For those of you who really want to learn about cryptocurrencies like Bitcoin, the two most popular books to read are "Digital Gold" and "The Age of Cryptocurrency".
These books are also recommended by Ian Balina. Ian is one of the influencers in crypto who is working on making it mainstream.
A cryptocurrency is a digital or virtual currency designed to work as a medium of exchange. Every transaction is a file that consists of the sender’s and recipient’s public keys (wallet addresses) and the amount of coins transferred. The transaction also needs to be signed off by the sender with their private key. All of this is just basic cryptography. Eventually, the transaction is broadcasted in the network, but it needs to be confirmed first.
In early 2009, an anonymous programmer or a group of programmers under an alias Satoshi Nakamoto introduced Bitcoin. Satoshi described it as a ‘peer-to-peer electronic cash system.’ It is completely decentralized, meaning there are no servers involved and no central controlling authority. The concept closely resembles peer-to-peer networks for file sharing. In a decentralized network like Bitcoin, every single participant needs to do this job. This is done via the Blockchain.
The blockchain is an undeniably ingenious invention – the brainchild of a person or group of people known by the pseudonym, Satoshi Nakamoto. But since then, it has evolved into something greater, and the main question every single person is asking is: What is Blockchain?
“The blockchain is an incorruptible digital ledger of economic transactions that can be programmed to record not just financial transactions but virtually everything of value.” - Don & Alex Tapscott, authors Blockchain Revolution (2016)
Blockchain technology is like the internet in that it has a built-in robustness. By storing blocks of information that are identical across its network, the blockchain cannot:
- Be controlled by any single entity.
- Has no single point of failure.
Bitcoin was invented in 2008. Since that time, the Bitcoin blockchain has operated without significant disruption. (To date, any of problems associated with Bitcoin have been due to hacking or mismanagement. In other words, these problems come from bad intention and human error, not flaws in the underlying concepts.
what is altcoins?
Altcoins are any cryptocurrency other than Bitcoin. They are less well-known and established. It can be bought with Bitcoin, Ethereum, Bitcoin Cash, Litecoin, Tether and a few more. Most people buy altcoins with Bitcoin, Ethereum and Tether. Tether is always pinned to 1 $ USD. So you can cash in or out in Tether (USDT) so avoid your value to go up and down all the time.
What is a coin?
A coin is like a currency for paymentsystems. The most famous one is Bitcoin (BTC). Bitcoin can be used to pay for a product or service the same way the dollar or euro does.
What is a token?
A token can be described like a utility token that you need to use something, like an application. You can use it for trading as it has value, but it's not a currency the same way a coin is. A good example is Binance (BNB). You are using the token to get lower fees when trading on their exchange.
ERC-20 is a technical standard used for smart contracts on the Ethereum blockchain for implementing tokens. ERC stands for Ethereum Request for Comment, and 20 is the number that was assigned to this request. The clear majority of tokens issued on the Ethereum blockchain are ERC20 compliant.
A smart contract is a computer protocol intended to digitally facilitate, verify, or enforce the negotiation or performance of a contract. Smart contracts allow the performance of credible transactions without third parties. These transactions are trackable and irreversible.
What will cryptocurrencies be in the future and how will it work?
Around these days (written 17.06.18) and before, cryptocurrencies have more or less only been availiable on exchanges, allowing people to accumulate assets in the projects people like. Either just for profit or becuase they see the value and use case for them selves in the future (1 - 5 years). Some people say the train has already left the station, because we have been in a very long bear market (bear market = downwards trend). This is not true, the train hasn't even been built yet. If we look at Oslo, Norway for a second, there is only one restaurant that allows you to pay with bitcoin (The Kasbah). Cryptocurrencies have a set amount of coins/tokens, and can't be printed (except stable coins like Tether). Today 1 Bitcoin is worth 6557 $ USD. Imagine the day when there are 1000 restaurants, 1000 food stores, 1000 hairdresser, 1000 cardealers in Oslo who accepts Bitcoin.
There are different ideas of how paying with cryptocurrencies will work, and they will work in the same way as you pay with fiat. Cards, NFC applications and other digital solutions.
why do we need crytpcurrencies when we already have fiat?
It's a valid question to ask, why do we need them? Cryptocurrencies done the right way will help us against fraud, lower fees, identity theft, access, decentralization and currency exchange.
Fraud: Individual cryptocurrencies are digital and cannot be counterfeited or reversed arbitrarily by the sender, as with credit card charge-backs.
Identity theft: When you give your credit card to a merchant, you give him or her access to your full credit line, even if the transaction is for a small amount. Credit cards operate on a “pull” basis, where the store initiates the payment and pulls the designated amount from your account. Cryptocurrency uses a “push” mechanism that allows the cryptocurrency holder to send exactly what he or she wants to the merchant or recipient with no further information.
Decentralization: A global network of computers use blockchain technology to jointly manage the database that records Bitcoin transactions. That is, Bitcoin is managed by its network, and not any one central authority. Decentralization means the network operates on a user-to-user (or peer-to-peer) basis. The forms of mass collaboration this makes possible are just beginning to be investigated.
satoshi and fiat value
The person or group that created Bitcoin is called "Satoshi Nakamoto". 1 Bitcoin will always be 1 Bitcoin. When you want to know the Bitcoin value of an altcoin we talk about sats-value (satoshi). This is mainly used when you are checking the value on www.coinmarketcap.com.
This is important to understand if and when you want to sell, depending on if you want to make a satoshi profit or fiat profit. Some people want to become rich in fiat (EUR, USD etc) and some in Bitcoin (BTC). If the price of Zilliqa (ZIL) increases compared to Bitcoin (BTC), you can sell your ZIL back to BTC cheaper, as you get more Bitcoin.