How Does Bitcoin Work? A Detailed Review of the Most Popular Coin

bitcoin works

2017 can be surely called the year of cryptocurrency. It was last year when their existence became known to the general public. At the moment there are more than a thousand different coins. Most of the credit, of course, belongs to Bitcoin. Demand for Bitcoin is quite large, even if we take into account the current drop of the course. In this article we will explain how cryptocurrency is arranged, how it is mined, and we need it in general. We will take the most popular coin – Bitcoin – as an example.

Contents:
(please click the topic to scroll down to it)

  1. What are cryptocurrencies and why do we need them?
  2. What is Bitcoin transaction or how is Bitcoin transferred?
  3. How does a Bitcoin farm work or where do new coins come from?
  4. How to use Bitcoins?
  5. Conclusion

1. What are cryptocurrencies and why do we need them?

Cryptocurrencies are digital money, the main feature of which is absolute decentralization. Unlike Qiwi, Webmoney, Yandex Money, etc., there is no single server for cryptocurrency, blocking which you can “stop” the whole network.

In simple words, cryptocurrencies are absolutely independent of any systems (public, banking, financial, etc.). A similar “superpower” is given to the coins by the technology, based on which they are created – blockchain. With this technology, you can consistently encrypt any data, not necessarily financial transactions. This data register (if we are talking about cryptocurrencies, the transaction list) is stored on tens of thousands of computers all over the world simultaneously. The interaction between the participants is built on absolute equality. Each user is both a user and a server, similar to the peer-to-peer system used in uTorrent.

At this point in time, there is no such technology that could compromise, replace or block blockchain (in case of a large community). You will simply need a titanic amount of processing power to carry out such an action.

Another feature of Bitcoin (BTC) and other coins is their absolute autonomy. Intermediaries are not required for the correct operation of cryptocurrency, so there are pretty much no fees when making transactions

2. What is Bitcoin transaction or how is Bitcoin transferred?

Daily transactions in the Bitcoin (BTC) network only amount to about $4 billion. If you want to sell more than buyers want to bue, the rate of Bitcoin rate, in the opposite case it increases. This mechanism is understandable to the vast majority of people, but not many people understand how the Bitcoin transaction is carried out from a technical point of view. Let us try to explain this issue in simple words.

When transferring Bitcoin from one wallet to another, a section of data confirmed by a unique signature is collected in blocks. Each transaction is unique and there can not be two identical ones. The information stored in the section is mostly information about previous transactions that are encrypted into a special code (hash). Blocks are connected in chains, which are necessary both for checking the implementation of the payment itself and for physically implementing special transaction parameters. Generally speaking, each new transaction stores data about all previous payments from the chain of blocks

3. How does a Bitcoin farm work or where do new coins come from?

Fiat (paper) money is printed on the currency court, precious metals (including gold) are extracted from the depths of our wonderful planet, but where do bitcoins or other digital coins come from?

As we said above, cryptocurrency does not have any single centers and it is logical to assume that coins are produced by the forces of the entire community. Mining (extraction) of cryptocoins is carried out by providing the platform with computing power of the equipment. People who want to start mining bitcoins should install special farms, which consist of video cards or special network equipment for mining (ASIC-miners). Using its computing power, equipment solves complex equations and collects data into blocks. For this, the Bitcoin algorithm awards the miners with a certain number of coins. It was possible to receive 50 BTC for calculating the first block, after 210 thousand blocks are extracted, the reward reduces by half. At the moment it is 12.5 BTC per block.

The emission of Bitcoin is limited to 21 million coins. Despite the fact that more than 17 million coins have already been mined, the last piece will be mined not earlier than in May of 2140. Satoshi Nakamoto (pseudonym of the Bitcoin creator) did this intentionally in order to prevent the inflation of the coin.

4. How to use Bitcoins?

Anyone with access to Internet can use the most popular cryptocurrency. In order to pay with Bitcoins in the Internet, it is enough to have a virtual wallet (such as Blockchain.info). However, it is not practical to store all your savings on such services. If you want to buy Bitcoins and leave them be for several years until the rate grows, then it’s better to use a cold wallet. You can read more about the classification of cryptocurrency wallets in this article.

If you want to get free coins, you can use bitcoin faucets – these are special services that pay tine shares of BTC for performing certain actions (viewing advertisements, clicking, registering in services, etc.)

5. Conclusion

Cryptocurrencies have recently been attracting more and more attention of the public. Bitcoin is considered the leader of the industry. Its operations are based on the technology of blockchain. For this reason, Bitcoin does not need a single center, regulators or intermediaries. All transactions are made directly from wallet A to wallet B. Data on financial transactions are stored in blocks. The work of the system is supported by the miners who provide the computing power of their own network equipment. For this, the system rewards them with a certain number of coins.

There is no need for deep knowledge in the field of cryptography for common use of Bitcoin. You just need to create a wallet and have access to the Internet to carry out transactions.

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A Major Japanese Bank Is Developing a Blockchain-Based Payment Network Due in 2020

Mitsubishi UFJ Financial Group, Inc. (MUFG) is on the most prominent financial institutions in Japan, moreover, it is the world’s fifth largest bank in the world. Located in Tokyo, MUFG has branches in 50 countries all over the globe and over 150 thousand employees.

The financial group provides services in the various fields like leasing, asset management, commercial banking, credit cards, securities and others. It also constantly collaborates with the largest banking establishments in America, Europe and Asia.

MUFG and blockchain

Following the example of its competitors and partners, Mitsubishi UFJ Financial Group decided to involve innovative technologies in order to upgrade and advance its payment systems.

According to the official press release of the bank, it is partnering up with the Massachusetts-based company Akamai Technologies, which is a leading provider of content delivery and site accelerating services.

MUFG and Akamai Technologies, Inc. (“Akamai”) announced today that they have agreed to strengthen their strategic alliance towards the full-scale launch of a new payment network business and establishment of a joint venture, Global Open Network, Inc.,” is mentioned in the press release.

The main purpose of the collaboration, the development of a blockchain network for payments, is planned to be launched in 2020.

As stated by the bank representatives, they want to experiment with “diverse payment schemes” which will allow to expand their range of services.

We remind you that another global financial establishment, Abu Dhabi Commercial Bank, is also working on implementing cutting-edge technologies and launched a financial management app.

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Cryptocurrency Prices Today, February 14: Cryptocurrency Did Not Catch The Romantic Atmosphere And Began To Fall In Price

Bitcoin, Ethereum, Ripple, Bitcoin Cash, EOS, Litecoin, Cardano, Stellar, IOTA, Dash, Monero: Cryptocurrency Rate

According to the Coingecko online platform, Bitcoin (BTC) lost 0.35% over the past 24 hours after a period of growth. The price at the time of writing is $3607 per coin.

Cryptocurrencies have returned to the red zone:

Bitcoin Cash lost 0.6% over the past 24 hours and costs $121 per coin;

Ripple fell by 1% and costs $0.30;

EOS decreased by 4.1% and its price is $2.78;

Litecoin dropped by 3.2% and its value is $41;

Cardano lost 2.5% and its cost is $0.040;

Stellar fell by 1.1% and costs $0.076;

IOTA decreased by 1.6% and its value is $0.26;

Dash lost 1.9% and its price is $78;

Monero dropped by 2.5% and costs $47.

Over the past 24 hours, Ethereum has lost 0.7%. The rate of the coin is $122.

The total market capitalization fell to $120 billion. Bitcoin accounts for 52.5% of the total. In monetary terms, it is $63 billion.

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Report: Blockchain Investments Cannot Overcome Fintech Funding

European blockchain companies set a record in 2018, however, they are unable to overcome funding that comes to financial technology companies.

Blockchain boom in 2018

At the end of 2017, the rate of Bitcoin skyrocketed to incredible price of $19,000. As the first cryptocurrency began gaining popularity, people started to wonder about the technology that stayed behind. After that people understood that blockchain can be used not only in crypto, but also in other spheres of life.

Some companies began to create their own blockchain and implement it into financial sector, political sector, etc. For example, Western Union supports cryptocurrency and blockchain, and it seeks the ways of their implementation; LG Uplus released a blockchain cross-border payment system.

After the cryptocurrency prices collapsed, the blockchain technology remains to be quite popular topic on different IT conferences and summits.

Blockchain investments cannot overcome fintech funding

According to Innovate Finance’s ‘2018 FinTech VC Investment Landscape‘ report, blockchain and cryptocurrency industry in Europe has witnessed a series of significant deals, but notably just four deals amounted to over $300 million. These deals include such projects, as Paxos (Bankchain), Dfinity, SEBA Crypto, Bitfury. They raised from $65 million to $103 million in different periods of the year.

Analysis shows that fintech companies are much more popular among investors than blockchain. European challenger banks Revolut and N26 alone raised $461 million across 7 deals. They closely followed by personal finance and wealth management ($333.61 million), and alternative lending and finance ($306.64 million) industries.

Fintech’s big picture

If we take the investments of all financial companies all over the world, we will see that they raised $36.6 billion from venture capital investors.

The leader in fintech investments is China, Chinese company Ant Financial set a record for  both fintech and venture capital, raising $14 billion. In overall, China led with $18.9 billion invested across 90 deals.

Next place is taken by the United States; it has raised $10.6 billion across 1,042 deals. The United Kingdom followed on in third place with $1.7 billion invested across 261 deals.

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Cryptocurrency Prices Today, February 13: Cryptocurrencies Are Showing an Upward Trend

Bitcoin, Ethereum, Ripple, Bitcoin Cash, EOS, Litecoin, Cardano, Stellar, IOTA, Dash, Monero: Cryptocurrency prices

According to the online platform Coingecko, Bitcoin (BTC) added 0.4% over the past 24 hours after a period of growth. The price at the time of writing is $3620 per coin.

Cryptocurrencies once again moved to the green zone:

Bitcoin Cash added 0.57% over the past 24 hours and costs $121 per coin;

Ripple grew by 1.96% and costs $0.30;

EOS gained 5.78%, and its price is $2.92;

Litecoin lost 1.48%, and its value is $42;

Cardano increased by 1.31%, and its cost $0.041;

Stellar added 0.2% and costs $0.076;

IOTA grew by 3%, and its value is $0.27;

Dash remains stable, and its price is $82;

Monero gained 2.51% and costs $49.

Over the past 24 hours, Ethereum added 2.37%. The exchange rate of the coin is $123.

The total market capitalization is $121 billion. Bitcoin accounts for 52.6% of the total volume. In monetary terms, it is $63 billion.

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How To Read Trading Charts

Cryptocurrency exchanges work on the same principle as traditional exchanges. Potentially, it is possible to earn very good money on these platforms, but for this, it is needed to be able to correctly read the cryptocurrency coin chart. Of course, in order to become a professional trader, it needs to learn and practice a lot, but if your goal is to understand the basics, this article will be an excellent starting point in the exciting world of trading for you.

There are a huge variety of different charts, but the most common is the “Candlestick chart”. The chart is a much more informative tool than digital or text analysis. Using graphics, it is possible to quickly navigate and understand the current mood of the crowd, as well as the balance of power between sellers and buyers of a particular asset. Based on the obtained data, it is possible to calculate the potential profitability or unprofitability of a particular deal.

1. The main types of stock charts

As it was mentioned above, there are a huge number of different types of charts, but the main ones are lines, bars, and candlesticks. All of these tools (with the exception of the line charts) can tell about:

  • price at the beginning of the selected period (1 minute, 5 minutes, 15 minutes, 1 hour, 1 day, 1 week, etc.);
  • price at the end of the selected period;
  • the minimum and maximum rate of the selected period.

By and large, the crypto chart clearly shows the history of the struggle between bulls and bears. In the process of this confrontation, a large number of deals are made. It should be understood that even a slight fluctuation of the price means that some have already earned on it, while others, on the contrary, have suffered losses.

2. “Candlestick chart”

Let’s take a closer look at the most common version of charts, namely “Candlestick chart”. It was invented almost 400 years ago by a rice seller from the country of the Rising Sun. The process of observing a line chart is not entirely convenient; for this reason, the construction of “Candlestick chart” is based on the principle of dividing the total time into specific periods. This principle helps to quickly navigate what is happening on the market and, accordingly, to give the Bitcoin trend prediction or any other financial asset forecast.

3. How to read the chart “Candlestick chart”?

One candle represents the range of prices for an asset for a certain period of time. The boundaries of the candle are the lowest and highest asset price in this period of time. If the candle`s color is green, this means that the asset has increased in value over a given period of time; if it is red, then, on the contrary, it has fallen.

Source: https://www.tradingview.com/

If you look closely at the above chart, you will notice:

  • the candle corresponds to the time interval – 60 minutes;
  • the minimum asset price was $3485,24;
  • the maximum asset price was $3733.58;
  • This hour began with a price of $3506,42 and ended with the price of $3687 (for this reason, the candle is green).

The main parameters that should be paid attention to when reading cryptocurrency charts are:

  • asset price;
  • time;
  • trading volume.

By and large, the entire analysis of charts is an ordinary calculation of the balance between supply and demand. It is possible to estimate the level of the strength of bulls or bears through the asset price (vertical axis) and the volume of transactions (horizontal axis). These skills allow experienced traders to take the right position in advance and earn money on any price movement.

4. Conclusion

In this article, we talked about how to read cryptocurrency charts. As it was mentioned above, there are a huge number of different types of charts, but the most popular and often used is the option “Candlestick chart”. The basic principle of this type of charts is to divide the time into certain periods. It is quite informative and easy to read. If you want to start trading, then you definitely need to get a deeper understanding of this topic.

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Bitcoin Trading in Venezuela Hit All-Time High: The Possible Future of Bitcoin

According to the report of TrustNode, Bitcoin volumes have surpassed all time high in Venezuela, rising above 2,000 BTC for the first time on peer-to-peer exchange LocalBitcoins.

Bitcoin is the only way to feed family in Venezuela

You may have heard that Venezuela has been experiencing economic crisis as the national currency – the Venezuelan bolivar – has collapsed and become valueless.

The citizens suffer from a lack of basic supplies, including products, medicines, etc. The supermarket shelves are bare. Children are fainting from hunger in their classrooms. The situation changed even worse when the government of Nicolas Maduro blocked U.S. humanitarian aid from coming into the country through the Columbian border.  

The administration of the opposition leader Juan Guaidó remain optimistic, they are convinced that they are able to pass the aid to the people. However, the Venezuelans do not trust anyone anymore, and the only hope left is Bitcoin. People started mining Bitcoin to convert it into dollars to purchase foods and other necessities.

All-time high of the Bitcoin trading

As the 2019 Venezuelan protests caused by presidential crisis are in full swing, people started to trade Bitcoin at full. That is why, the weekly volume of the BTC-to-Venezuelan bolivar (VES) pair increased to 2,454 BTC. It is worth $8.95 million per week and $1.29 million per day.

Bitcoin Future in Venezuela

Tuesday is going to be a big day for Venezuela, according to the Washington Examiner, on Tuesday, February 12, the Venezuelan people plan to demand Maduro’s resignation on the streets all over the country, and try to bring U.S. aid across the Colombian border. Nicolas Maduro has ordered his military to stop them. So the future of Bitcoin depends on who will win.

If Nicolas Maduro remains to be the President of Venezuela, then Petro coins will have more power than Bitcoin. However, if the opposition leader Juan Guaidó overthrows the current government, then Bitcoin will definitely have future in Venezuela as Juan Guaidó gives preference to Bitcoin over Petro.

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