WHAT IS BITCOIN?
WHAT IS BITCOIN?


year | Block # | Reward |
2009 | 1 | 50 |
2012 | 210,001 | 25 |
2016 | 420,001 | 12.5 |
2020 | 630,001 | 6.25 |
2024 | 840,001 | 3.125 |
What are cryptocurrencies?
Cryptocurrencies are digital assets designed to work as a medium of exchange wherein individual coin ownership is stored in a ledger. Cryptocurrencies exist in a form of a computerized database using strong cryptography to secure transaction records, control the creation of additional coins, and to verify the transfer of coin ownership.
Cryptocurrencies typically do not exist in physical form (like paper money) and is typically not issued by a central authority. ( government or bank )
This decentralized aspect of cryptocurrency is a huge reason why it is such an important part of the future of finance. Without central control there is no such thing as sanctions. Without the decentralization there isn't much fundamental difference between fiat and crypto.
Both can be used as a medium of exchange, they both have their value governed by supply, demand, work, scarcity and other economic factors.
Decentralization is the process by which the activities of an organization, particularly those regarding planning and decision making, are distributed or delegated away from a central, authoritative location or group.
Proof of work (POW) is a form of cryptographic zero-knowledge proof in which one party proves to others that a specific amount of computational effort has been expended for some purpose. Verifiers can subsequently confirm this expenditure with minimal effort on their part.
The two major currencies by market cap that rely on POW are Bitcoin and Ethereum.
Proof of stake (POS) is a type of consensus mechanism by which a cryptocurrency blockchain network achieves distributed consensus. In (POS)-based cryptocurrencies the creator of the next block is chosen via various combinations of random selection and wealth or age.
- Proof of Stake (POS) was created as an alternative to Proof of Work (POW), which is the original consensus algorithm in Blockchain technology, used to confirm transactions and add new blocks to the chain.
- With Proof of Stake (POS), Bitcoin miners can mine or validate block transactions based on the amount of Bitcoin a miner holds.
- Proof of Stake (POS) is seen as less risky in terms of the potential for miners to attack the network, as it structures compensation in a way that makes an attack less advantageous for the miner.
- Proof of Work (POW) requires huge amounts of energy, with miners needing to sell their coins to ultimately foot the bill; Proof of Stake (PoS) gives mining power based on the percentage of coins held by a miner.
What Is Ethereum?
Ethereum is a decentralized, open-source blockchain featuring smart contract functionality. Ether (ETH) is the native cryptocurrency of the platform. It is the second-largest cryptocurrency by market capitalization, after Bitcoin, Ethereum is the most actively used blockchain.
Ethereum was proposed in 2013 by programmer Vitalik Buterin. Development was crowdfunded in 2014, and the network went live on 30 July 2015, with 72 million coins pre-mined. The Ethereum Virtual Machine (EVM) can execute scripts and run decentralized applications. Ethereum is used for DEFI ( decentralized finance) and has been utilized for many ICO's (Initial coin offerings)
In 2016, a hacker exploited a flaw in a third-party project called The Dao and stole $50 million of Ether. As a result, the Ethereum community voted to hard fork the blockchain to reverse the theft and Ethereum Classic (ETC) continued as the original chain.
Ethereum has started implementing a series of upgrades called Ethereum 2.0, which includes a transition to POS (proof of stake) and an increase in transaction throughput using sharding.
What is a smart contract?
A smart contract is a computer program or a transaction protocol which is intended to automatically execute, control or document legally relevant events and actions according to the terms of a contract or an agreement. The objectives of smart contracts are the reduction of need in trusted intermediators, arbitrations and enforcement costs, fraud losses, as well as the reduction of malicious and accidental exceptions.
Vending machines are mentioned as the oldest piece of technology equivalent to smart contract implementation. 2014's white paper about the cryptocurrency ETH ( Ethereum) describes the Bitcoin protocol as a weak version of the smart contract concept as defined by computer scientist, lawyer and cryptographer Nick Szabo. Since Ethereum, various cryptocurrencies support scripting languages which allow for more advanced smart contracts between untrusted parties. Smart contracts should be distinguished from smart legal contracts. The latter refers to a traditional natural language legally-binding agreement which has certain terms expressed and implemented in machine-readable code.
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