Cryptocurrencies are actively conquering the market. Many retail outlets and even state structures are happy to accept bitcoin and other coins for payment. However, most new cryptocurrencies never gain popularity – they appear and disappear with no trace. Bitcoin is considered the king of the cryptocurrency market, it also sets the mood for all alternative cryptocurrencies, altcoins.
Bitcoin was created anonymously in 2009 and implemented the world’s first deflationary monetary model and person-to-person payment structure. Its emission is limited to 21M bitcoins, which will be mined gradually due to the complication of the mining process. The last coin will be mined in 2140. Back in 2020, Bitcoin could be bought for $8K, and now one Bitcoin costs about $33K.
Below we selected the most important and necessary facts about the world of cryptocurrencies so that you keep up with the train of innovations.
Cryptocurrency – a miracle of new money
Cryptocurrencies allow people to make person-to-person payments without the involvement of third parties in the form of banks. Also, digital money allows everyone who has access to the Internet to fairly and fully manage their money and earn.
Cryptocurrency has no barriers
Barrier-free international transactions with super low fees are made possible by cryptocurrency. The business that uses it does not have to deal with foreign exchange and conversions. The digital money infrastructure has been developing since 2011, and now many large old-school companies and even governments are interested in cryptocurrencies or are trying to design their own. This is the dawn of the digital transparent economy.
Impossible to lose your wallet
Cryptocurrency does not exist in physical form, and therefore it is impossible to put it in a physical wallet. For this, there are special hardware and software (cold and hot) cryptocurrency wallets. It can only be used with a private key, a unique word sequence. And if you lose this key, then it will be almost impossible to operate your crypto wallet again.
20% of all bitcoins are stored in wallets, which owners do not have access to
According to the analytical company Chainalysis, which studies blockchain technology, there are now more than 18.5 million bitcoins in the world. However, 20% of them, totaling $140 billion, are in lost or blocked wallets. Many became happy owners of bitcoins 10 years ago, when it first appeared and cost nothing. However, the sharp rise of BTC has forced wallet owners to activate themselves.
For example, a programmer from San Francisco, Stefan Thomas, lost the password from the hard disk, which stores 7,002 bitcoins, or more than $230M now. The storage device allows you to enter an incorrect password 10 times and then locks out completely. Stefan Thomas has already used eight tries. The programmer admitted that he was disappointed with how the cryptocurrency works: he does not like the idea that people should be banks for themselves and take responsibility for managing funds and storing private keys.
An IT specialist from Wales, James Howell, in 2013 accidentally threw away a hard drive containing 7,5K BTC. Now he asks the city authorities to allow him to search the landfill and promises to give the city residents 25% of the amount in their wallet.
All that remains is to wish these «lucky ones» to train their memory.
Bitcoin’s inventor is unknown, but there are guess-works
Everyone has heard of Bitcoin, which is not only the most expensive cryptocurrency, but also the pioneer of the market, which gave impulse to all altcoins’ creation. Satoshi Nakamoto is considered the creator of Bitcoin. There are many theories: that this is not one person, but a group of individuals, or an anonymous crypto anarchist, or a government group. There is also a rumour that this is an abbreviation of the leading tech giants: Samsung – Toshiba – Nakamichi – Motorola. The story of the man behind the name “Satoshi Nakamoto” is intricate and very interesting. Let’s try to figure it out in the next article.
There are over 5,000 different cryptocurrencies
Cryptocurrency is the future, and everyone, without exception, wants to jump on this train. That’s why new cryptocurrencies are constantly emerging. There are more than 5,000 different cryptocurrencies in the world. Let’s be honest, most of them cost almost nothing. And whoever can find a diamond in a haystack – a worthy project that will soon conquer the market among all the hopeless shitcoins – will surely become rich.
With so many altcoins the creators of new ones have to think outside the box, coming up with catchy names. Therefore, there are cryptocurrencies in the world with such extravagant names as PizzaCoin, Cabbage, DogeCoin (named after the Internet meme) and Coinye (don’t you know Kanye West?).
No altcoin has been able to remove His Majesty Bitcoin from the throne at the top of the market, but one coin has forever taken the second step of the pedestal.
Ethereum is the second largest cryptocurrency after Bitcoin in terms of price and popularity. Ethereum was designed at the end of 2013 by cryptocurrency researcher and programmer Vitalik Buterin, who was only 19 years old!
Ethereum was launched in mid-2015, and now the number of transactions on the network exceeds a million per day. The second most popular cryptocurrency is notable for its “whales” – about 300 people have purchased tokens worth more than $1M, and now they hold about a third of all Ethereum on the market.
In some aspects, Ethereum is more technologically advanced than Bitcoin. Tech enthusiasts interested in smart contracts and decentralized financial applications prefer this particular currency. First, it runs on its own blockchain with a new Proof-of-Stake algorithm, which is less energy consuming and faster than the Bitcoin blockchain. In addition, the emission of Ethereum is not limited like bitcoin, and many perceive this as a plus.
Mining is harmful to the environment, but more and more “green” cryptocurrencies are appearing in the world
In 2019, scientists at the Technical University of Munich calculated that the blockchain network that powers Bitcoin consumes 45.8 TW/h of electricity every year. As a result, 22 to 22.9 Mt CO2 is released into the atmosphere annually. This is comparable to the carbon footprint of countries like Jordan or Sri Lanka.
Initially, bitcoin miners used ordinary personal computers with a computing power of 0.01 GH/s (gigahash per second, the number of combinations that the equipment can go through per unit of time) and energy efficiency of 9 thousand J/GH (joules per gigahash, a unit of energy per computation unit). Now they have switched to specialized systems based on integrated circuits with a capacity of up to 44 thousand GH/s and an efficiency of 0.05 J/GH. The researchers also found that 68% of capacity is concentrated in Asia, 17% in Europe and another 15% in North America.
Making the process of mining cryptocurrency more eco-friendly is possible by transferring mining farms to renewable energy sources. Now more and more cryptocurrencies appear in the world, which are designed to improve the environmental situation. For example, SolarCoin – is aimed at the development of solar energy. Energy producers register their installation and open a wallet that acts like a bank account. For every MW/h of energy produced, they receive one Solarcoin.
There is also a groundbreaking new eco-friendly Chia blockchain. The project works on a revolutionary chain that works thanks to free space on the hard drives of miners. Let’s figure out what kind of new algorithm was invented. The Proof-of-Space-and-Time algorithm is based on using hard disk space as the main resource for mining (the process during which new transactions are added to the blockchain), rather than computing power. The Bitcoin network uses Proof-of-work. Proof-of-work is the principle of creating blocks in a blockchain, in which network validators must find a solution to a certain complex problem. Meanwhile, it consumes a huge amount of electricity. Is a huge disadvantage for the Proof-of-work network, on which Bitcoin is running.