The congestion of the Bitcoin, Ethereum and Litecoin networks

Cryptography is the oldest science of how to ensure the confidentiality and integrity of data, rooted in the distant past. The history of its development is more than 4 thousand years old. The first methods used an alphabetical algorithm (replacing letters or words with other symbols).

 Already in the twentieth century, they began to use a mathematical approach. Back in the 70s of the last century, the use of cryptography was carried out only at the state level. Now it is available in almost all countries, there are even national standards. Features of modern cryptographic science - in an open encryption algorithm, which requires the use of computational tools.

The most popular are the following cryptographic transformations: symmetric and asymmetric encryption, digital signatures and hashing.

What is cryptocurrency

In the age of electronic gadgets, the emergence of digital currency was only a matter of time. What distinguishes it from cash is its fully digital structure. It is cryptography that provides digital currency protection against counterfeiting and gives the name to the whole era of the digital economy. All electronic currencies operate in blockchain technology, the main properties of which are as follows:

    Decentralization - lack of a single center for verifying transactions, distribution between peer-to-peer network nodes.
    Irreversibility of transactions - the data transferred to the blockchain cannot be changed or canceled, therefore it is extremely important to be careful when making exchange transactions.
    Transparency - anyone can get access to the blockchain where information is recorded (but this does not apply to private networks).
    Security - at the moment, not a single case of hacking of the cryptocurrency blockchain has been recorded.
    Confidentiality - when registering a wallet, personal data is not indicated, therefore, in theory, it is impossible to link the user and the transactions made.

The operating principle of this system is quite simple. Imagine a database that is constantly updated and is present for every participant in the events. Any action can be entered into it, from financial transactions with digital currencies to the results of sports competitions or laboratory research. Pages of this system are stored by all users at the same time, are regularly updated and refer to older copies. When an attempt is made to falsify, delete or replace information, the blockchain will check with tens of thousands of other versions and find a discrepancy in the structure.

Advantages of using blockchain technology:

    there is no need for intermediaries during the transaction;
    information is entered into a single database, operations are transparent for all participants;
    the possibility of deception is excluded;
    the absence of a central unit guarantees the stability and reliability of the system.

All this favorably distinguishes the digital economy from the classical banking system.

Bitcoin development history

It should be noted that he had no intention of creating anything like that. Satoshi Nakamoto was fascinated by the idea of an "electronic monetary system of the same rank." In 2008, the domain name bitcoin.org was registered and a new cryptocurrency was officially introduced. It is hard to believe, but in 2009-2012 the bitcoin rate was less than a dollar, and only by the end of 2012 1 BTC could be purchased for $ 12. Since 2013, there has been a gradual increase in the value of the digital analogue of fiat money, in December 2017 it peaked and amounted to a staggering amount of 17,900 USD per bitcoin. Even today, to buy bitcoin, you have to pay a tidy sum, about 9.5 thousand USD per coin.

Lets list the main reasons for the growth in the value of digital currency:

    Bitcoin becomes a means of payment in China and Japan. Chinese Internet corporation Baidu announced that its goods and services can be paid for with cryptocurrency. In Japan, bitcoin was legally equated to a full-fledged currency that can be paid in any store.
    Global outreach. Even people far from Internet technologies and cryptography know about this system, or at least have heard something about it.
    Potential investment vehicle. It is especially interesting in the long term as an opportunity to earn money by increasing its rate.

Each coin has two sides. In the wake of its popularity, cryptocurrency has both loyal supporters and ardent opponents. For critics, Bitcoin is still a bubble, whose value is exorbitantly inflated amid general worship and speculative operations. Pessimists argue that such a high price is unreasonable and sooner or later it will collapse.
Types of cryptocurrencies

Today, about 2330 different digital currencies can already be found on cryptocurrency exchanges, and new coins continue to appear.

The leading position (and by a huge margin) is taken by the "pioneer" bitcoin. Of particular interest are also the currencies that occupy the top of the rating, and have already firmly conquered their part of the digital market.

Altcoins are an alternative to bitcoin, although they are only a variation of it. The creators of altcoins, at their discretion, improve the source code of the leader, getting different variations with the same core, such actions are called "hard fork". This happens when users do not come to a consensus regarding certain aspects of the functioning of electronic money. For example, in August 2017, when the bitcoin system did not handle a huge amount of work, consumers had to wait for the end of a monetary transaction for more than one hour. But since there is no single decision maker to initiate changes, it is necessary that 99% of users accept the new rules and begin to comply with them. Ultimately, then they could not come to a general plan of action.

The very first altcoin is considered to be NMC (Namecoin). It was introduced to the market in 2011. The "firstborn" still exists, although it is not seen in the top ten cryptocurrencies. Its main differences from MTC are as follows:

    the need to register a domain name in the bit zone;
    loss of a sufficiently large amount of time to understand the rules of working in the system and in the selection of a unique name;
    a small number of DNS servers - all over the world you can count them on the fingers of both hands (to be more precise - there are 8 of them), which guarantees constant overload and inaccessibility for a number of users.

Ethereum (ethereum, ether) is both a smart contract currency and a decentralized functional environment. One of the "youngest" coins that appeared in 2015. Its creator, Vitaly Buterin (a Canadian-Russian programmer who received the World Technology Award in 2014 for his creation, bypassing Mark Zuckenberg and other applicants), embodied his brainchild with funds raised through crowdfunding (the amount was collected in bitcoin).

If you follow the terminology, the Ethereum platform is written to create and support the functioning of blockchain-based applications using smart contracts. They are built in such a way that a certain action will be performed only when the specified conditions are reached.

For a better understanding, you can give an example of renting a car. As long as the payment from the user by the vehicle arrives in full and on time, no problems arise, but as soon as the lease conditions are violated, the smart contract will lock the car door, and the renter simply cannot open the car until the debt is paid off.

Smart contracts are the basis of all ICOs, guaranteeing investors the automatic enrollment of tokens after the transfer of Ether to the specified wallets. Today, Ether occupies about 18% of the total cryptocurrency market, which ensures itself an honorable second place in the list of leaders. The Ethereum unit cost at the beginning of February 2020 is 192 USD. In addition to popularity, it is worth noting the flexibility and functionality of Ethereum, it is perfect for use as a tool for making payments, as one of the forms of asset storage, as part of an investment package.

The main value and highlight of Ethereum is the ability to generate decentralized projects on the blockchain, ranging from a game room to a charitable foundation. This property has become a catalyst for the development and rapid growth of the exchange rate of major currencies and the inflow of investments into the crypto world.

Electronic Ripple

Ripple is the fastest electronic money. The Ripple code, as opposed to the thousands of different variations of bitcoin, is written from scratch to order from venture capital funds (an investment institution that prefers to work with innovative projects and enterprises is engaged in investments in shares of companies or securities with a high degree of risk). The main goal of creating Ripple is to save on the cost of banking operations and increase their speed. For example, with a banks total turnover of over USD 5 million and a total load of 300 thousand transactions per year, the savings on one operation will amount to USD 3.4, which in total will exceed one fifth of the annual turnover.

In contrast to Bitcoin and Ether, Ripple does not provide resources for mining (mining). This is a centralized system where one corporation Ripple Lab owns all the digital money and issues it for processing research data from various universities. Initially, the authors planned to create an exchange interface for depositing, withdrawing and exchanging currencies, but, as the appetite comes with eating, and when creating the platform, the decision came to the birth of a new info-coin. Lets note the characteristic features of the Ripple coin:

    availability of software codes (they are free);
    the ability to cancel the operations performed;
    no commission for exchanges between platform participants;
    saving the history of all transactions on wallets;
    the feasibility of creating a farm or pool to carry out "useful" computations for science or medicine.

How it works? For example, a cancer research institute needs to process huge amounts of data (experimental or statistical research). The organization itself does not have the technical and human resources for such a costly operation. The central server breaks down the entire volume of work into small fragments and sends it to network users who have previously installed special software.

After receiving the result, the information is transmitted to the central server. Since the fragments are small, the load on the computer is almost imperceptible, but there are millions of such machines on the network, which leads to a stunning result. Problems that the institute would spend weeks or months on are solved in a matter of days or hours. Today Ripple ranks third in the list of leaders in cryptocurrencies, the cost of one coin is 0.25 USD.

Cryptocurrency Litecoin

Litecoin is a peer-to-peer electronic payment system that appeared in 2011. Litecoin has a digital currency of the same name, which allows you to make fast and almost free payments anywhere in the world. This is the second Bitcoin fork after Namecoin by Charles Lee. The main difference from the source is the shorter time to confirm transactions and greater storage efficiency. The encryption of the wallet of this currency is interesting: you can freely view the operations and account balance, but as soon as you decide to spend coins, you will have to enter a password. This provides protection against viruses that devastate electronic piggy banks.

The advantages of Litecoin are as follows:

    higher mining speed due to the use of a functionally different Scrypt algorithm;
    compared to bitcoin, more than 4 times the number of coins;
    more efficient use of the central processor for computing work;
    recalculation of system complexity every 3-4 days.

Dash cryptocurrency

Dash is a private cryptocurrency. It appeared in 2014 as a result of the conversion of the bitcoin code, the main difference of Dash is complete privacy. When using the leader of the cryptocurrency market, the confidentiality of information is preserved until the owner of the wallet is known, if an unauthorized person managed to establish the identity of the user, then he can track any transaction, even the purchase of a bottle of water in a few years. On the Dash platform, this is fundamentally impossible, since information is not collected in blocks - operators are responsible for it. These are the same platform participants as miners who process data and receive a reward for it.

Bitcoin and other cryptocurrency transactions

What is a transaction in general? This word came to us from the English language and is translated as an agreement or a deal. The people of Great Britain borrowed this concept from the "dead" Latin language, meaning transactio - agreement. This concept is equivalent to a switch, which can be in one of two positions, like a binary operator - 0 or 1 (executed or not).

The first association that comes to mind when we hear this definition is a banking transaction. In essence, this is any action that changes the clients account: payments, transfers, replenishment, interest accrual, commission write-off. For example, when paying for purchases with a payment card, you can read a message about a successful transaction in the terminals response.

In addition to the banking sector, this term is also used in programming. In the world of zeros and ones, in billions of terabytes of information, a transaction is making adjustments, adding new information to the database, updating its state. Even a person far from mathematics and logic can imagine a table with records, which is allocated an isolated part of memory on a hard disk. A change that also only has two states, true or falce, is a transaction. Everything is very similar: bank accounts are the same database, only it is located on the bank server, and changing an account means making adjustments to the database and changing its state.

What does all this have to do with Bitcoin? What exactly is a Bitcoin transaction? Everything is very simple. This is an operation that influences and transforms the clients account of the information economic system. It has two positions, either passed or not. The peculiarity is in the very database on which the Internet accounts are located. Due to the decentralized structure and the absence of a single control center, millions of linked copies of it are located on the computers of the lucky owners of the cryptocurrency. New entries in it are confirmed and considered legitimate with full compliance in all copies. This is the blockchain mentioned above.

What is included in the structure of the transaction:

    Login: information about the source of BTC from the sender.
    Amount: the totality of the transferred resources.
    Output: recipient address.

The mechanism that prevents fake transactions is called mining. The more copies stored by the owners of cryptocurrency wallets, the higher the systems reliability. All new agreements (agreements) are written not gradually, but in blocks. Today, the frequency of the formation of such a block is 10 minutes. The first to make changes is the miner who got the new coin.

Mining is an endless process of creating new blocks in the system, which consists in iterating over numbers and finding a hash with the given properties. A reward is paid for creating a new cell. To make a new transaction, at least six confirmations are required, which excludes falsification (for example, sending bitcoins to two addresses simultaneously).

Why, then, are there unconfirmed transactions? The bottom line is that the block has a limit on the amount of information entered into it, and there is no guarantee that the desired translation will get there. How do you ensure data entry? Money decides everything here: transfers are sorted by the amount of the commission, and the higher it is, the more likely it is to get into the block. With a heavy load on the network, transfers with too little commission may never get into the database.

Therefore, to ensure a higher speed, you need:

    Try to make transfers of large volumes, the higher they are, the higher the status of the transaction.
    It is better to participate in large trading platforms, they do not use network resources, but only platforms, which increases the speed.
    Use multi-signature wallets.

When making a transfer, the commission is paid to miners who help in carrying out the calculations; today it is low and amounts to 1-2 satoshi (which is equivalent to 0.25 USD).

What is Satoshi? If you take an interest in the history of the emergence of the crypto market and look at its origins, then the name of the creator of bitcoin - Satoshi Nakamoto is forever imprinted there. He also named the analogue of the American cent by his nickname. To be more precise, 1 Satoshi is 0.00000001 BTC.

You can get the desired coins in several ways:

    Meinig (this concept is already familiar).
    Satoshi-cranes (specialized sites where you can get a reward for completing a task; assignments can be very different, from watching an advertising video to passing a sociological survey).
    Purchase at an exchange office or exchange.

The choice of the method for obtaining Satoshi remains with the user, the methods of obtaining the desired coins can be combined.
Difference when using other cryptocurrencies