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Cryptocurrencies

Cardano, a top smart contract cryptocurrency

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Cardano (ADA) is a blockchain smart contract technology platform known for running the Ada cryptocurrency.

Launched in 2017, Cardano aims to be an all-in-one cryptocurrency platform featuring smart contracts, side chains, multi-party computation, decentralized applications, metadata, and countless other functions.

Similar to Ethereum, Ripple, and Stellar, Cardano seeks to be far more than a cryptocurrency: its goal is to function as a complete technology and financial platform, meeting the needs of 21st century finance.

While still relatively young, Cardano’s rapid development, suite of features, and technological pedigree have caused it to become one of the hottest cryptocurrencies. Interest in Cardano is only sure to increase once more of its features come online.

Crypto investors with an interest in smart contract platforms would do well to check Cardano out, because it promises a number of innovations that will allow it to possibly outcompete Ethereum, Ripple, and other competitors in the market.

Overview

Cardano was launched on September 27, 2017 by Input Output Hong Kong (IOHK), a blockchain development firm led by Charles Hoskinson, best known as the co-founder of Ethereum. (1) (2)

Cardano is primarily distinguished from Ethereum by its use of a Recursive InterNetwork Architecture (RINA), which allows for faster transactions and more security compared to other smart contract platforms. (3)

Similarly to Stellar, Cardano also uses a system of decentralized consensus in order to maintain order on the blockchain and verify transactions. All machines connected to the Cardano network participate in vetting transactions, making it impossible for any one actor to take control of the network and misuse it. Any machine connected to the Cardano network can participate in this process, though as with Stellar, not all machines will be treated equally. (4)

As part of its decentralized consensus model, Cardano uses the Ouroboros proof-of-stake algorithm to verify the integrity of transactions. Cardano designates anyone who participates in the verification of transactions as a “slot leader,” whose job is to generate new blocks in the blockchain. Anyone who owns a Cardano Ada coin is automatically regarded as a slot leader. (5)

Most notably, Cardano features a unique ledger design that was created to increase the flexibility of smart contracts utilized on the network. Cardano’s ledger separates account values from the logic behind why values are moved from one account to another, which distinguishes it from virtually every other cryptocurrency, where both entities are lumped together. This promises to make Cardano one of the best platforms for arranging sensitive financial transactions. (6) (7)

In addition to all these innovations, IOHK is currently developing a virtual machine for Cardano, along the lines of Ethereum’s EVM, which will increase the platform’s computational ability. Cardano is also implementing Plutus, a smart contract programming language designed to secure buyers and sellers from security breaches. Future updates will allow users to create apps in other programming languages, such as C, Java, and JavaScript. (8)

IOHK has stated that their primary objective with Cardano is to develop a platform that makes it possible to implement banking systems in areas where they have traditionally been too expensive to implement. Several practical implementations of Cardano have already been achieved. For example, Greece’s national education and research network has begun using Cardano to verify student diplomas. (9) (10)

While Cardano is still quite young, its pedigree as a creation of Ethereum’s co-founder, its existing features, and its ambitious development schedule have made it a cryptocurrency to watch. If you have an interest in smart contract platforms, Cardano is worth adding to your portfolio.

Mining

Like Ripple and Stellar, it is not possible to mine Cardano, but it is possible to increase your stash of it by using its unique architecture.

Cardano’s proprietary cryptocurrency Ada (named after Ada Lovelace, one of the inventors of the computer) uses a proof-of-stake algorithm instead of a proof-of-work algorithm like Bitcoin and most cryptocurrencies. This means that new coins are generated on the network not through mining, but through the coins that are already existent. (11)

What this means is that anyone who owns Ada coins and is connected to the Cardano network via a Daedalus wallet (the official wallet of Cardano) can receive additional Ada without doing anything. Even better, some Ada holders can receive transaction fees if their personal stash is large enough. It’s akin to receiving interest in a savings account, with the caveat that a user must keep their Daedalus wallet online in order for it to work. (12)

Effectively, this means that any Cardano holder can participate in the growth of the Ada supply and also make money without having to invest in expensive computer hardware.

Recap

Smart contract cryptocurrencies represent the next generation of crypto: beyond merely serving as stores of value, they function as entire financial and banking systems unto themselves. Ethereum and Ripple have led the pack when it comes to smart contract cryptos, but Cardano is quickly catching up due to its advanced features.

Cardano’s unique programming language and use of decentralized consensus has helped build it into a robust smart contract system, offering security and speed beyond that of Ethereum and Ripple. Without a centralized authority to dominate the blockchain, Cardano’s growth is only limited by its userbase, which is exploding every day.

Most importantly, Cardano’s proof-of-stake algorithm makes it one of the easiest ways for long-term crypto investors to grow their bag. Without having to invest in ASIC miners or purchase expensive computers, Cardano users can participate in the network’s growth, verify transactions, and make a tidy profit all at the same time. Few cryptocurrencies can match this level of benefits to their users.

Cardano’s major demerit is that it is not very old and is untested to a certain degree. However, the currency has proven itself through both its suite of features and the unique ways that people have found to use it.

If you have an interest in smart contract cryptocurrencies, looking into Cardano is worth your time. It promises to be one of the leading currencies in its market and potentially a pillar of world finance in the future, so it behooves you to get involved now.

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Cryptocurrencies

Bitcoin Cash, the hard fork of Bitcoin

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Bitcoin Cash (BCC) is a cryptocurrency that offers scalability, flexibility, and lower fees compared to Bitcoin, its parent cryptocurrency.

Established on August 1, 2017 due to a hard fork in the Bitcoin blockchain, Bitcoin Cash has rapidly become one of the most popular and highly valued cryptocurrencies on the market. (1) (2)

Due to its similarities with Bitcoin and its improved transaction rate, Bitcoin Cash has been embraced by cryptocurrency enthusiasts as a reliable alternative to Bitcoin. Many vendors and business that accept Bitcoin have also begun accepting Bitcoin Cash, spurred by its faster transaction speeds and lower fees. (3)

Bitcoin Cash is an ideal cryptocurrency for users who value speed and efficiency above all else.

Overview

Bitcoin Cash was established on August 1, 2017 as the result of a hard fork in Bitcoin’s blockchain.

For years, Bitcoin users were divided on the issue of Bitcoin’s scalability and how to make the cryptocurrency accessible to more users.

Bitcoin’s block size limit, at only 1 MB per block, capped the number of transactions per day at 250,000. This design was implemented by Bitcoin’s developers at the beginning of its development with the intent of reducing spam transactions. (4) (5)

This resulted in increasingly long waits for transactions to complete, as more people and businesses began using Bitcoin. The block size limit has also led to a steep increase in the fees that people pay to speed up their transactions. (7) (8)

These problems lead to many vendors and users abandoning Bitcoin and moving to other cryptocurrencies, with Bitcoin’s share of the cryptocurrency market falling from 95 percent to 40 percent. (9)

Many Bitcoin enthusiasts have long advocated that the block size limit be increased, which would allow for more transactions per day and thus faster transactions overall. Supporters of a block size limit increase argued that it would increase Bitcoin’s appeal and make it possible for more businesses and consumers to start using the currency. (10)

However, due to the technical complexity that increasing the block size limit would entail, the change was never implemented, and the Bitcoin community was torn over how to proceed.

Opponents of a block size limit increase argued that increasing the block size limit would hurt miners and independent mining pools, centralizing power in the hands of the largest mining pools, which would go against the spirit of Bitcoin. Additionally, many opponents of the block size increase also argued that Bitcoin was not intended to be a popular currency and should remain a small, underground commodity. (11)

Ultimately, on August 1, 2017, the problem was solved when the ViaBTC Bitcoin mining pool produced a 1.9 MB BCC block that was not compatible on Bitcoin’s network, creating a hard fork that birthed Bitcoin Cash. (12)

Bitcoin Cash features a block size limit of 8 MB, which allows for two million transactions per day, meaning that transactions are much faster than on Bitcoin and fees are also much lower. Bitcoin Cash also features improved protections against replay attacks, a common problem when cryptocurrencies go through a hard fork. (13) (14)

Additionally, unlike Bitcoin, Bitcoin Cash is fully decentralized, with multiple independent teams working to develop and enhance it in the future. (15)

Many businesses and vendors who previously used Bitcoin have now begun using Bitcoin Cash as well, making it one of the most popular cryptocurrencies currently on the market, though it has not yet caught up to Bitcoin’s visibility or popularity. Anyone who owned Bitcoin at the time of the hard fork on August 1, 2017 automatically became owners of Bitcoin Cash as well. (16) (17)

Some Bitcoin purists are opposed to Bitcoin Cash and have begun referring to it as “Bcash” in an attempt to delegitimize it. (18)

Mining

Mining Bitcoin Cash is not as popular as mining Bitcoin due to the former’s relative newness.

Despite this, many Bitcoin miners have switched to mining Bitcoin Cash because of its rising popularity and the likelihood that it will become more profitable in the future. The larger block size limit is a major selling point for miners due to the fact that it allows them to earn more transaction fees more quickly compared to Bitcoin. (19) (20)

However, due to the fact that Bitcoin Cash is a fork of Bitcoin, mining it carries many of the same problems that Bitcoin mining does. Mining Bitcoin has increasingly become an expensive and arduous endeavor due to the blockchain’s size and complexity, which precludes people from mining it with CPUs or GPUs, requiring miners to purchase dedicated rigs. (21)

However, because Bitcoin and Bitcoin Cash use much of the same fundamental technology, mining rigs designed for the former are also compatible with the latter. (22)

There are many quality Bitcoin Cash-compatible mining rigs available for a variety of prices, designed for everyone from hobbyists to dedicated miners. For example, Bitmain offers a line of inexpensive mining rigs priced that can reliably mine Bitcoin and Bitcoin Cash. (23)

Keep in mind that mining Bitcoin Cash, like Bitcoin, consumes a lot of electricity, and as the blockchain continues to grow in size and complexity, miners will need more advanced equipment (and more rigs) in order to continue turning a profit on it. (24)

Despite this, mining Bitcoin Cash can be a profitable enterprise, and is likely to gain in popularity as the currency itself becomes more widespread.

Recap

Bitcoin Cash is a cryptocurrency ideal for users who are looking for speed, low costs, and reliability.

Its greater transaction speed compared to Bitcoin has made it a viable alternative for vendors and businesses who want to increase their profits.

Additionally, Bitcoin Cash’s lower transaction fees also make using the currency less expensive, making it more accessible to lower-income users.

Bitcoin Cash’s growing popularity among vendors who already use Bitcoin have made it a good cryptocurrency for shopping and other basic business transactions.

Miners will also appreciate Bitcoin Cash’s profit potential, and the fact that Bitcoin Cash is compatible with preexisting Bitcoin mining rigs makes it all the easier to start profiting from mining it.

Ultimately, Bitcoin Cash is a reliable cryptocurrency, one that is certain to grow in popularity and value in the future due to its improvements over Bitcoin.

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Cryptocurrencies

Ripple, the blockchain for banks

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Ripple (XRP), also known as the Ripple Transaction Protocol, is a cryptocurrency and real-time gross settlement system designed to make financial transactions simpler and easier.

Launched in 2012, Ripple was designed not merely to function as a cryptocurrency, but an all-in-one payment processing and remittance system for banks, businesses, and consumers. (1)

Ripple was created with the express purpose of replacing existing payment infrastructure with a model that is decentralized, open source, and accessible to all. Additionally, Ripple allows users to create various types of custom cryptocurrency, fiat currency, and other types of currency via its token system. (2) (3)

Ripple has been adopted by numerous banks, financial institutions, and other major banking organizations due to its reliability, flexibility, and functionality. (4)

Ripple is an effective and worthwhile investment for anyone looking for an all-in-one cryptocurrency and payment processing system.

Overview

Development on Ripple began in 2004, inspired by the RipplePay.com system created by Canadian web developer Ryan Fugger. Fugger designed RipplePay.com with the intent of creating a decentralized monetary system that allowed users to invent their own currencies for any purpose they wanted. (5) (6)

Developers Jed McCaleb(who later found Stellar), Arthur Britto, and David Schwartz saw RipplePay.com and sought to expand it through the use of Bitcoin’s blockchain technology, fulfilling Fugger’s dream. (7)

Ripple was conceived as a solution to several problems Bitcoin possessed: excessive electricity usage, slow transaction speed, and excessive centralization. Unlike Bitcoin, Ripple would verify transactions through a community-wide consensus instead of relying on miners. (8)

After being joined by developer Chris Larsen in 2012, McCaleb, Britto, and Schwartz obtained Fugger’s consent to continue developing RipplePay.com into a full-fledged cryptocurrency and monetary system. Ripple would launch that same year. (9)

Forming the corporation OpenCoin (later renamed Ripple Labs), Ripple’s developers focused their efforts on creating the Ripple Transaction Protocol, a system that allows instant, direct transfers of money between two separate parties. The protocol was compatible with everything from the U.S. dollar and other currencies to airline miles. (10) (11)

To accomplish this, Ripple was programmed to rely on a central ledger that is maintained by a number of servers that continuously compare and verify transaction records. (12)

To facilitate transactions, OpenCoin created XRP, a cryptocurrency that allowed users of the Ripple protocol to transfer money without the wait times and fees of traditional banking networks. Ripple also linked Bitcoin to their system, allowing people to use the Ripple protocol to send a payment in any currency to a Bitcoin wallet. (13) (14)

In 2013, Ripple Labs released Ripple’s reference server and client as open source software, allowing anyone to contribute to Ripple’s future development. (15)

Beginning in 2014, Ripple shifted their focus to the banking market, with hopes that their system could replace the existing, outmoded systems that banks rely upon to make transactions. (16)

That year, Munich-based Fidor Bank became the first bank to adopt the Ripple Transaction Protocol. Cross River Bank in New Jersey and CBW Bank in Kansas would also adopt Ripple that year. (17) (18)

In December of 2014, Ripple announced a partnership with Earthport, a global payments service whose clients include Bank of America and HSBC. Since then, more banking clients have joined the Ripple system, including Western Union, the Commonwealth Bank of Australia, and the Royal Bank of Canada. (19) (20) (21) (22)

In 2015, the Financial Crimes Enforcement Network fined Ripple Labs $700,000 due to violations of the Bank Secrecy Act. Ripple Labs responded by adding AML transaction monitoring to the Ripple protocol to bring it into compliance with U.S. law. (23)

In recent years, Ripple Labs has expanded globally, opening offices in Australia, the U.K., and Luxembourg, and more and more banking institutions have begun using Ripple in some fashion. (24) (25) (26)

In Ripple, transactions take place when users make cryptographically signed transactions that can be done using either XRP or a fiat currency of their choice. XRP transactions are monitored through the use of Ripple’s internal ledger. (27)

While Ripple originally lacked real-world enforcement of transactions, its integration with numerous banks and payment systems gives it a credibility and security that many cryptocurrencies lack. (28)

Ripple derives its name from the fact that transactions between parties require trust; if two users have not established a trust relationship, the transaction will “ripple” throughout the network until it finds a path in which each link is between those who do have a trust relationship. (29)

Due to its use by many banks and financial institutions, Ripple brings a level of security, stability and trustworthiness that few cryptocurrencies can match, making it a popular option for investors and traders.

Mining

Unlike most cryptocurrencies, Ripple cannot be mined due to its unique design.

In contrast to Bitcoin and other cryptocurrencies, where miners are responsible for processing transactions on the network, Ripple transactions are processed through a system-wide user consensus. Thus, mining is unnecessary to maintain the integrity of the network. (30)

Additionally, Ripple’s designers created 100,000,000,000 XRP when Ripple first came online, and they have steadfastly refused to make more. They have also been criticized for the way in which the currency was originally distributed, with the founders retaining 20 percent of all XRP in circulation. (31) (32)

Because it is impossible to mine Ripple, the currency has had a deeply polarizing response from cryptocurrency enthusiasts, with Bitcoin fans deriding it for being “pre-mined.” (33)

The inability to mine Ripple has limited its use and growth to a certain extent. It is unknown if Ripple’s designers plan to allow mining or to issue new XRP in the future.

Recap

Ripple is a cryptocurrency that offers a suite of security and convenience features that few if any other cryptocurrencies possess. Its consensus-based transaction system frees it from reliance on miners and gives it a stability when it comes to sending or receiving money.

Additionally, Ripple’s compatibility with mainstream fiat currencies gives it a flexibility that most cryptocurrencies lack. The sheer number of financial institutions using Ripple for their transactions has further buttressed its reliability.

Because mining Ripple is impossible, the currency may turn off some cryptocurrency users who are looking to make money with minimal effort.

However, those who are looking for a reliable cryptocurrency and transaction system built into a single package will definitely want to check Ripple out.

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Cryptocurrencies

Bitcoin, the original blockchain

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Bitcoin (BTC) is a cryptocurrency and worldwide payment system, the first cryptocurrency to be invented and released to the public.

Debuting in 2009, Bitcoin has grown to become a powerhouse in world financial markets due to its high value and its decentralized structure, with no controlling authority. (1)

Bitcoin is fully digital currency, utilizing blockchain technology to enable direct, peer-to-peer transactions between users, powered by “miners” who generate new Bitcoins through the use of their computers. (2) (3)

Bitcoin’s increasing popularity has led many vendors and businesses to begin accepting it as legal tender and many investors to adopt it as a means to make money. (4)

While newer cryptocurrencies have improved on Bitcoin’s basic design, Bitcoin remains the world’s leading cryptocurrency and an important part of any investor’s portfolio.

Overview

Bitcoin was first proposed in 2008 by Satoshi Nakamoto, an anonymous and possibly fictitious Japanese programmer. In a white paper titled “Bitcoin: A Peer-to-Peer Electronic Cash System,” Nakamoto laid out the basis for a worldwide fiat currency accessible to all, cutting out the middlemen of world governments. The name “Bitcoin” is derived from this concept, combining “bit” (the smallest unit of digital storage) with “coin.” (5) (6) (7)

Nakamoto’s concept relied on a technology called the “blockchain,” a public ledger that records all transactions occurring on the network. The blockchain is fueled by “miners,” users who utilize their computers or specialized mining rigs to solve the blockchain’s complex math problems, creating new Bitcoins as a reward for success. Miners are also responsible for processing network transactions, assessing fees for doing so. (8)

There is also a hard limit of 21 million Bitcoins that can be created by miners as a means to combat inflation, though the rate at which new coins are created will naturally slow down as the number of Bitcoins in circulation increases. (9)

Bitcoin transactions take place on a peer-to-peer basis. Transactions are handled by miners, who process them in exchange for fees. Bitcoins are stored in a digital wallet which is identified by an address and can be stored on a computer. (10)

On January 3, 2009, Nakamoto released the Bitcoin client as open source software, though it wasn’t until 2011 that the currency began to gain notoriety. In that year, several major organizations, such as Wikileaks and the Electronic Frontier Foundation, began accepting donations in Bitcoin. The dark web marketplace Silk Road, only accessible through Tor, also became notable for allowing customers to purchase illegal drugs with Bitcoins. (11) (12) (13)

In 2013, Bitcoin saw major expansion, with Bitcoin-based payment processor Coinbase selling over one million dollars worth of Bitcoins in one month. Also, in October that same year, Silk Road was shut down by the FBI and administrator Ross William Ulbrecht (aka “the Dread Pirate Roberts”) was arrested, with 26,000 BTC seized by the government as part of his apprehension. (14) (15)

In 2014, Mt. Gox, one of the oldest and most popular Bitcoin exchanges, was shut down after filing for bankruptcy, with 744,000 Bitcoins going missing. Former CEO Mark Karpelès would later be arrested by Japanese police in 2015 on charges of embezzlement. (16) (17)

Despite these setbacks, Bitcoin has continued to grow as a cryptocurrency. In 2013, growth in Bitcoin spiked after residents of Cyprus began transferring their money to Bitcoin wallets in response to the European Union’s proposed “haircut” of bank accounts in the country due to the financial crisis. (18)

As of 2017, Bitcoin has exploded in popularity, value, and mainstream acceptance. Several countries, including Japan and Russia, have passed legislation legalizing Bitcoin as a form of valid tender. Countless merchants and businesses now accept Bitcoin as payment, and Bitcoin ATMs have become a major presence throughout the world. (19) (20)

However, recent problems with Bitcoin’s scale resulted in a hard fork of the blockchain on August 1, 2017, splitting the currency into two: regular Bitcoin and Bitcoin Cash. Bitcoin Cash is distinguished from Bitcoin by its higher block size limit, a significant bottleneck with Bitcoin because it significantly slows down transactions and has also caused transaction fees to spike. (21) (22)

Additionally, Bitcoin now faces competition from numerous other cryptocurrencies such as Ethereum, Litecoin, and Dash, which have significantly cut into its market share. Many of these altcoins boast improvements over the basic Bitcoin design.

Despite this, Bitcoin’s longevity and reliability have established it as a force in the cryptocurrency markets, and one that is here to stay.

Mining

Bitcoin can be “mined,” a process that allows users to make money and also facilitate transactions on the network.

Mining is the term used to refer to using a computer or ASIC mining hardware to solve math problems on the Bitcoin blockchain, which expands the blockchain, makes transactions possible, and also allows the miner to earn Bitcoin passively. (23)

While mining was relatively easy in the early days of Bitcoin, the increasing size of the blockchain has upped the difficulty level considerably. However, it is still possible to turn a profit on the network. (24)

Mining can be done by using a computer’s CPU, its GPU, or a dedicated ASIC mining rig. However, due to the size of Bitcoin’s blockchain, CPU and GPU mining are no longer economical. It can take months, if not years to earn Bitcoin using CPU and GPU mining, and electricity costs could eat away any profits you could make. (25)

Instead, prospective miners should purchase dedicated mining rigs, which possess the horsepower necessary to mine Bitcoin in economical and profitable amounts. (26)

However, mining is costly in terms of electricity. If electricity is expensive where you live, it can significantly eat into or eliminate your profits. To ensure that you can turn a profit mining Bitcoin, make sure that electricity in your area is reasonably priced. (27)

With these caveats out of the way, Bitcoin mining can still be a profitable enterprise.

Recap

As the oldest and most recognized cryptocurrency, Bitcoin played an integral role in shaping the current cryptocurrency scene and revolutionizing money.

While it has its flaws and is not as technologically advanced as some of its newer competitors, Bitcoin’s stability and popularity with traders and businesses make it a strong player on the cryptocurrency markets.

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