Name: Petro

Venezuela is the second country to launch its own national cryptocurrency named Petro. Petro was launched in February 2018 after its announcement in December 2017. It is claimed to be backed by the country’s oil and mineral reserves and is intended to supplement Venezuela’s plummeting Venezuelan Bolívar currency.

The Venezuelan government also intends to use the national cryptocurrency as a means of circumventing US sanctions and accessing international financing.

  1. Estonia
  • Cryptocurrency Name: Estcoin

Estonia, a country in Northern Europe which is very welcoming of cryptocurrencies in general, had announced in August 2017 about its plans of launching a state-backed cryptocurrency on Ethereum.

But it has not been launched yet and remains a proposed cryptocurrency under the name ‘Estcoin’ which will be launched via an ICO or token sale.

Vitalik Buterin was quite supportive of this idea and said, “An ICO within the e-residency ecosystem would create a strong incentive alignment between e-residents and this fund, and beyond the economic aspect makes the e-residents feel like more of a community since there are more things they can do together”.

Estonia can soon become the third country in the world after UAE & Venezuela to launch its own national cryptocurrency.

  1. Russia
  • Cryptocurrency Name: Crypytoruble

Recently, Russia has been particularly interested in launching its own cryptocurrency to circumvent the US sanctions. Moreover, when the interest comes directly from their President Vladimir Putin, you should take it seriously, because in October 2017 Putin ordered the creation of Russia’s national cryptocurrency largely referred to as the Cryptoruble.

However, on the contrary, the Russian Central bank hasn’t shown much interest in launching the Cryptoruble yet. In this back and forth process, there are chances that Cryptoruble might come into existence sometime in mid-2019.

 

  1. Sweden
  • Cryptocurrency Name: E-Krona

Meanwhile, another European nation Sweden is contemplating its state-backed cryptocurrency and it looks like they are very close to their launch date.

The new Swedish cryptocurrency will be known as E-Kroan through which Sweden aims to go totally cashless. Therefore, Sweden’s central bank, Riksbank, wants to launch an equivalent digital form of cash and will launch it in 2018 through the IOTA blockchain.

IOTA is popular cryptocurrency in the open-source decentralized market that works on ‘Tangle’, a directed acyclic graph based data structure which has no blocks, no chain, and no miners.

  1. Japan
  • Cryptocurrency Name: J-Coin

Japan, one of the most welcoming countries for cryptocurrencies in the Asian region has also been contemplating its government-backed cryptocurrency since 2017.

What they call J-Coin, is expected to be launched ahead of the Tokyo Olympics in 2020. J-Coin will supplement Yen (JPY) and will be pegged to JPY in 1: 1 fashion through which citizens will be able to buy goods and services.

Other Countries Going In This Direction

Name Of Country Name Of Cryptocurrency
Dubai (UAE) Emcash
Venezuela Petro
Estonia Estcoin
Russia Crypytoruble
Sweden E-Krona
Japan J-Coin

There are many other countries, developed and developing, that are thinking in this direction. That is because the digital government backed cryptocurrencies can help them evade sanctions, ease accounting and reduce the cost for the nations.

On the downside, it will also help inflate the national currency virtually with no cost through nation-backed cryptocurrencies, which can be a little problem in the long run.

Some more countries are:

  • India
  • China
  • US
  • UK
  • Ecuador
  • Canada
  • Israel

The core differences between Cryptocurrency and Digital Currency

Though cryptocurrency is a type of digital currency, there are some fundamental differences.

Structure. Digital currencies are centralized; there is a group of people and computers that regulates the state of the transactions in the network. Cryptocurrencies are decentralized, and  the regulations are made by the majority of the community.

Anonymity. Digital currencies require user identification. You’ll need to upload a photo of yourself and some documents issued by the public authorities. Buying, investing and any other processes with cryptocurrencies do not need require any of that. Nevertheless, cryptocurrencies are not fully anonymous. Though the addresses don’t contain any confidential information such as name, residential address, etc., each transaction is registered, the senders and the receivers are publicly known. Thus, all the transactions are tracked.

Transparency. Digital currencies are not transparent. You cannot choose the address of the wallet and see all the money transfers. This information is confidential. Cryptocurrencies are transparent. Everyone can see any transactions of any user, since all the revenue streams are placed in a public chain.

Transaction manipulation. Digital currencies have a central authority that deals with issues. It can cancel or freeze transactions upon the request of the participant or authorities or on suspicion of fraud or money-laundering. Cryptocurrencies are regulated by the community.

How Crypto/Bitcoin ATMs works?

It would be best to start by explaining what exactly do these ATMs do, and it is pretty simple.

There are two types of crypto ATMs – two way and one way. One way ATMs allow you to exchange fiat currency for cryptocurrency. While two way ATMs allow you to exchange fiat and crypto both ways. Most crypto ATMs support Bitcoin, but the rising number brings more altcoin ATMs and ATMs that support more than one cryptocurrency.

The process itself is quite simple too (at least most of the time). The main things you would need for the transaction are the address of your wallet and fiat money you want to exchange. However, some ATMs might request some more information, such as your phone number or your ID for security reasons, especially if you go for a bigger transaction.

The usual transaction requests you to select the amount of cryptocurrency you would like to purchase and scan or type in your wallet’s address. The type of your wallet does not make a difference, so if you want to exchange your newly purchase cryptocurrency for another coin, you can deposit right into your exchange wallet.

After depositing the money, the machine either prints an offline wallet for you or sends Bitcoins to your Bitcoin wallet. … If you want the Bitcoins to be sent to your pre-existing wallet, you can scan a QR code representing your wallet address using the BTM scanner. Bitcoins are directly transferred to your wallet.

A Bitcoin ATM lets you buy bitcoin with cash. Similar to the way you insert a debit card into a traditional ATM and get cash, a Bitcoin ATM accepts cash and spits out bitcoins. Some Bitcoin ATMs also work the opposite way: you can send bitcoins to the machine and receive cash.

 

The basics of initial coin offerings (ICO)

An Initial Coin Offering (ICO) is the cryptocurrency industry’s equivalent to an Initial Public Offering (IPO). ICOs act as a way to raise funds, where a company looking to raise money to create a new coin, app, or service launches an ICO.

ICOs are basically blockchain crowdsales, the cryptocurrency version of crowdfunding. The ICOs have been truly revolutionary and have managed to accomplish many amazing tasks:

  • They have provided the simplest path by which DAPP developers can get the required funding for their project.
  • Anyone can become invested in a project they are interested in by purchasing the tokens of that particular DAPP and become a part of the project themselves.

It was in July 2014 when ICOs well and truly came into the public’s attention. That was when the ICO ethereum raised .4 million and ushered in a new age of ICOs.

Since 2013 ICOs are often used to fund the development of new cryptocurrencies. The pre-created token can be easily sold and traded on all cryptocurrency exchanges if there is demand for them.

With the success of ethereum, ICOs have become the de-facto method of funding the development of a crypto project by releasing a token which is somehow integrated into the project.

Short History of Initial Coin Offering

Maybe the first cryptocurrency distributed by an ICO was Ripple. In early 2013 Ripple Labs started to develop the Ripple called payment system and created around 100 billion XRP token. The company sold these token to fund the development of the Ripple platform.

Later in 2013, Mastercoin promised to create a layer on top of bitcoin to execute smart contracts and tokenize Bitcoin transactions. The developer sold some million Mastercoin token against bitcoin and received around mio.

Several other cryptocurrencies have been funded with ICO, for example, Lisk, which sold its coins for around $5mio in early 2016. Most prominent however is ethereum. In mid-2014 the Ethereum Foundation sold ETH against 0.0005 bitcoin each. With this, they receive nearly $20mio, which has become one of the largest crowdfunding ever and serves as the capital base for the development of Ethereum.

As ethereum itself unleashed the power of smart contracts, it opened the door for a new generation of Initial Coin Offering.

What is Smart contract and how it works

Smart contracts are lines of code that are stored on a blockchain and automatically execute when predetermined terms and conditions are met. At the most basic level, they are programs that run as they’ve been set up to run by the people who developed them. The benefits of smart contracts are most apparent in business collaborations, in which they are typically used to enforce some type of agreement so that all participants can be certain of the outcome without an intermediary’s involvement.

Bring transparency, simplicity and efficiency to every financial transaction

What do smart contracts do?

The easiest way to explain what a smart contract does is through an example. If you’ve ever bought a car at a dealership, you know there are several steps and it can be a frustrating process. If can’t pay for the car outright, you’ll have to obtain financing. This will require a credit check and you’ll have to fill out several forms with your personal information to verify your identity. Along the way, you’ll have to interact with several different people, including the salesperson, finance broker and lender. To compensate their work, various commissions and fees are added to the base price of the car.

What smart contracts on blockchain can do is streamline this complex process that involves several intermediaries because of a lack of trust among participants in the transaction. With your identity stored on a blockchain, lenders can quickly make a decision about credit. Then, a smart contract would be created between your bank, the dealer and the lender so that once the funds have been released to the dealer, the lender will hold the car’s title and repayment will be initiated based on the agreed terms. The transfer of ownership would be automatic as the transaction gets recorded to a blockchain, is shared among the participants and can be checked at any time.

How do smart contracts work?

Smart contracts work by following simple “if/when…then…” statements that are written into code on a blockchain. A network of computers executes the actions (releasing funds to the appropriate parties; registering a vehicle; sending notifications; issuing a ticket) when predetermined conditions have been met and verified. The blockchain is then updated when the transaction is completed.

Let’s see how this plays out in a supply chain example. Buyer B wants to buy something from Seller A, so she puts money in an escrow account. Seller A will use Shipper C to deliver the product to Buyer B. When Buyer B receives the item, the money in escrow will be released to Seller A and Shipper C. If Buyer B doesn’t receive the shipment by Date Z, the money in escrow will be returned. When this transaction is executed, Manufacturer G is notified to create another of the items that was sold to increase supply. All this is done automatically.

Within a smart contract, there can be as many stipulations as needed to satisfy the participants that the task will be completed satisfactorily. To establish the terms, participants to a blockchain platform must determine how transactions and their data are represented, agree on the rules that govern those transactions, explore all possible exceptions, and define a framework for resolving disputes. It’s usually an iterative process that involves both developers and business stakeholders.

The benefits of smart contracts go hand-in-hand with blockchain.

  • Speed and accuracy: Smart contracts are digital and automated, so you won’t have to spend time processing paperwork or reconciling and correcting the errors that are often written into documents that have been filled manually. Computer code is also more exact than the legalese that traditional contracts are written in.
  • Trust: Smart contracts automatically execute transactions following predetermined rules, and the encrypted records of those transactions are shared across participants. Thus, nobody has to question whether information has been altered for personal benefit.
  • Security: Blockchain transaction records are encrypted, and that makes them very hard to hack. Because each individual record is connected to previous and subsequent records on a distributed ledger, the whole chain would need to be altered to change a single record.
  • Savings: Smart contracts remove the need for intermediaries because participants can trust the visible data and the technology to properly execute the transaction. There is no need for an extra person to validate and verify the terms of an agreement because it is built into the code.

Cryptocurrencies Mining

  • Cryptocurrency mining is the process in which transactions between users are verified and added into the blockchain public ledger. The process of mining is also responsible for introducing new coins into the existing circulating supply and is one of the key elements that allow cryptocurrencies to work as a peer-to-peer decentralized network, without the need for a third party central authority.
  • Bitcoin is the most popular and well-established example of a mineable cryptocurrency, but it is worth noting that not all cryptocurrencies are mineable. Bitcoin mining is based on a consensus algorithm called Proof of Work.

How does it work?

  • A miner is a node in the network that collects transactions and organizes them into blocks. Whenever transactions are made, all network nodes receive them and verify their validity. Then, miner nodes gather these transactions from the memory pool and begin assembling them into a block (candidate block).
  • The first step of mining a block is to individually hash each transaction taken from the memory pool, but before starting the process, the miner node adds a transaction where they send themselves the mining reward (block reward). This transaction is referred to as the coinbase transaction, which is a transaction where coins get created ‘out of thin air’ and, in most cases, is the first transaction to be recorded in a new block.
  • After every transaction is hashed, the hashes are then organized into something called a Merkle Tree (or a hash tree) – which is formed by organizing the various transaction hashes into pairs and then hashing them. The outputs are then organized into pairs and hashed once again, and the process is repeated until “the top of the tree” is reached. The top of the tree is also called a root hash (or Merkle root) and is basically a single hash that represents all the previous hashes that were used to generate it.
  • The root hash – along with the hash of the previous block and a random number called nonce – is then placed into the block’s header. The block header is then hashed producing an output based on those elements (root hash, previous block’s hash, and nonce) plus a few other parameters. The resulting output is the block hash and will serve as the identifier of the newly generated block (candidate block).
  • In order to be considered valid, the output (block hash) must be less than a certain target value that is determined by the protocol. In other words, the block hash must start with a certain number of zeros.
  • The target value – also known as the hashing difficulty – is regularly adjusted by the protocol, ensuring that the rate at which new blocks are created remains constant and proportional to the amount of hashing power devoted to the network.
  • Therefore, every time new miners join the network and competition increases, the hashing difficulty will raise, preventing the average block time from decreasing.  In contrast, if miners decide to leave the network, the hashing difficulty will go down, keeping the block time constant even though there is less computational power dedicated to the network.
  • The process of mining requires miners to keep hashing the block header over and over again, by iterating through the nonce until one in the network miner eventually produces a valid block hash. When a valid hash is found, the founder node will broadcast the block to the network. All other nodes will check if the hash is valid and, if so, add the block into their copy of the blockchain and move on to mining the next block.
  • However, it sometimes happens that two miners broadcast a valid block at the same time and the network ends up with two competing blocks. Miners start to mine the next block based on the block they received first. The competition between these blocks will continue until the next block is mined based on either one of the competing blocks. The block that gets abandoned is called an orphan block or a stale block. The miners of this block will switch back to mining the chain of the winner block.

·         Mining pools

  • While the block reward is granted to the miner who discovers the valid hash first, the probability of finding the hash is equal to the portion of the total mining power on the network. Miners with a small percentage of the mining power stand a very small chance of discovering the next block on their own. Mining pools are created to solve this problem. It means pooling of resources by miners, who share their processing power over a network, to split the reward equally among everyone in the pool, according to the amount of work they contribute to the probability of finding a block.

Ethereum Special Features: Beyond All other cryptocurrencies Ethereum Could
Change the World

Enterprise Ethereum has access to public Ethereum, the most secure and developed blockchain platform and ecosystem in the world. Even if you have not invested in any crypto, you cannot miss the news of the digital currencies. Nowadays, any talk of financial technology is not complete without a mention of cryptocurrencies like bitcoin, bitcash, and Ethereum. Bitcoin and Ethereum have particularly established a dominance that is impossible to shake in 2018.
While the two cryptocurrencies largely do the same things, they have important features that distinguish them. Ethereum is a more recent crypto that has brought with it many new innovations. The most attractive aspect of Ethereum is undoubtedly its reliance on the blockchain. While Bitcoin is largely modelled with traditional currencies in mind, Ethereum is largely inventive and more fashioned on the basis of digital technology infrastructure. For this reason,
Ethereum has the best chance of bringing radical changes to the world. We will look at why this is so by analyzing this cryptocurrency.

Basic Ethereum Capacities

The key feature that distinguishes Ethereum is that it is more of a canvas than a coin. This platform is not just deeply anchored on the blockchain but it is the infrastructure itself. This makes it unlimited in terms of usage capabilities. The platform is not simply created so that it can make transactions. Instead, it is created as a general-purpose platform that can be adjusted to suit the specific needs of a particular programmer. This flexibility ensures that the potential
of the cryptocurrency is not limited. The two most impressive aspects of Ethereum are unquestionably smart contracts and dApps. These two have a potential of affecting transactions, collaboration, and business in general.

The Scope of Usage

Ethereum is also the cryptocurrency of the future because of its scope. The world is progressively moving to the digital platforms. Most industries and future companies will be based online. This means that a suitable infrastructure is needed to match the demand of future organizations. Ethereum will be able to address these needs through its inventive tools. Smart contracts will, for instance, be used for fulfilling agreements made between two parties.

Smart contracts are much more efficient than ordinary contracts because the terms of the agreement are made using code. The flexibility of smart contracts also means that they can be designed to serve a plethora of purposes. With a range of conditions being put in place to ensure that the contracts are foolproof, it is almost expected that Ethereum will be a go-to platform for businesses.

Summary

The cryptocurrency world is only set to continue expanding. While Bitcoin was the progenitor of cryptos, Ethereum seems to be the technology that will continue with the legacy. Its effective use of the blockchain infrastructure reflects exactly how a modern digital currency should be. The platform is a pioneer of several groundbreaking technologies that are set to revolutionize the financial tech world as a whole. Ethereum has not only taken the great bits of the pioneer
cryptocurrency but it has also vastly improved the ecosystem.

Crypto Valley

Crypto Valley is a Swiss nationwide ecosystem with active connections to international centers of blockchain innovation in London, Singapore, Silicon Valley and New York. The Crypto Valley Association has been set up to foster the growth of this ecosystem.

Located in Zug in the heart of Switzerland, Crypto Valley is uniquely positioned to make the most of the decentralized Swiss political system and its matchless business environment. Zug offers a robust platform for global growth due to its pro-business philosophy and the openness and easy accessibility of its local government. Zug’s low-tax, business-friendly environment and fantastic quality of life have attracted many of the world’s leading companies, creating an
international, cosmopolitan culture, and easy access to powerful global networks.

Companies Keep Flocking to Swiss Crypto Valley, Over 1,000 Jobs Added in a Year

Almost 100 new businesses established a presence in the Swiss Crypto Valley last year, shows a new study. Its findings were released during the CV Summit in Davos on Thursday, a blockchain-focused event that takes place during the World Economic Forum’s annual meeting. The total number of companies working with digital assets and blockchain technologies in the Crypto Valley has reached 842, the survey reveals, compared to 750 in its last year’s edition. Jobs in the sector have also increased substantially – from 3,300 in 2018 to 4,400 by the end of 2019, the Swissinfo news portal reported.