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In this brief article, we are going to go over some of the key terms related to crypto currencies in order to aid you in getting a better understanding of this phenomenon.
What is blockchain?
If you need a metaphor, imagine a text file that is duplicated approximately a billion times across a network of PCs. Then imagine the said network was devised in such a way that it constantly updates the text file. That’s how blockchain works, in a nutshell – it’s a shared database. Since it is not stored in a single location, its contents are publicly available and easily verifiable. Also, this is how you decentralize something. Many people describe blockchain as a shared ledger. Some say it is like a chain of blocks – every time a block is ready, it is added to the chain.
Now, let’s talk about one of the most vital details of blockchain – consensus.
What is a consensus?
Due to the anonymous, inherently risky nature of the blockchain, there’s this little thing called “consensus”. The blockchain is a shared database, so operators need to agree whether something new gets to be added to the database. Since you can’t verify the author’s trustworthiness, some kind of a reviewing method is required– that’s the consensus that we mentioned. There are several distinctly different ways of achieving consensus:
- Practical Byzantine Fault Tolerance.
- Proof of Work.
- Proof of Stake.
- Delegated Proof of Stake.
Every single one of these ways deserves an in-depth explanation, so you’re free to do your own research. Proof of Work is the most renowned way of achieving consensus. No wonder it is utilized by the world’s number one digital currency, Bitcoin. The Delegated Proof of Stake method, for example, is not exactly well-liked, because it is the least decentralized and could possibly cause a destabilization of the system’s balance. That’s why there is only one company utilizing this method. It is also worth noting that it is crucial for you, the reader, to really learn the difference between those methods. That is going to be incredibly helpful in the long run.
What are altcoins?
Now that you have some background information on some of the crypto terms, let’s dive into the ever-exciting domain of altcoins. Many people say that this kind of digital currency is the most promising part of this whole system, but what exactly are altcoins? The word itself is a shortened version of “Bitcoin alternative”, so it basically used to represent every other cryptocurrency on the market, sans Bitcoin. Ethereum is an altcoin, for example.
There over 480 different digital currencies in existence right now and more are created every single day. It should be noted that most altcoins are nothing more than Bitcoin copycats, desperately trying to duplicate the success of the world’s number one cryptocurrency. Let’s talk about how one goes about creating a new Bitcoin alternative.
How and why would create a cryptocurrency?
Thanks to the soaring popularity of Bitcoin, many brand-new alternatives are receiving major media attention/investments. Everyone states their own reasons for embracing this new technology. The more prevalent ones include the blockchain being fraudproof, easy to access and, the most widespread one, no involvement of third parties.
First and foremost, you need to take this step – determining whether or not you possess enough crypto knowledge to make an altcoin. In case you don’t – hire someone to help aid you and handle the coding process. Now you must decide whether you choose to set up a Bitcoin fork or a brand-new alternative digital currency. Here’s some valuable information to aid your selection.
The first way, creating a Bitcoin fork. This is an option for the less tech-savvy people. You can utilize readymade, free and dependable source code. In order to mold it into something that fits your demands, you must find the closest alternative that has similar enough features to yours.
The second way, setting up a whole new blockchain. Hopefully, you’re an expert in both digital currencies and coding. By building your very own altcoin from the ground up, you can give it distinct features of your choosing.