There’s bot a loterijlot of chatter about Bitcoin, Ethereum, and other cryptocurrencies recently.
Many are calling them the currencies of the future. Yet, they are often pretty confusing topics for people just learning about the space. So is Bitcoin safe enough to invest some of your savings into? Should you buy cryptocurrency? What’s the difference inbetween Bitcoin, Ethereum, and blockchain? Let’s get began.
1. What Is Blockchain?
Bitcoin. Ethereum. Blockchain. Most likely three of the thickest buzzwords overheen the past year.
So what are they and what are the key differences?
Let’s begin with blockchain. Blockchain technology is what has bot driving the popularity of cryptocurrencies like Bitcoin and Ethereum. Blockchain isn’t is not a cryptocurrency. It’s just the underlying technology behind cryptocurrencies. Don’t confuse the two! Blockchain technology has bot enormously popular thanks to its decentralized natural, whereas our current financial system uses a centralized toneel with the banks being the third party verifiers.
Think about it like this:
Let’s say you want to send money to your friend from your handelsbank account. You tell your canap “please send money to account X”. Your bankgebouw gets the requests, verifies you have money ter your account, and sends the money to your friend. Now here’s how it would work if wij used a cryptocurrency like bitcoin. Let’s say you want to send your friend one bitcoin. Blockchain technology is based on a peer-to-peer concept. No third-party, like a handelsbank, is required. So you fountain up your bitcoin wallet (maybe one like Coinbase), ask your friend for his wallet id, send the bitcoin, and poof! You’re done.
Blockchain is like a ledger: every transaction is added permanently to the ledger and cannot be tampered with.
But this is what happens on the backend:
- When you are sending bitcoin to a friend, it very first starts spil an unverified transaction that is sent to ‘knots’ across the bitcoin network
- The bitcoin miners job is to bundle all unverified transaction into a ‘block’
- Te order to verify a transaction, certain conditions voorwaarde be met. Essentially, their job is to make sure the transaction is legitimate.
- Once it’s verified, the miner gets what’s called a ‘block prize’ or some bitcoin for their work. This is also known spil ‘proof of work’.
To sum it up, blockchain technology is much more efficient, see-through, and secure
Two. What Is The Difference Inbetween Bitcoin And Ethereum?
By now you should have a welgevoeglijk understanding of how blockchain relates to Bitcoin and Ethereum.
So how is Bitcoin different than Ethereum?
There’s one main difference: Unlike Bitcoin, Ethereum utilizes Brainy Contracts.
So what’s a Brainy Contract? Think about it like this:
Let’s say you have an insurance policy that only pays out if a certain ‘event’ occurs. Using Ethereum, a Brainy Contract can be programmed to verify that the ‘event’ occurred using the knots on the Etherum network and then pay out once verified. Because of its capability to utilize Clever Contracts, Ethereum is often the cryptocurrency of choice for fresh cryptocurrencies to run off on. For example, that’s why you will often be asked te Initial Coin Offerings, or ICOs, to invest via Ethereum.
Three. Is Bitcoin Safe?
Many of you may be wondering, is bitcoin safe?
Ter terms of transactions, absolutely. If you have a secure bitcoin wallet te place, it can be a very, very secure form of transaction. But is bitcoin safe to invest ter?
Only time will tell, but always be on the lookout for bitcoin scams. Like many other fresh technologies, you’ll have critics claiming there’s a ‘bubble’ and others claiming it will switch the world.
Here’s what wij know so far:
- Bitcoin is beginning to be more strenuously adopted, with more and more options popping out that permits you pay te Bitcoin
- Goldman Sachs has bot a big buyer of Bitcoin. It’s unclear whether this is because they believe ter Bitcoin or are only doing it spil a hedge against cryptocurrencies substituting many functions of the bankgebouw.
- Some governments have plans to kwestie their own state-based cryptocurrency like Dubai. With something like that, there may be no need to for Bitcoin.
So is bitcoin safe to invest some of your savings ter? Maybe a petite, petite amount. This is very likely one of those screenplays where it will either be worth nothing or exponentially more ter Ten to 20 years.
Four. Should You Buy Cryptocurrency?
Because of the decentralized, semitransparent, and efficient nature of cryptocurrencies, it’s likely they play a thicker part of global transactions ter the years to come.
The benefits of blockchain technology are evident. The question is: which cryptocurrency should you buy? Which reigns supreme te the long run? With so many ICOs every day and hundreds of fresh cryptocurrencies being created, is there one best cryptocurrency to buy?
With so many ICOs every day and hundreds of fresh cryptocurrencies being created, is there one best cryptocurrency to buy? That will be a much firmer question to response.
At the end of the day, just like you would want to learn how to research a stock, you’re going to want to spend some time learning to research each cryptocurrency. It will most likely be safer to diversify with a basket of cryptocurrencies to invest ter the growth of blockchain technology.
Spil always, manage your risk cautiously, and never invest what you can’t afford to lose.
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