In this Tech Talks in 10 Minutes series, I’ll be explaining the blockchain in the simplest way that I can, and yes in less than 10 minutes.
A bit of Blockchain history
The first actual blockchain was designed in 2008, by Satoshi Nakamoto. It was his initial design that was used as the technology that is powered by the digital currency known as bitcoin.
On 18 August 2008, the domain name bitcoin.org was registered and later that year, on 31 October, a link to a paper authored by Satoshi Nakamoto titled Bitcoin: A Peer-to-Peer Electronic Cash System was posted. In that specific whitepaper, Nakamoto wrote this he said “What is needed is an electronic payment system based on cryptographic proof instead of trust, allowing any two willing parties to transact directly with each other without the need for a trusted third party.” And this started the age of crypto currency with Bitcoin.
Bitcoin first started trading from around $0.0008 to $0.08 in July 2010 per coin.
How it works
Before we understand how it works, we have to understand why was it developed. Satoshi Nakamoto cited in his article that the current financial transaction systems we use have a lot of weaknesses and these can be resolved by the block chain.
Imagine 2 people from different places wanting to transact money. The current trust model’s flow is this.
- Ken wants to send $500 to Jenny.
- Ken asks for Jenny’s email, phone number, address, bank account.
- Ken uses a third party financial system – bank, or money sending app and sends the $500.
- The third-party charges a fee before they send the moneyt to Jenny.
- Jenny receives an email, or a call from the 3rd party financial system that Ken sent $500 to Jenny’s bank account.
The blockchain flow :
- Ken wants to send $500 to Jenny, in ETH so he asked for her ETH wallet.
- Jenny sends her Ethereum wallet to Ken.
- Ken sends $500 worth of ETH to Jenny’s wallet address, and the blockchain transaction was successful, Ken spending only $7 and Jenny receives her money in seconds.
Let’s spot a weakness in the trust model. What if Jenny said, she didn’t receive the transfer or her bank was hacked? In the block chain system, that would never happen unless the transaction did not occur. But if Ken sent a transaction number to Jenny then she would be able to confirm that specific transaction. This just means that the blockchain is not subject to 3rd party human error.
What is the blockchain?
The blockchain is simply a set of records, a data base or a ledger linked together and encrypted using cryptography and is shared across a network of computers in the cloud. In the simplest terms, it is a chain of blocks that can never be edited, modified or removed. There is one term in crypto that we use for this it’s called, immutable.
It is decentralized, no one entity owns the blockchain. It is also transparent. You can check all the records at any given time.
Cryptocurrency and the blockchain
The most popular blockchain platforms in the world today is of course Bitcoin, and the second is Ethereum.
Bitcoin’s network runs on it’s own crypto currency called BTC while Ethereum, a platform for decentralized applications runs on Ether or Eth.
Cryptocurrency is a medium of exchange on the blockchain. That’s it, you use crypto currency to exchange for participation in a blockchain service or transaction.
What are the most popular crypto currencies you should invest now?
#1 on our list is BTC
The price of Bitcoin changes a lot every day, and has seen many highs and lows over the last few years.
If you want to invest in Bitcoin then you need to stay up to date with the latest news and trends around Bitcoin. When news is released about a new technical improvement, you might want to think about buying Bitcoin. If there is a huge fall in price of the cryptocurrency in question, then that too might be a good time to buy Bitcoin because you can buy it at a low price.
#2 IS Ethereum’S (ETH)
Unlike Bitcoin, Ethereum is not just a digital currency. It is a more advanced blockchain project. This is because Ethereum offers something special — by using Ethereum’s platform, developers can build their own cryptocurrencies.
Imagine that you would like to build a blockchain-based solution for managing the supply chain of your business. Well, thanks to Ethereum, you don’t need to start from the beginning. Instead, you can just build an application on Ethereum’s blockchain. Ethereum makes it much easier for new blockchain projects to launch.
Julian Hosp, a blockchain expert, said that the market cap of Ethereum could rise to $200 billion by the end of 2020. If Hosp’s prediction is correct, the price of Ethereum will reach up to $2000. Hosp’s reason behind the prediction is based mostly on the ICOs (Initial Coin Offerings) that decided to use the Ethereum blockchain in 2018 & 2020.
Ethereum also plans to improve their technology a lot this year, with new protocols almost ready to go.
Ripple, also known as XRP, was a prime contender for the spot of the best cryptocurrency in 2017 with growth of around 36,000%!
So, what is it about Ripple that has made it so popular for investors?
The main reason for Ripple’s popularity is that it is not just a digital currency, but also a payment system. Ripple uses blockchain technology to make international payments faster and more secure.
If you tried to make an international bank payment today, it would take around 2-10 days for the transaction to process. The same payment, when done using Ripple, takes a few seconds. How awesome is that!
But there’s more good news – many large financial institutions like American Express, JP Morgan and Santander are already using Ripple’s technology. Also, Ripple has been working with the Saudi Arabia Central Bank, China’s LianLian International and other banks from around the world.
Our list of what is the best cryptocurrency to invest in 2020 cannot be complete without Litecoin. Just like Ripple, Litecoin showed great performance in 2017 with a growth of almost 8000%.
Litecoin is the 5th largest cryptocurrency with a market cap of around $11 billion. Litecoin continues to interest investors because of its close connection to Bitcoin, thus providing a good reason for Litecoin to be on our list for the next cryptocurrency to invest in 2020.
Litecoin was created in 2011 to improve upon Bitcoin’s technology. Litecoin completes a transaction 4 times faster than Bitcoin. However, unlike Bitcoin, the maximum number of Litecoin is capped at 84 million — 4 times more than the coin supply of Bitcoin (21 million).
Litecoin was the first cryptocurrency to perform a Lightning Network transaction in May 2017. Using the Lightning Network, 0.00000001 Litecoin was transferred from Zurich to San Francisco in under one second! Once Litecoin starts using the Lightning Network, it could increase the price of the Litecoin!
But there is one tip I can say, just do the stocks concept. Buy low, sell high!
Blockchain DeFi applications and How can you earn using the blockchain.
With the advent of Defi, which means decentralized finance, a staggering amount of investors are pouring into the blockchain space, to ultimately make money and yes, you can earn on an unlimited number of ways using the blockchain. But that means, we need like another 10 minutes for that topic alone. And I think you better understand right now, how to use crypto currency because as they say, if the world moves forward, don’t move against it.
So that concludes my Tech Talks in Ten Minutes, my name is Maida. You might also want to check out realtydao.com, we are building the first fractionalized blockchain platform for digital assets – meaning the new TLDs from handshake.com and domains. We are giving away RDAO’s right now so if you want to learn more about it, please do visit realtydao.com.