Welcome to Brave New Coin’s Bitcoin 101. First-timers, we’d like to introduce you to the wonderful world of cryptocurrency; where payment is frictionless, free and instantaneous, and pizza could cost you $5 million dollars (more on that later). Sections 1-6 will cover the essential things you need to know about Bitcoin.
To our experienced readers, welcome back. Sections 7-10 contain some more advanced ideas and fun trivia. Read up, get to know Bitcoin better, and discover how cryptocurrency could change the world. Let’s get started.
Altcoins are attempts to build upon Bitcoin and improve it. The cryptocurrency ecosystem has now grown to one containing hundreds of different “coins”, each trying to fill different market niches. Some have risen to fame, such as Litecoin, Dogecoin and Darkcoin.
Copycats: These are coins that are simply clones of an existing cryptocurrency, they bring nothing original to cryptocurrency. Copycoins are often get rich quick schemes on behalf of their creators or even worse, outright scams. Its not all that bad though, some are not so evil. (such as Dogecoin)
Country coins: Coins intended for use as a national currency. Auroracoin was the first of these coins, and attempted to “airdrop” coins to each member of the Icelandic population. Sadly none of these experiments have been successful so far. Other Examples: Mazacoin, Isracoin
Multiple Algorithm coins: These coins aim to solve the problem of single algorithm vulnerability by using multiple algorithms in the mining process. Meaning that if a single algorithm’s security is compromised, the coin’s blockchain is still secure. Examples: Digibyte, XCurrency.
Bitcoin 2.0: These are attempts to create a cryptocurrency which can perform more complicated tasks such as housing decentralised, autonomous organisation (DAOs) in a blockchain. Examples: Mastercoin, Ethereum, Counterparty
Bitcoin’s blockchain has many future applications(beyond digital currency). Already, developers are thinking about what cryptocurrency can do for the world.
Disrupt Global Remittance Flows: Every year, approximately $500 billion USD is sent around the world by money transmitters like Westen Union & Moneygram. On average, 8.14% of all money sent is taken in transaction fees, this can even be as high as 20%. This amounts annually to about $40 billion dollars. Bitcoin could drastically lower these fees, allowing more money to go to those who are receiving it. There are still a few obstacles to be overcome.
A similar saving can also be applied to credit card payment networks, did you know that 40% of Visa and Matercard’s costs come from fraud prevention?
Move The Stock Market onto the Blockchain: Coloured coins intend to use the blockchain to act as the system for exchanging anything, not just bitcoin. By “colouring” a fraction of a bitcoin, it can represent any tradable asset. In theory this means that a decentralised stock market could be created, with companies conducting IPOs using coloured coins representing their shares.
Fight Internet Censorship: Namecoin is a cryptocurrency that allows people to create domain names (like .com, .org, .uk & .gov) which cannot be seized. This has the potential to offer journalists, activists and normal people the ability to publish content online without fear of censorship, protecting their rights to free speech.
Prove Its Yours: Proofofexistence.com allows anyone to upload files onto the blockchain, to show that you are their creator or owner. Imagine a musician uploading a proof of a music score they created onto the blockchain. This makes their ownership indisputable. The documents themselves are not uploaded, only the cryptographic proof of their existence.