Why Is Bitcoin so Popular?
Compared to other financial currencies, Bitcoin has very little barrier to entry. If you already own Bitcoin, no verification is required and you can start trading almost instantly. Moreover, Bitcoin is not fiat currency. This simply means the price is not related to the economy or policies of any single country.
And unlike stock markets, there are no official Bitcoin exchanges. Instead, hundreds of Bitcoin exchanges operate 24/7 around the world. Because of no official exchanges, this results in no official Bitcoin price where the currency is known for its rapid and frequent price movements.
Secondly is personal spending. You can use Bitcoin to purchase almost anything! From buying cars to travelling the world.
In December 2013, a Tesla model S was purchased for a reported 91.4bitcoins. The dealer, located in California continues to accept Bitcoin as a means of payment. They have since managed to sell a Lamborghini Gallardo for 216.8 Bitcoin.
You can also travel the world using Bitcoins! Just head to www.cheapair.com. On 22nd November 2013, they announced that they would be the first online travelling agency accepting Bitcoin. You are able to purchase flights, hotels, car rentals and cruises. You can even book the whole package.
Cryptocurrency also provides the chance for you to give back to society. How? By crowd funding. You are able to be part of someone’s success story by donating to a crypto crowd funding project. Companies such as Lighthouse have built their crowd funding platform using Bitcoin.
The perks of donating through this system are you will not be charged for your donation and funds will not be released unless the project meets its criteria. You are also able to withdraw from the campaign before its completion.
You have complete control over the donation! Examples of successful funding campaigns are from Dogecoin, which includes campaigns run for Nascar driver Josh Wise.
The question is, Why Cryptocurrency?
Apart from cryptocurrency being very secure and is run through a decentralized network, there are other properties which projects why cryptocurrencies may be the most talked about topic in town. It has also been considered as potentially an investment vehicle, which may garner massive returns.
Have you heard of Erik Finman? The teenage Bitcoin millionaire who started picking up Bitcoin at only $12 a piece back in May 2011, when he was just 12 years old. He received the Bitcoin as a tip from his brother and a $1000 gift from his grandmother.
He now reportedly owns 403 Bitcoins, which holds a value of roughly $2,600 where it has accumulated to a stash of $1.08 million and change.
Firstly are its transactional properties. Cryptocurrency transaction is fast and global. Transactions are propagated immediately in the network and are confirmed within minutes. Since the transactions are managed by a global network of computers, they do not take into account your physical location. It is possible for you to send your cryptocurrency to someone in your vicinity, or even if they are living on the other side of the world.
Secondly are their monetary properties. The currencies are in controlled supply thus there is a high chance that the value of the currencies appreciates over time. As mentioned earlier, Bitcoin will somehow reach its final number somewhere in 2140.
Third is their revolutionary property. You have more control of what is going on in your account and how the system works and operate. This is due to the decentralized network of peers which keeps a consensus on account balances and the transactions made. As compared to your physical bank account, which can be changed and controlled by people you don’t see and governed by rules you don’t even know?
The Types Of Cryptocurrency Available
The world of cryptocurrency has always revolved around Bitcoin until recently, when virtual currencies has served a very important purpose in the investment realm and people start flocking to cryptocurrencies as compared to fiat currencies.
Believe it or not, aside from Bitcoin, there are over 800 cryptocurrencies! However, we will only discuss the top 5 most prominent currencies in the market. The 5 cryptocurrencies are:
Firstly, is Bitcoin.
This is the first ever cryptocurrency invented and remains by far the most sought after cryptocurrency to date. Bitcoin is known as the digital gold standard in the cryptocurrency network. As explained in the previous module, Bitcoin is the pioneer of Blockchain Technology that made digital money possible.
It is the first ever decentralized peer-to-peer network powered by its users without any central authority or middleman which means, no unnecessary costs are included in the digital money transaction.
Over the years of Bitcoin’s existence, its value has fluctuated tremendously from zero to over $2000 per bitcoin to date. Its transaction volume has also reached 200,000 daily transactions.
One major advantage that it has over other crypotcurrencies is bitcoins are impossible to counterfeit or inflate. The reason being there are only 21 million bitcoins created for mining, no more no less. Therefore it is predicted by 2140, all bitcoins will already be mined.
Thanks to its blockchain technology, you have ultimate control over your money and transactions without having to go through a third party such as the bank or Paypal.
Bitcoin transactions are also impossible to be reversed. Therefore, you should only deal with trusted parties as Bitcoin is also used as a means for cyber-crime like dark net markets or ransomware.
Media companies and investment firms in South Korea, India, Australia and Japan have started discussing on how Bitcoin may surpass the value of certain fiat currencies in the future as an alternative monetary system.
ABC News, a national news service in Australia have also reported recently it is likely for Bitcoin to replace even the USD in the next 10 years if it sustains its current exponential growth.
The second most popular currency is Ethereum.
Created by Vitalik Buterin, it has scored itself the second spot in the hierarchy of cryptocurrencies. This digital currency launched in 2015 is predicted to surpass Bitcoin and may be the cryptocurrency of the future. Ethereum is currently worth $279 since its launch.
Is Ethereum similar to Bitcoin?
It is in a way, but not really. Like Bitcoin, Ethereum is a part of a blockchain network. The main difference between the two currencies is that Bitcoin blockchain focuses on tracking ownership of the digital currency while Ethereum blockchain focuses on running the programming code or network. Instead of having to build an entirely original blockchain for each new application, Ethereum enables the development of thousands of different applications in a single platform. In the Ethereum blockchain, miners work to earn Ether. Ether is a crypto token that helps run the network.
Another use of the Ethereum blockchain is its ability to decentralize any services that are centralized. For instance, Ethereum is able to decentralize services like loans provided by banks, online transactions using Paypal as well as voting systems and much more.
Ethereum can also be used to build a Decentralized Autonomous Organization (DAO). A DAO is a fully autonomous organization without a leader. DAOs are run by programming codes on a collection of smart contracts written in the Ethereum blockchain. DAO is designed to replace the structure of a traditional organization and like Bitcoin, eliminating the need for people and a centralized control.
What are the most obvious benefits of Ethereum?
Firstly, a third party cannot make any changes to the data. The system is also tamper and corruption proof. This is because Ethereum is built based on a network formed around a consensus as a result, making censorship impossible. Secondly, just like Bitcoin, Ethereum is backed up by secure cryptography. Therefore, the applications are well protected against any form of hacking. The third cryptocurrency is Litecoin.
When the currency was first launched in 2011, it aspired to be the ‘silver’ to Bitcoin’s ‘gold’. Litecoin also recorded the highest market cap of any other mined cryptocurrency, after Bitcoin after its launch.
The main reason of Litecoin’s creation is to make up what Bitcoin lacked. The main difference between Litecoin and Bitcoin is the 2.5 minute time to generate a block for Litecoin, as opposed to Bitcoin’s 10 minutes.
For miners and technical experts, the Litecoin possesses a very important difference to Bitcoin, and that is a more improved work algorithm which speeds up the hashing power and system altogether.