The latest buzzword in tech and financial circles these days is Cryptocurrencies, it has gotten everyone interested from the small-time investor to Tech moguls to Big Banks. We have had so many different names getting thrown around like Bitcoin, Ethereum, Ripple, Litecoin etc. and all having different values and use cases. Today we will try to understand what all the craze is about and, in the process, understand a few of the primary misgivings about cryptocurrencies.
The 1st and most popular Cryptocurrency, whose price has been a keen interest of speculation and discussion among all. Bitcoin was created by someone called Satoshi Nakamoto, the real identity of this person or group is still unknown and has been a source of mystery among tech enthusiasts. Bitcoin was created based on a white paper concept which talks about blockchain.
Before we deep dive into blockchain or Proof-of-Concept, let’s take a step back and define what Bitcoin is in the simplest language – It is a currency in the online world (Digital Currency/form of cash in an online world), transaction in which happen without any central authority (Bank/RBI/SEC etc.) as it is transmitted by making use of a peer-to-peer network. These transactions are stored in a digital database (Ledger) called blockchain, but before its addition to the blockchain, the transaction needs to be verified by most nodes on the network.
Now you must be thinking how Bitcoin got created or came into existence, well, to answer that you need to understand one more term called Mining. The process of verifying the transaction and unearthing new blocks is called Mining. Anyone with suitable hardware and software can participate in mining. In the process of unearthing new blocks by solving complex puzzles, Bitcoin is the outcome. It is the prize that is received at the end of the process by who is the fastest to discover the next block on the chain.
It is the cryptocurrency of the Blockchain based on Ethereum platform. It is the cost which is received by Miners for extracting new blocks. The core difference lies in the fact that Ethereum has a scripting platform which is run on EVM (Ethereum Virtual Machines), This scripting platform is used to write smart contracts. Smart Contracts are codes written on immutable ledger which get auto-executed based on certain keyset conditions.
So, Bitcoin is more conceptual as a Digital Currency for payments where else Ethereum is more generic in nature with applications in various fields like healthcare, supply-chain etc. with the use of Smart Contracts.
ICO – Initial Coin Offering
Assume you have an idea of a real-world implementation of Ethereum blockchain in the healthcare industry, you want to create a product for that implementation but don’t have the funds needed for the full-scale development. That is where the proof-of-concept comes into the picture, you develop a POC and then raise funds through ICO. It is like fundraising through IPO by a firm in the equities market, the firm will sell a certain amount of tokens in the exchange market to raise funds. People will buy your token based on parameters like how good the concept is, how strong the Dev team is technically, who is the brain behind the concept, etc.
All the major tokens can be traded on online exchanges which makes them exciting and causes a fluctuation in the real-world prices associated with them. These exchanges let you convert your USD into Cryptocurrencies or trade the tokens you have mined.
Now that we have had a look at the basics of Bitcoin, Ethereum & ICO, let us have a look at the below table which gives information of some famous cryptocurrencies-
|Founder||Satoshi Nakamoto||Vitalik Buterin||Chris Larsen & Jed McCaled||Charles Lee|
|Description||Digital Currency used in peer to peer network||Decentralized platform which runs smart contracts||Real-time gross settlement and remittance system backed by major banks||Like Bitcoin with different hashing|
|Mining Process||Processor Intensive||Memory Intensive||Not minable||Processor Intensive|
|Hashing Algorithm||SHA 256||Ethash||Ripple Protocol Algorithm||Scrypt|
Source – coinmarketcap.comLoading Likes...