A Beginner’s Guide to Bitcoin and Cryptocurrency Technologies [2020]
![A Beginner’s Guide to Bitcoin and Cryptocurrency Technologies [2020]](https://thebitcoinstreetjournal.com/storage/2020/01/E15hPI.png "A Beginner’s Guide to Bitcoin and Cryptocurrency Technologies [2020]")
Cryptocurrency provides the best way of taking back control of the financial privacy of people from around the world by connecting only a wallet address to transactions instead of KYC-proven identification details like name, address and date of birth.
Some cryptocurrencies such as Monero have taken it one step further and worked to create fully anonymous cryptocurrencies that completely protect the identities of those involved in transactions.
Low Fees
Using Paypal, Western Union and banks to make transactions can incur large fees depending on the situation and is another major drawcard for cryptocurrencies.
Although the exact cost of crypto transfers can vary, and there have been points in time when congested blockchains with backlogs of transactions pushed the price of transfers higher, typically using cryptocurrency to make international transfers and even payments within your country is cheaper than mainstream financial services.
For example, a study showed that when selling 60 items on eBay and cashing out using Paypal the researcher paid a fee of 17.59EUR on a total amount of 60.50EUR, where the same transfer using Bitcoin would have cost just 0.27EUR.
Permissionless
The banking system, Paypal, Western Union and others can all select who they would allow to make transfers, and this can be arbitrarily applied for any transgression that the company decides to enforce.
There are many people around the world that are not able to use the mainstream financial system also because of a wide range of other reasons, and one of the core tenants of cryptocurrency when it was created was that having no one controlling party means that all are able to use the network if they would like to.
Permissioned or “private” blockchains are, as you would expect, distributed ledger technology networks that can control who has access to them, but no major cryptocurrencies in the world are permissioned.
Permissionlessness works in-sync with low fees and shared control and governance to make cryptocurrency a newer and more inclusive version of money.
Fast Transfers of Value
International transfers can take more than 4 days. Many banks don’t process transfers over weekends in order to use that 2-day period to earn themselves a small fortune in additional interest and returns on the money they hold during that time. Sometimes Paypal can be instant, sometimes you have to wait days for funds to clear.
Surprisingly to many, Bitcoin is one of the slowest cryptocurrencies with an average transfer time of 30 minutes, but this still vastly outpaces most mainstream financial services providers.
Dash is known for having fast transaction times of 2.5 minutes, NEO has super fast speeds of roughly 15 seconds, and Nano has insanely fast transfer times of 5–10 seconds.
What is Blockchain?
Blockchain technology is a revolutionary technology that was developed original by Nakamoto and since then has become an integral part of cutting edge academic research, as well as one of the hottest sectors for new patents over the past few years.
Unlike normal financial systems that are centralized and use a trusted intermediary in order to manage transfers, blockchain replaces the middleman with cryptography and algorithms in order to manage all aspects of the network.
Blockchain is not owned by anyone, but instead if shared between all parties that engage with it, and while governments and hackers can easily shutdown centralized systems that have a single server for example, blockchain technology saves the code that runs the system on many thousands of different servers — making attacks and censorship more difficult, if not virtually impossible.
What Protects a Blockchain?
A blockchain is just a temporally-connected, cryptographically-locked chain of blocks of data. There are various types of data stored on blockchains, but typically a list of transactions is present in each block, along with the time the block was mined, who mined it, and a hash of the data from the previous block which is added to the following block.
This way of cryptographically chaining blocks together is one of the main features that secure a blockchain. Because blockchains are just data stored on many computers, any one of the nodes in a blockchain can be a malicious actor and can try to falsify the data in their copy of the blockchain for profit.
The cryptographic link between blocks means that if any of the data previously stored in the blockchain is changed, the final hash will not be the same. It’s a quick and efficient way of confirming that data has not been changed — even by a single additional full stop. If it has, a wildly different hash will be returned which easily protects the blockchain from fraud.
What are Crypto Wallets?
Cryptocurrency wallets are the software that is used to store cryptocurrencies and to protect the owner from theft.
The way that cryptocurrency ownership typically works is that through the use of cryptography an amount of a cryptocurrency can be stored with the only way for it to be accessed by knowing a secret code.
Cryptocurrency wallets have public keys and private keys.
Published at Wed, 29 Jan 2020 17:13:45 +0000
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