The Essence of the Blockchain Technology and Cryptocurrency

essence of blockchain and cryptocurrency

In the last couple of decades, technological progress has accelerated its full-scale expansion on pretty much all spheres of human life. Every year there appears something new that can change the world and make it a little easier and more efficient. One of such inventions is the technology of blockchain and the new payment system created on its basis – cryptocurrency. In this article, we will try to explain what the blockchain technology is and why cryptocurrencies will change the world in the next 5-10 years.

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

  1. The essence of the blockchain technology
  2. Cryptocurrency types and their difference from other payment systems
  3. How are coins extracted?
  4. Forecasts for the cryptocurrency market
  5. Conclusion

1. The essence of the blockchain technology

Blockchain is quite a young technology, the first application that was launched on its base was Bitcoin, thus, blockchain is often referred to as a purely transactional network. In fact, the practical application of this technology is unlimited. Now there are blockchain applications that work in the fields of logistics, medicine, law, trade, rent, etc.

In short, blockchain is a chain, which consists of a large number of blocks, where various information can be stored. Each subsequent block stores data about each previous one in an encrypted form. The uniqueness of the technology lies in the fact that the entire register of data is decentralized, and its copies are simultaneously stored on tens of thousands of computers around the world. This provides the highest level of protection from third-party interventions. The data stored in the system is almost impossible to compromise, replace or delete.

Let’s review an example of where you could introduce a blockchain system. In order to achieve full transparency in the presidential elections (parliament, senate, etc.), they can be held on blockchain. If the government of any country dares to take such a step, it will be possible to consider that these are the first 100% non-falsified elections in the history of mankind. The technological base is already there, the matter remains for the world leaders, but most likely they will not be quite happy about such prospects.

With the help of this technology, intermediaries can be removed from the chain of interaction between buyers and sellers of goods and services, which makes cooperation more profitable and effective. The technology of blockchain has a great future, many analysts compare its importance to humanity with the invention of the Internet. It will be able to fully reveal its potential in the third decade of the 21st century.

2. Cryptocurrency types and their difference from other payment systems

As it has already been mentioned above, cryptocurrencies became the first mass applications that were built on the basis of the blockchain technology. The first one was Bitcoin, but in almost 10 years since its creation, about 2500 different coins and tokens having different value and performing different functions have been released. Some coins are designed purely for making payments, others can act as the domestic currency of a certain application, the third are able to guarantee dividends from developers for their holders. Types of coins are too numerous, you can read more about them in our article.

The main difference between cryptocurrency and traditional payment services is their decentralization. That is, coins do not have a specific center that can monitor the network. All participants of the system interact on the principle of equality, where each member of the community acts as a user and as a server at the same time.

Advantages over traditional payment systems:

  • Significant reduction of the commission and time of international transfers due to the absence of intermediaries. For example, a transcontinental payment for $99 million was recently made in the Litecoin network, the commission was only 40 cents, and the transaction took 10 minutes. Within the traditional payment systems, this would require 7-10 working days, and commission fees would be at least $100k.
  • Anonymity. Digital technologies both give us freedom and take it from us. Using a MasterCard or Visa, a person stops being anonymous. If you want, you can track the entire history of his/her purchases, his/her location, etc. Some cryptocurrencies guarantee total anonymity.
  • Absence of outside intervention. Any bank can freeze its client’s funds if it sees it fit. Since cryptocurrencies do not have a single center, such intervention in the work of individual wallets is almost impossible. Of course, it all depends on the type of wallet. For example, you can freeze your account at the exchange, but if the coins are on a hardware cold wallet, no one else has access to it, except its owner.

3. How are coins extracted?

Bitcoin is often compared with precious metals, in particular gold, because they have a number of similar characteristics:

  • limited amount (a total of 21 million BTC will be released);
  • the need for extraction (mining) and the gradual increase in the complexity of this process.

Some coins (such as Bitcoin, Ethereum, Litecoin, etc.) need to be mined. Let’s discuss what kind of process it is and how it works. So, coins are awarded to the miners who installed a certain amount of computer equipment and provided it for the system’s operation. You can obtain cryptocurrency in a variety of ways, even using a PC, but you should not wait for any serious earnings in this case. Miners often use more powerful hardware, such as video cards or ASICs. The computing power of miners ensures the operation of the system and the timely conduct of transactions.

4. Forecasts for the cryptocurrency market

It is worth noting that the market is now in a phase of deep correction in comparison with its peak values, which were observed in the January this year. But even if you look at the annual chart, you can see that the assets are showing good growth (about 250%). According to the two-year chart, the growth rate of capitalization is 21760%, and so on. So do not panic like most of the media. The fact is that there are many people who invested in late November-December 2017. Their outrage is justified, they lost 70-80% of their contributions, but it is unfair to make a conclusion from this that the cryptocurrency industry is collapsing.

Many analysts predict growth for this year by 20-30 times of today’s value. In general, analyzing the cryptocurrency market is a rather difficult task, and nobody can say for sure what rate will be at the end of the year. Let’s just say, there are no fundamental reasons for the collapse. As soon as the news background improves, the market should start to grow and possibly even reach new historical highs.

5. Conclusion

Many people interpret the technology of blockchain as a transactional-only network, but this is not true. The application spheres of this technology are numerous. Cryptocurrency is only the tip of the iceberg. Analysts predict the widespread introduction of decentralized applications in the 2020s.

Subscribe to The Coin Shark news in Facebook: https://www.facebook.com/coinshark/

John McAfee Will Shine the Light on Crypto

A crypto personality John McAfee took quite a serious position regarding his presidential campaign in 2020. He shared a couple of interesting details with his future electors

McAfee claimed that the main focus of his campaign is going to be blockchain, its implementation in various sphrese and raising awareness about this technology as well as cryptocurrencies among the people.

If we accept the Blockchain as our guiding light, our hearts and our minds can be free,” he added in a rather poetic way.

We remind you that McAfee does not actually want to become the President of the US, he just wants to run for the post. Here is why:

Why Is John McAfee Not Planning to Be the President?

Subscribe to The Coin Shark news in Facebook: https://www.facebook.com/coinshark/

The U.S.-China Trading War Influences Cryptocurrency World, Bitmain Suffers Most

Not long ago, we discussed that Bitcoin was in danger, since Chinese authority was able to attack it any time. The US decided to keep up with opponents and stroke the crypto world of China, namely crypto asset industry.

These two countries are currently in a state of trading conflict, introducing tariffs on goods traded with each other. In June the USA changed the classification of ASIC miner, called Antminer S9, in a way that Chinese miners can be at a loss. That month the “electrical machinery apparatus”, the given category to the ASICs, had a 2.6% tariff.

Later in August, the tariff raised by 25 per cent. At the moment, Chinese mining producers deal with the fee of 27.6 per cent on their US shipments.This action has a colossal impact on Bitmain, the company based in Beijing and being the biggest Chinese mining hardware maker.

Bitmain tried to cope with the pressure by filing for a Hong Kong IPO. It could reportedly rise $3 billion. The company’s filing also mentioned the fact that about 62.8% revenue came from overseas in first half of 2018, though there was no comment on how many sales had come from the US.

The crisis came to Bitmain at a very bad time. IPO filing showed the company’s turnover dropped in second quarter of 2018 drastically, losing about $400 million in compare to $1.1 billion net profit in the first quarter.

One of the analysts, Mark Li, reckons the US tariffs aim at making Chinese hardware less competitive than opponent ones produced in other countries. He also added that Bitmain’s boardship is more aware of technology arms race, where the company is falling behind

The cold trading war between China and States can last for a long time, yet no one is sure how much loss or profit it can bring, we are only able to watch and wait. Now we want to remind you

Mining Complexity: What It Is and Where It Will Get

Subscribe to The Coin Shark news in Facebook: https://www.facebook.com/coinshark/

TRON Is Partnering Up with Baidu: What Is the True Purpose of This Collaboration?

A decentralized blockchain platform TRON, which is one of the main competitors of Ethereum, announced its partnership with the Chinese web services giant Baidu.

Although, the TRON team assures the aim of this partnership is spreading blockchain solution among the crypto community, there has been a lot of speculation regarding this issue.

Many people believe that TRON is currently working on the launch of its own platform for video content, as an alternative to YouTube. Such assumptions were caused by the comments from TRON developers regarding the recent access issues on YouTube. They claimed that this would not have happened on TRON.

We remind you:

Justin Sun Offers the Venezuelan President to Connect Petro to Tron instead of Ethereum

Subscribe to The Coin Shark news in Facebook: https://www.facebook.com/coinshark/

Bitcoin Mining: How Are the Most Popular Coins Mined Today?

How to mine BTС today?

Quite a lot of people really managed to make a fortune out of Bitcoin mining. And many still manage to do so today. In this article, The Coin Shark will tell what mining is, how the most popular cryptocurrency is mined today, when the latest Bitcoin will be mined, what are the prospects of the digital currency mining industry and other things that every crypto-enthusiast is interested in.

Content:
(please, click the topic to scroll down to it)

  1. What is mining?
  2. How is Bitcoin mined?
  3. How many Bitcoins can be mined and what’s the time period for that?
  4. Types of Bitcoin mining
  5. Prospects of Bitcoin mining
  6. Conclusion 

1. What is mining?

Today, even those who are not really familiar with cryptocurrencies have definitely heard something about mining. However, it is not always clear what it actually is.

Mining is a computing operation. In fact, this is a kind of an attempt to solve a complex mathematical problem. The particular “X” that must be found as the result of the calculations is called a hash. If it is successfully found a new block is generated in the cryptocurrency blockchain. A block is a structural unit where the information about cryptocurrency transactions is recorded. It is sometimes not that easy to get all those terms, so let`s take a look at a rather simple example: a block is a kind of a banknote. Any banknote is a legal tender only if it looks in a certain way. It has a special design, watermarks, other security features, particular density, etc. Each banknote must meet certain specified parameters, otherwise, you will not manage to buy something for it and it will be just a piece of paper. The same thing with cryptocurrencies! Transactions are confirmed by being recorded into the blocks, and the blocks must be valid, must have a particular form. To meet this form, to generate a valid block, a hash with required parameters should be found as the result of computing operations. And that is exactly what miners are responsible for!

2. How is Bitcoin mined?

Bitcoin is a Proof-of-Work algorithm-based digital currency, that is why BTC is mineable. Proof of work actually means that transactions are confirmed, and the blocks are generated only if a certain work is done – new coins are issued only when one has managed to find the hash and create a new valid block. Every new block is generated approximately once every ten minutes. The Bitcoin code is written in such a way that, depending on the computing power in the network, the difficulty of the hash varies. In other words, the more powerful the miners are, the more difficult it is for them to find the hash. That is how the system maintains the balance between the available computing power and the complexity of the calculations. It does not matter whether only several personal computers are engaged in Bitcoin mining (as it was in 2009) or huge industrial mining farms (as it is happening today) – it will always take approximately ten minutes to generate every new block.

So, when miners do their calculations successfully and manage to find the hash, they are rewarded. This reward used to be as huge as 50 BTC. However, back then the number of coins was not actually a significant fortune. According to the Bitcoin code, this reward decreases by half every 210 thousand blocks. Since each block of Bitcoin is generated in about 10 minutes, it takes about four years to get 210 thousand blocks. So, every four years the reward is reduced by half. In 2012, there was the first reduction from 50 BTC to 25. The next reduction took place in 2016. Today miners get 12.5 Bitcoins for each generated block.

3. How many Bitcoins can be mined and what’s the time period for that?

It is only possible to mine a total of 21 million BTC. This maximum amount of cryptocurrency is provided by its programming code. First of all, this limitation is designed to prevent inflation and preserve the value of Bitcoin. Actually, those things are usually valuable, that have a limited supply, and if Bitcoin had an unlimited emission, like Ethereum and some other virtual currencies, it would have been potentially subject to inflation. As of mid-October 2018, according to coinmarketcap, the number of BTC coins in circulation reached 17,332,325, which means that only a bit more than 3.5 million coins remain to be mined. It would seem not a big deal – almost all Bitcoins have already been mined! But truth is, it will take more than a century to mine the remaining coins!

So, let’s see how long will it take for miners to get all Bitcoins. To calculate this, we should make several mathematical operations. Of course, these operations are not as complicated as those required to find Bitcoin hash. The computing power of your calculator will be enough! So that is what we have:

The reward is reduced by half every 210 thousand blocks (approximately once every four years). Accordingly, the number of coins issued will decrease every four years. So, 10.5 million BTC was issued during the first “four-year cycle”, when the reward for each block was 50 BTC. Then the number of coins is reduced by half with each cycle. According to this formula, the very last BTC will be mined about the year 2140! Interestingly, in the first seven “four-year cycles”, miners will extract 99% of the coins, and it will take more than a century to get the remaining 1%.

4. Types of Bitcoin mining

About ten years ago, when the first peer-to-peer decentralized payment system with a cryptographically protected digital cash (yep, it’s all about Bitcoin) was launched, there was only one, or perhaps several miners, in the network. Probably it was an ordinary PC or laptop owned by Satoshi Nakamoto – the mysterious Bitcoin developer – and maybe some other PCs owned by those involved in the development of Bitcoin. So initially users were able to mine Bitcoin using their own devices. The computing power of their processors was enough to perform necessary calculations and find Bitcoin hash. This type of mining was called CPU-mining. However, with the growing popularity of Bitcoin, more and more people joined the system, the load and difficulty increased, and eventually, it became clear that even the most powerful PC had not enough power to mine Bitcoin effectively. A casual user with his laptop was left behind. And the reason is that a probability of getting a reward is equal to the ratio of your individual computing power to the power of the entire network. So a new solution was found – users started mining Bitcoins using the computing power of video cards. That new type of mining was called GPU-mining. Several video cards were connected to a computer and the entire powerful device used special software to mine BTC. Today, a number of cryptocurrencies can still be mined using processors or video cards, but this is not working out with Bitcoin. To be able to find Bitcoin has users should make really complex calculations and special high-performance devices are required. These are ASIC-miners – a special equipment with high computing power and price.

Today users who have special equipment for BTC mining combine their computing power in special mining pools. Pools are groups of miners who use their computing power together and jointly perform the operations necessary to obtain Bitcoin hash. The probability of getting a reward is much higher than if users mine the cryptocurrency solely. This reward is then distributed in proportion to the computing power “invested” by each individual miner.

Moreover, cloud mining is also relatively popular. This, in fact, means that a user simply rents computing power from owners of large mining farms, who are often the manufacturers of mining equipment. Despite the fact that today this type of mining is gradually becoming less attractive, it still has its advantages – users do not need to buy equipment, place it, set up, maintain its operation, update hardware, pay for electricity, etc.

5. Prospects of Bitcoin mining

Many believe that the mining era is almost over and there are some reasons for this. After all, as we have already figured out, even the cryptocurrency code itself provides a reduction of the reward. If Bitcoin rate does not increase significantly, nobody will be interested in running expensive mining equipment and earning a couple of thousand satoshi (1 satoshi is 0.00000001 BTC).

Today mining is a fairly centralized industry with and it is rather difficult for beginners to join it. Especially for those who do not have a lot of money. Even owners of huge industrial mining farms experience some problems. For example, some of them realize that the equipment they used in 2017 cannot provide the same profitability in 2018. Today BTC mining is largely controlled by mining pools one hand and owners of huge industrial mining farms on the other and this tendency for mining to become more centralized is likely here to stay.

6. Conclusion

So, Bitcoin mining is not a “gold rush” anymore. The increased difficulty made it way more centralized and way less available for casual users. Today, mining still provides big profit for those who own huge mining farms or at least some high-performance equipment. The Bitcoin rate is far from the historical maximum, but nevertheless, it remains quite significant, and most importantly, according to many experts, has prospects for an even greater increase. However, today it is practically impossible to make money on mining without big preliminary investments. Mining prospects depend on the rate of cryptocurrency, and on the other hand, are also predetermined by the Bitcoin programming code itself. However, this predetermination can be defined differently. Yes, the reward is reduced every four years, so mining can become less appealing in the future. But this reduction can be compensated if Bitcoin price increases. Anyway, today many crypto enthusiasts consider other mining options. Sometimes it is easier to mine other coins, and then, if desired, exchange them for Bitcoin. One thing is clear – the mining industry has been changing, and the time will tell,  what will happen to it in the medium term.

Subscribe to The Coin Shark news in Facebook: https://www.facebook.com/coinshark/

The Blockchain-Based Platform of Telegram Is Almost Ready

Telegram (cosmonaut)

As reported by the news media Vedomosti, the first news about the upcoming release of the blockchain of Telegram Open Network (TON) appeared in September and were privately sent to the major investors.

The project is approximately 70% ready. The main component, Virtual Machine, is fully completed, meanwhile, the developers are finishing up with the actual blockchain: the structure for creating new blocks and storing data in them.

Pavel Durov, the founder of Telegram messenger, and his team managed to raise almost $2 billion for this platform. It will be functioning some time at the end of November.

We remind you that the first stage of this blockchain, the Telegram Passport, which is a verification and authentication service, successfully went live in July.

Telegram Launches Passport Authorization Service

Subscribe to The Coin Shark news in Facebook: https://www.facebook.com/coinshark/

Sony Will Manage Its Work Using the Blockchain Technology

The Japanese electronics giant Sony announced the adaption of the blockchain technology in order to improve and upgrade its systems of work.

As stated in the official press release of the company:

This new system is based on Sony and Sony Global Education’s previously developed system for authenticating, sharing, and rights management of educational data, and additionally features functionality for processing rights-related information.

Different branches of Sony will utilize blockchain for similar purposes, but in different spheres, namely:

1. Sony Corporation, which is actually a producer of electronic devices, will create a special management structure on blockchain. It will help keep track of copyright of particular digital content and protect it from any type of violation.

2. Sony Music Entertainment will use the system while focusing mainly on music-related content. Given the amount of music stolen nowadays, Sony representatives believe that their innovation might help smaller artists keep ownership to their own music.

3. Sony Global Education aims at revolutionizing the sphere of education. Blockchain will be used to manage and distribute information and store educational content.

This is not the first time the company touched upon blockchain. In the past, it submitted around 20 different blockchain-related patents and made it into top-30 businesses that work with this technology.

Sony is not the only electronic device producer that took interest in blockchain. We remind you:

Samsung Created a Blockchain Platform for Banks

Subscribe to The Coin Shark news in Facebook: https://www.facebook.com/coinshark/