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Litecoin Beginner's Guide

Litecoin is the silver to Bitcoin's Gold

Litecoin is often touted as “the Silver to Bitcoin’s Gold’. But why is that? And what does that even mean in the realm of Cryptocurrencies and digital money? Keep reading to find out.

Litecoin vs Bitcoin

Litecoin was created in 2011 by Charlie Lee, a former Google employee, by rewriting Bitcoin’s source code. Litecoin is, for all intents and purposes, identical to Bitcoin in all aspects except the following:

Litecoin has a cap of 84 million coins: Unlike Bitcoin, which has a hard cap of 21 million coins, Litecoin is designed to have 84 million coins. Both coins are divisible to a one hundredth of a million (known as a Satoshi in Bitcoin or 0.00000001) so there’s no direct obvious advantage in the number of total coins available. The only advantage may be psychological, as most people prefer to own complete coins as opposed to fractions of a coin.

New Blocks are created every 2.5 minute instead of every 10 minutes: Given that both Bitcoin (Core, that is) and Litecoin use 1MB blocks to record transactions, Litecoin is in theory able to process transactions 4x faster than Bitcoin. The reality is that Litecoin has severely outperformed Bitcoin transaction speeds, which is being hobbled by a large transaction volume. While Litecoin’s longest block took around 6 minutes to be mined (this was back in 2012), the Bitcoin network recently took 40 hours to mine one block!

Finally, Litecoin uses a different hashing algorithm than Bitcoin. Whereas Bitcoin uses the SHA-256 algorithm (which relies heavily on processing power), Litecoin uses Scrypt, which is much more RAM-memory dependent. Although the hashing algorithm used has little impact on the end user experience, it is important to note that, due to the use of Scrypt, Litecoin mining has not seen the arms race that dedicated Bitcoin mining rigs have seen, so it is still a viable option for mining hobbyists.

What does this even mean?

The aggregate result of these differences that Litecoin is both cheaper and faster than Bitcoin. All the drama surrounding Bitcoin’s scaling debate shows foresight on behalf of Charlie Lee, who designed Litecoin with a purpose in mind. Instead of being ambiguous and letting the community devolve into a Civil War to define what Bitcoin was (secure store of value to the Bitcoin core crowd, fast and cheap transactions to the BCash crowd), the Litecoin Foundation (headed by the ubiquitous Charlie Lee) has a clear roadmap for the Cryptocurrency.

In fact, Litecoin embraced its cheap and fast qualities by being the first Cryptocurrency to adopt Segwit. Again, Charlie Lee believes that Litecoin’s niche lays in being a cheap and fast transactional cryptocurrency, with transaction becoming even cheaper and faster with the Lightning Network (the first ever Lightning Network transaction was made with Litecoin!).

In this way, Litecoin, which used to model itself after Bitcoin is pulling ahead and acting as a test-net for features (namely the aforementioned SegWit and Lightning Network) before being implanted on the latter.

Yeah, about that Charlie guy…

By now you may be wondering about Charlie Lee’s role in Litecoin development and future growth, especially if you are wary of any “benevolent dictator” type figures. Well, you can rest easy, as although Charlie remains closely involved in the development of Litecoin through the Litecoin Foundation, he has as of December 19, 2017 sold all of his Litecoins to avoid any conflicts of interest.

Screen capture of Charlie Lee criticizing ripple XRP.
Charlie throwing shade.

Be sure to follow Charlie on twitter where he shares his thoughts on the Crypto-world. Looking for even more crypto-twitter accounts to follow? Check out our guide.

So back to our original question

What does it mean when people say that Litecoin is the silver to Bitcoin’s gold? Sometimes it can be helpful to take a linguistic journey. In most Hispanic countries, the word for silver “plata”, is used interchangeably with cash. And that is the niche in the cryptocurrency space that Litecoin is aiming for, the best Cryptocurrency cash for everyday transactions.

As one of the oldest and most well-known Cryptocurrencies, Litecoin is widely available, with users being able to purchase Litecoins in at least 38 exchanges,.

Next time you go out, be sure to have some plata in your wallet! If you need any help getting some, check this out!

 

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What is Bitcoin? A beginners guide

A brief history of Bitcoin

Let’s start with the basics shall we? You can’t very well conquer Westeros Bitcoin if you don’t understand anything about it.

In the late 2000s, an anonymous fellow named Satoshi Nakamoto proposed a system based on some previous research projects. Satoshi authored the now famous ‘Bitcoin: A Peer-to-Peer Electronic Cash System’ whose stated goal was to create a new electronic cash system” that was “completely decentralized with no server or central authority.”

Without any concept of a central bank, who is to prevent you from spending your same $100 more than once? How do you even prove who you are when you want to spend it? Bitcoin’s answer to this problem involves using fast computers and advanced math to create a cryptographic blockchain. Basically a ledger.

What is Bitcoin?

Simply put Bitcoin is a person-to-person digital cash. Most importantly, it’s decentralized, meaning it can’t be controlled by any single person or company or country. This is especially important since the Iron Bank has controlled most aspects of money since before the Doom of Valyria.

You have no doubt heard the term “blockchain”, but what does this mean excatly? A blockchain is just a digital ledger. This ledger, like a traditional accountants ledger, records every transaction ever made on the bitcoin blockchain.

There are no Iron Bank to mint coins, to distribute the and no “authority” that can control it. It is in a category of money known as cryptocurrency.

Mining Bitcoin 

How in the 7 Hells is it created and distributed then? Bitcoin is “mined” by powerful computers connected to the internet. Mining is the process of using a ton of computer power to solve a complex equation. Imagine it as trying to solve a very difficult equation by attempting every possible answer until the right one is found. The computer that solves the equation first is rewarded with a coin. The miner can then sell his bit coin to anyone he wants: Either Peer-to-Peer or through an exchange.

Bitcoin and many other cryptocurrencies rely on mining to verify the integrity of transactions (and thus the entire blockchain). In theory you can mine on any computer. But in the past couple of years, specialty hardware has been developed that makes solving Bitcoin’s specific equation very fast. This makes mining Bitcoin unprofitable for home users on their regular PCs. Sorry reader your a bit too late to convert Casterly Rock into your own personal Bitcoin mine.

There are currently about 17 million bitcoins in circulation and a total of 4 million Bitcoin yet to be mined. This means the total supply of Bitcoins is capped at  21 million. This cap raises an argument that Bitcoin could have problems being used with so few in circulation. But because Bitcoin (the currency) can be broken down and divided into smaller units this issue is mostly non existent.

Like $1 can be broken down into 100 pennies, Bitcoin is also divisible. The most common unit of measurement is a single bitcoin or 1 BTC. This can then be broken down in to eight decimal places, or 0.00000001 BTC, or as it’s commonly know “1 satoshi”. That means you do not have to buy 1 whole BTC to own Bitcoin, you can own a fraction of a Bitcoin like 0.00004520 BTC.

Where do you store your bitcoin if there is no Iron Bank?

Bitcoin can be stored on digital wallets. There are a variety of wallets that you can choose from: Online, PC, Hardware and paper. If you would like an extensive guide on Crypto wallets, and recommendations, check out our guide Crypto Wallets: What are they and how do I use them.

This only scratches the surface of Bitcoin. We haven’t even delved into the rival digital currencies, or  altcoins, where Ethereum, NEO, Litecoin and the like duke it out for The hand of the king. Make no doubt, Bitcoin sits on the Iron Throne.

Bitcoin roundup

So what have we learned from this post?

1. It’s decentralized
The Bitcoin is not controlled by any one central authority, but rather distributed across a network of computers that mine bitcoin, process transactions and work together to confirm the blockchain.

2. It’s sort of anonymous: The Iron Bank would like you to think it’s a tool for the Starks and Martell’s to launder money and wage their wars but that is simply not true. Bitcoin wallets, and their addresses, are not linked to names or physical addresses unless that wallet address is obtained from an exchange where the user did extensive KYC. Theoretically, that wallet could be linked to a specific user forever if enough effort is made by authorities and the exchange hands over records. A user can own multiple wallets which is why its very difficult to know how many unique users around the world are using Bitcoin at any given moment.

3.It’s transparent: Wait what? The blockchain stores every transation that has ever happened on the network. If you have used a public address, and chances are you have on an exchange, then anyone can know how much Bitcoin is stored at the address.

4. It’s fast – Debatable.

5. You gotta pay transactions fees: If I were to transfer some Bitcoin at this very moment it would cost me $14. About 0.001 BTC. Not to bad for large sums but unacceptable for small transactions. At certain times the fees can get steep because there are too many transactions to process at which time miners prioritize transactions that offer a higher fee.

7. It cannot be repudiated – Resistance if Futile.

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Introduction to Cryptocurrency Part 2

This is the second part of our series “Introduction to cryptocurrency”. If you have not read the first installment we highly recommend you start here.

How do US dollars become Bitcoin?

You can buy them. Exchanges allow you to trade one kind of currency for another (AKA a Pairing…Dollar to Bitcoin (USD/BTC), Euro and Bitcoin, Canadian Dollar and Bitcoin, etc).

Some exchanges allow you to deposit your local currency (such as dollars) via credit card, check (a “virtual check” – called ACH), or bank transfer.

Coinbase in the US is a very popular exchange for USD and BTC pairs. In Europe, Kraken and Cex.io reign. These exchanges are usually in the US or western Europe and require verification and are often subject to regulation (to avoid money laundering, drugs/scams, etc). Exchanges generally charge small fees for transfering any cryptocurrency or Fiat currency from their site.

Ethereum

Eth Thumb.pngEhtereum is considered the largest “alternative” blockchain project to Bitcoin. It was designed to be a decentralized platform for smart contracts. Smart contracts is just computer code that can facilitate the exchange of money, content, property, shares, etc. It also allows developers to build and deploy decentralized apps (Dapp) on ethereum. Think of it this way: Any centralized application can be decentralized on Ethereum. That is powerful.

Altcoins

Many exchanges exist that don’t work with “real money” at all – they simply exchange Bitcoin for other coins, like Ethereum, Litecoin, or “alt coins”. These exhchanges are sometimes referred to as altcoin exchanges. Bittrex and Binance are popular exchanges for alt coins. At the moment Bittrex has frozen new user registration so you might also want to consider Poloniex.

Altcoins have a multitude of uses and goals. They can span from projects that use the blockchain to enhance identity verification like Civic and uPort. They can also serve as a protocol to audit blockchains like Ethereum. Quantstamp is an example of this. The aopplications are endless with the blockchain and alt coins.

If you have questions about cryptocurrency exchanges check out our guide Crypto Exchanges for beginners here.

What about hackers?

No doubt you’ve heard the news of the Equifax and Yahoo! hacks, which exposed over 1 billion credentials, in the news and thought “How is this still hapenning?”. It seems with every new hack we get renewed calls to do somthing. Anything. But the systems we use, centralized databases and servers, will still likely lead to security breaches.

How does the blockchain fight this? How does decentralization reduce the chances of hacks or breaches? With public blockchain networks, like Bitcoin, hackers would have to hack an ecosystem of computers, nodes and servers. Even if they tried this they would have to access over 50% of the global bitcoin hashrate ( speed at which a compute is completing an operation in the Bitcoin code) which is extremely difficult considering the mining ecosystem Bitcoin and Ethereum have. Hacking so many computers, servers and nodes at once is, at this moment, very damn hard.

But I’ve read about hacks like Mt. Gox, Etherdelta, and Youbit, etc. The difference between a cryptocurrency exchange being hacked, and your wallet or the actual blockchain getting hacked are two entirely different things. The Exchange is a centralized entity that stores your passwords and your cryptocurrency. If the exchange is hacked its likely your account will be affected in some way. Be sure to activate 2FA for your accounts! This is why it is important to have crypto wallets and to understand the differneces between the types (check out our Crypto Wallet guide here). You can store your currency on different wallets for security purposes and reduce your exposure to hacks.

 
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What is Ripple?

If you are new to the cryptocurrency space then you have likely been reading and watching the meteoric rise of Ripple. If you are not new to the crypto space then you are likely cursing Ripple’s name as you review your portfolio (more on that later). On Dec. 10, the company had a market capitalization of just over $9 billion. As of today, 29 Dec, Ripple has a marketcap of $84 billion. Second to only baby jesus himself, Bitcoin. As the great Patrick Swayze said “Nobody puts baby in a corner”. So what’s the deal with Ripple?

Let’s start with the basics

Ripple_flowchart.png

Ripple is a real time gross settlement system (RTGS), currency exchange and remittance network. Quite a mouthful eh? Released in 2012 Ripple is built on a distributed open source protocol, consensus ledger and currency called XRP. Do not confuse the cryptocurrency with the network! The network is referred to as Ripple, and the currency known as XRP or ripples. The whole idea behind Ripple is to provide “secure, instant and nearly free global financial transactions of any size with no chargebacks”. Sound familiar?

Fast and Cheap

Ripple XRP is the currency used in the payment network for all transactions. This provides for reduced time and money associated with cross-border payments. Each transaction through the system is processed in only four seconds.

No mining involved

Here is where things get tricky. There are 100 billion ripple already in existence. However only 38 billion are actively in circulation. What does this mean? Well it’s simple: Ripple the company controls a lot of XRP in the market. Ripple claims this is done to avoid “flooding” the market. Others argue it is Ripple the company manipulating supply and prices. Beefy right?! 🙂

Institutional acceptance

Here is where Ripple differs from other crypto projects: They have a long list of established banks joining RippleNet to process cross-border payments in real time with end-to-end tracking and certainty. Large institutions like RAKBANK (UAE), Santander, Standard Chartered and BBVA are partners. You can find use cases here. This makes ivestors very happy, and why wouldn’t it?

So why is the price flying?

For starters the Ripple name and brand is known inside and outside of the crypto community. Second Ripple has institutional acceptance. And third it has a very very attractive price (before it broke 1USD) which made it easy for new users to get in the mix. Many people also do not realize that you can buy fractions of a cryptocurrency which leads new users to think BTC or ETH are too expensive. It is much more satisfying to own 100 xrp than 1/342 btc. Now imagine all the new users joining cryptocurrency exchanges over the past month (some estimates have it at 100k new users per day) and combine it with the above and you will have a rocket ship ready for lift off.

In addition to the above in the trading industry you have something called Fear of Missing Out (FOMO). Humans are emotional by design and if you add a cryptocurrency that is exploding in price people are going to want to get in on that action. One final ascpect is that Ripple is so widely avaiable. By last count it can be bought and traded on 92 exchanges…Which is insane!

So why the beef with Ripple in the crypto community?

Two main issues have the crypto space up in arms: Privacy and centralization.

  • Centralization: The brilliance of the Bitcoin and the blockchain is that is is completely decentralized. In other words no one single person or entity controls the chain. Ripple is the exact opposite. Ripple owns the vast majority of the coins available on the platform meaning they could control the price. Every time the XRP coins are released they first go to Ripple to do with them as it pleases.
  • Privacy: Cryptocurrency is the poster child of privacy and anonymity. Ripple’s decision to market their platform exclusively to banks has been a cause of concern for some users who worry about big brother keeping an eye on their transactions.
  • Token Utility: The ripple currency is unnecessary for companies that want to use the Ripple software. The coin does not reflect any of the success the company may or may not have…kind of a problem if you’re investing in ripple don’t you think.
  • Coin supply distribution: The company owns over half the total supply which means they can dump on new investors any time. HUGE issue. They’ve escrowed some of their funds.

Regarding the XRP “escrow” Ripple has released an official statement here. An execerpt below:

To provide additional predictability to the XRP supply, Ripple has locked 55 billion XRP (55% of the total possible supply) into a series of escrows. These escrows are on the ledger itself and the ledger mechanics, enforced by consensus, control the release of the XRP.

The escrow consists of independent on ledger escrows that release a total of one billion XRP each month over the next 55 months.

 

Where can I buy ripple?

As our friend Julio stated in his article on the Bitcoin scaling debate: By now you may be wondering which side of the debate to pick. The answer is: Don’t. Smart investors don’t pick sides. They pick winners, sell losers, and hedge their bets.

Ripple is on many of the major exchanges and has pairs with many difference currencies (XRP/USD; XRP/YEN; XRP/EUR, etc). This makes it very easy for new users to cryptocurrency to get in and purchase XRP. If you have questions about which exchange to use have a look at our guide “Cryptocurrency Exchanges for Beginners“. Make sure to DYOR (do your own research) before buying any cryptocurrency.

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Introduction to Cryptocurrency Part 1

Introduction to Crypto

Cryptocurrencies are a new kind of money and interest in them is exploding. This is a highly simplified overview of how cryptocurrencies work which will be published in two parts. It is intended to give non-nerds a brief summary of this revolutionary technology.

Google Trends Interest Over Time shows that this year the search term Bitcoin has exploded. That massive increase corresponds to BTC hitting the 10k USD mark.

We also know that Coinbase, the largest US based cryptocurrency exchange, surpassed Charles Schwab in terms of active brokerage accounts in November of 2017.

[table id=3 /]

Cray cray right?

The need for a “new kind of money”

So why do we need a new kind of money? Well for as long as many of us can remember credit card companies and banks have controlled the movement and storage of money. And yet they are so incredibly inefficient. As an example credit card transactions involve many parties:

  1. The bank that issued the card (Capital One)
  2. The credit card processor (Authorize.net, various merchant services..)
  3. The payment network itself (VISAnet, Amex, etc)

For this reason, credit cards:

  • Are only issued to those with bank accounts or good credit
  • Pretty expensive for merchants ($0.30 fee plus 2.9%)
  • Subject to a lot of regulation and controls (not suitable for adult services, etc)
  • Not suitable for send money person-to-person

Computer scientists have been trying to make something better for decades.

What is Bitcoin?

Bitcoin is person-to-person digital cash. Most importantly, it’s decentralized, meaning it can’t be controlled by any single person or company or country.

In the late 2000s, an anonymous fellow named Satoshi Nakamoto proposed a better system based on some previous research projects. Without any concept of a central bank, who is to prevent you from spending your same $100 more than once? How do you even prove who you are when you want to spend it?

Bitcoin’s answer to this problem involves using fast computers and advanced math to create a cryptographic blockchain.

What is a blockchain?

Simply put a blockchain is an open ledger. The thing accountants use to track asset movements, but visible to anyone. The innovation of this kind of ledger is that it’s decentralized, meaning all the information on the ledger is stored on all the computers (nodes) connected to the network.

With a decentralized database it becomes incredibly difficult if not impossible to hack without a central point of failure….Equifax anyone.

What is Mining?

Mining is the process of using a ton of computer power to solve a complex equation.  

Imagine it as trying to solve a very difficult equation by attempting every possible answer until the right one is found. The computer that solves the equation first is rewarded with a coin.

Bitcoin and many other cryptocurrencies rely on mining to verify the integrity of transactions (and thus the entire blockchain).

In theory you can mine on any computer. But in the past couple of years, specialty hardware has been developed that makes solving Bitcoin’s specific equation very fast. This makes mining Bitcoin unprofitable for home users on their regular PCs.

But, this money isn’t real!

Paper money issued by governments is known as “fiat currency”. The only thing that makes a currency “real” — a real-world/fiat one, or a virtual one — is the trust of the public in its issuer and mechanisms.

Those in Zimbabwe or Venezuela, where inflation has spiraled out of control, have a different picture of the stability of fiat currency. Currency traders in the stock market manipulate currency values constantly.

Similarly, a Babe Ruth rookie year baseball card has no real value, but people have accepted its worth, and therefore you could buy a car with one. So whenever you here someone use that “intrinsic value” bullshit about Gold and Diamonds and jewellery…well you know…

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