Crypto Corner

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The First Cryptocurrency

In this episode of Crypto Corner, Eddie and Anton talk about Bitcoin and how it was the first cryptocurrency to gain popularity and kickstarted the crypto market as we know it today. 

The ability to conduct transactions and have them recorded on a decentralized network was one of the initial reasons Bitcoin was adopted. This network is able to function without a central party due to the concept of proof of work, which simply means that the ledger with the most computational work is the one that is trusted. 

However, there is still room to improve for Bitcoin, as it sees low transaction speeds and limited applications outside transferring funds.

 

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What is the Blockchain? 

In this episode of Crypto Corner, Eddie and Anton talk about what the blockchain is and how it works.

A blockchain is a shared, immutable ledger that records transactions and tracks assets. This ledger is distributed to all network participants, and they are able to see every transaction recorded, but nobody can alter a transaction after it has been approved and recorded to the ledger. 

One of the benefits of transactions on a blockchain is that they can utilize smart contracts, which are programs stored on the blockchain and then run when set conditions are met. 

 

 

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How Does a Blockchain Work?

In order for a transaction to occur and be recorded on a blockchain, a series of steps must be done. First, a block is created to hold the necessary information for the transaction, such as the amount, a signature, and the hash of the previous transaction. 

After a block is created, it is sent to everyone on the network and verified, through a process known as mining – which is basically guessing and checking. Once verified, the transactions are bundled together and chained to the existing blockchain via the hash of the previous block.

 

 

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The Economics of the Blockchain

With crypto’s infrastructure based on computing power processing transactions, the biggest cost of the blockchain lies in energy consumption, computing power, and sending information. Over time, those costs are expected to decrease, making blockchain more feasible to use on a global scale, but this decline in costs must outpace the increase in users. 

The biggest current risk to the entire crypto economy is the looming presence of regulation. Since crypto is a direct threat to existing government sponsored and controlled currencies, this puts crypto at the top radar for all governments to limit. 

 

 

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How Currencies Get Their Value

In the first episode of Crypto Corner, Anton and Eddie from the tastytrade Research Team discuss where decentralized currencies and centralized currencies derive their fundamental value from. A successful currency that is used in everyday transactions and as a store of future spending power has three main components to it. 

The currency must be trustworthy; it must have anti-counterfeit measures, and it must be accepted by a large number of participants. Both crypto and traditional currencies must have these in their systems, but they achieve it in different ways. 

 

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Ethereum

You might have heard of Bitcoin, but what about Ethereum? Ethereum was the biggest evolutionary crypto since Bitcoin, because it expanded the scope of what crypto and blockchain technology could be used for. Both Bitcoin and Ethereum use a centralized ledger, they are both decentralized, and they both use the same mining methods as of now. Later in 2022, Ethereum is planning to switch to a much more efficient, proof of stake method to verify transactions rather than the energy consuming proof of work. Proof of stake is not the fundamental difference between Bitcoin and Ethereum, but it will be a differentiating factor going forward.

 

 

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Use Cases of Cryptocurrencies

Crypto use cases have dramatically increased over the last year. From being only a transactional benefit a few years ago, there are now many uses and platforms to use different crypto on. 

In addition to payments, crypto can be used for decentralized financial services (de-fi), intellectual property protection (NFTs are the biggest example for this), investment diversification, and privacy protection. Most notably, with these increased use cases, there have been many more people gaining exposure to crypto in one of these areas, which has helped spread the growth of the industry.

 

 

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Storage and Ownership of Crypto

What's in your wallet? The most common way to store your crypto assets is via a wallet. A wallet is like a digital bank account for your crypto, and you can store, send, and receive assets via a wallet. The first type of wallet is a hot wallet, which means that it is always connected to the internet. 

There are two types of hot wallets, custodial or non-custodial, and each offers its own set of benefits and drawbacks. The less common but more secure type of wallet is a cold wallet, which is only connected to the internet when you want to make a transaction. This can come in the form of a physical wallet, similar to a USB stick, or a paper wallet, that simply contains your wallet address and private key.

 

 

[AnneMirackle5]

Thanks for sharing, I watched these videos. Very clear and interesting information about crypto