A lot has been said about bitcoin lacking intrinsic value, hence not having any real value in the currency markets. However, taking the intrinsic value of an asset into consideration when trading is only one approach to the markets.

Another approach focuses more on the price chart, demand and supply, and the crowd’s psychology in order to make informed decisions – usually by traders who prefer technical analysis over fundamental analysis while trading.

Price patterns and popular indicators may be used to deduce a lot of information from a price chart. Don’t forget that it is not only the financial headlines that move the markets, but the traders’ psychology as well. With the right indicators and tools, you will realise that traders’ psychology is also present on the price charts. Therefore, CFDs on bitcoins and other cryptocurrencies (i.e. speculation on cryptocurrency price movements without owning the actual cryptocurrency) are usually traded against the US Dollar, and may be treated and traded just like any other financial instrument if you apply disciplined technical analysis to your trading.

Lets take a break here, we will continue from the next publication. Stay tuned!!!  

Bitcoin constitutes the basis of many other decentralised currencies

that have appeared since 2009. These are referred to as alternative coins, or altcoins for short. While they have many similarities to the Bitcoin network, altcoins use different variations of blockchains and

proof-or-work algorithms for their foundation – many claiming to be an improvement on Bitcoin. For example, Litecoin is one of the first altcoins to use Scrypt as the proof-of work algorithm – this results in much faster confirmations than Bitcoin has, making it a very attractive alternative for retailers and investors. Scrypt was designed to be bruteforce-tolerant, which implies much higher security. Within the Litecoin system, a new block is added in the chain every 2 and a half minutes (compared to Bitcoin’s 10 minutes). To date, 84 million litecoins are scheduled to be put into circulation. Other popular altcoins include Ethereum, Ripple, IOTA and ADA.

  Lets take a break here, we will continue from the next publication. Stay tuned!!!  

Is another new day to learn something new and today we will be looking into the future of bitcoin.

The current situation of bitcoin is that a number of countries still prohibit the buying, selling and trading of it. In other countries the use of bitcoin is still disputed and under very careful scrutiny by their respective governments.

The reason for this fragile state of the bitcoin is that governments fear losing control. This creates a panic that in the future, this lack of control may open doors to unforeseen problems where governments and regulatory bodies will not be able to step in and draft, plan and execute monetary policies that can fix the problem.

With that said, however, many countries have adopted bitcoin as a legitimate form of currency and have accepted that it’s here to stay in some shape or form. While some may have a more conservative approach with regards to the new digital currency, it is clear that Bitcoin technology has already taken root.

Even if bitcoin the currency loses all of its value one day – depending on market action and how future regulations treat it – it is clear that the Bitcoin network and the technology that the currency was built on will have a long life.

    Lets take a break here, we will continue from the next publication. Stay tuned!!!  

Is another new day to learn something new and today we will be looking into the difference between Bitcoin and bitcoin, yes you heard me right. I know you must be wondering if am insane to be telling you that their is a difference between Bitcoin and bitcoin, that was how i felt the day i discovered it so i will also like to share the knowledge with you today, so without any waste of time lets jump into what we have today.

One of the most common misconceptions when talking about the most popular digital cryptocurrency is the differentiation between Bitcoin and bitcoin.

Bitcoin (written with a capital B) defines the entire network upon which the cryptocurrency system is built. When referring to Bitcoin, it’s the blockchain technology that is being referenced, the system that makes use of all of the necessary confirmations needed for new blocks to be added to the chain (i.e. the public ledger).

The other bitcoin (always written with a lower-case ‘b’) refers to the actual currency, which runs on the Bitcoin network.

Bitcoin=Network(Blockchain)

bitcoin=coin(asset)

  Lets take a break here, we will continue from the next publication. Stay tuned!!!    

Is another new day to learn something new and today we will be looking into Mining

To mine bitcoin you need software and a computer built for the specific

purpose of mining. The goal of the miner is to figure out a hash of the

block that is equal to or less than a specific target. If all information in

the block header remains constant, the result of SHA-256 will always be the same.

In cryptography, a nonce is an arbitrary number that can only be used once. That’s why it is included in the header – every time the calculated hash of the block header fails to meet the targeted range, the nonce is increased and the hash is re-calculated until it ultimately reaches its target. Miners with the most powerful computing devices will have an advantage – the total number of possible answers is close to 1077, which requires a lot of power and speed. Since there is no logic when calculating the winning hash, brute force should be followed.

Once the winning targeted hash is calculated, the block is included in the blockchain and the reward is granted to the victorious miner. Currently, a block is included in the blockchain every 10 or so minutes and a single block may contain approximately 1,000 transactions.

  Lets take a break here, we will continue from the next publication. Stay tuned!!!  

Satoshi Nakamoto

Emerging from the world of cryptography in the mid-2000s, the

mysterious Satoshi Nakamoto is credited as the mastermind creator

behind bitcoin the currency, and Bitcoin the network. Is that his real

name? Is he Japanese? American? Is he or she, in fact, a lot of people

merged under one pseudonym? To this day, no one knows.

As a direct response to the financial crisis of 2008, Satoshi Nakamoto envisioned a new and decentralized digital currency system he called bitcoin. In October 2008, Nakamoto published a paper entitled “Bitcoin: A Peer-to-Peer Electronic Cash System” which detailed a payment system based on chains of data blocks (later to become known as blockchain) and the removal of third parties between transactions. It came at a perfect time, of course, because a lot of people had lost

trust in traditional financial institutions due to the crisis.

Nakamoto’s proposal detailed how the new system would function without financial institutions, how a peer-to-peer network would resolve the issue of double spending and what this new system would mean for transactional privacy.

A few years after his proposal, Satoshi Nakamoto stopped being involved in the development of bitcoin and completely disappeared from all public forums.

Decentralisation &

The Peer-to-Peer (P2P) Network

The core principle of decentralization is the removal of a central,

controlling body, whether that be an entity in the form of a financial

institution (i.e. a bank), a “trusted third party” in the form of a payment

provider, or an individual middle-man between the sender and the receiver of a transaction.

One type of decentralized system like this has existed for many decades. Known as peer-to-peer – P2P for short – this network consists of, in its most simplified definition, two or more computers connected to one another and sharing all types of data. Torrent file-sharing, which is widespread and allows users to download music, movies, documents and other types of files, is based on a P2P network.

P2P technology has a long history. As a fault-tolerant network, P2P was initially designed for the purpose of transmitting military messages without any vulnerability to human fatality, natural phenomena or technical malfunction. Its primary feature is its autonomy – in other words, its inherent decentralized nature.

A P2P network has no centralized authority or regulatory entity that monitors, facilitates or controls any of the data that is shared between the two peers.

Public and Private Keys

vs. Public Address

To understand bitcoin and its intricate structure, you need to know

the difference between three terms whose definitions are often, easily

(and mistakenly), interchanged.

Private Keys: In their purest form, private keys are 256-bit numbers that are generated randomly and used to authorize the spending of bitcoins. ‘Bit’ is short for binary digit and always represented by one of the two binary figures: a 0 or a 1.

Since the number of possible 256-bit combinations is extremely large, a simpler system has been created to represent the private key. A 64-character hexadecimal system using letters a-f and numbers 1-9, like so:

ef235aacf90d9f4aadd8c92e4b2562e1d9eb97f0df9ba3b508258739cb013db2

Public Keys: Derived from the mathematical theory of elliptic curve multiplication, public keys are created from private keys. They are used to confirm that the data sent in the blockchain is authentic; in other words that it comes from the owner of the specific private key.

Thanks to the public key, the private key takes the shape of a digital signature, without ever being publicly revealed. The receiver, or any peer in the network, will only see the digital signature and public key.

Example of a Public Key:

030589ee559348bd6a7325994f9c8eff12bd5d73cc683142bd0dd1a17abc99b0dc

Public Address: Also known as the bitcoin address, the public address is also a major identifier for a transaction and it’s derived from the public key. In fact, this is the information that people need to input if they wish to send you bitcoin.

Each bitcoin transaction carries with it a unique public address, generated by applying the public key into a cryptographic algorithm called Secure Hash Algorithm (SHA). Example of a Public Address: 1J7mdgA5rbQyUHE2NYd5x39WVBWK7AfsLpEo6XZy

Trust

You’ve heard the term “trusted third party” before, right? Traditionally

speaking, this third party is the mediator between any customer and

any merchant. Banks and financial institutions or online payment

processors are conventional third parties that help facilitate

transactions.

Naturally, any transactions that involve people’s money must be built on trust. After the 2008 financial crisis, this core principle was shaken as the concepts of fraud and disputes became more prominent.

Traditional trust constitutes good faith towards the middle man; should any disputes or claims of fraud arise, it is up to this intermediary to settle them. The system works relatively well, but merchants end up incurring costs, customers are asked for more information, and transactional fees increase. Coupled with the fact that the traditional trust system took a hit after 2008, Satoshi Nakamoto came up with the Bitcoin Network as a new kind of trust system, based on the P2P network.

Proof-of-work

Integral to the mechanics of Bitcoin, proof-of-work (or POW) is

Satoshi Nakamoto’s ingenious workaround for confirming the blocks

of transactions. The trust that is traditionally extended to financial

institutions is transferred to the decentralised nodes (or computers)

on the P2P Bitcoin network.

These nodes validate and group transactions into blocks. In order to include the block in the ledger (blockchain), these nodes need to solve a “cryptographic puzzle”. This is done by hashing the information in the block to satisfy specific conditions. For example, one such condition is that the resulting cryptographic hash has to be less than a specified number. Since this type of proof-of-work involves a lot of trial

and error, the approach is called bruteforce - meaning all possible solutions are exhausted until the correct one is found.

The idea behind POW first emerged in the early 90s. By 1999, the first appearance of the official term was documented, and while appearing in various forms, it became increasingly popular when Satoshi Nakamoto integrated it into Bitcoin, amending it to include the decentralised node verification system.

Lets take a break here, we will continue from the next publication. Stay tuned!!!