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Crypto in 2017 has really become a hot asset to own, the digital currency behemoth Bitcoin recently hit the $18,000 mark (11th December 2017) and looks to continue to rise in value.
So what’s it all about? In layman’s terms, (and a common definition that’s found across the web) cryptocurrencies are limited entries in a database no one can change without fulfilling specific conditions.
In addition, they can be exchanged or speculated on just like any conventional or fiat currency. The only difference is that they are decentralised.
There’s a wide range of cryptocurrencies on offer and they all have different features, these include Bitcoin (BTC), Bitcoin Cash (BCH), Bitcoin Gold (BTG), Ethereum (ETH), Litecoin (LTC), Dash (DSH) (formerly known as Darkcoin and Xcoin), and Ripple (XRP).
The Cryptocurrency landscape has a lot of its own terms and they can be a tad confusing, below is a list of meanings that you’ll need to become familiar with and will help you get your bearings.
In a nutshell Altcoin refers to any digital coin that isn’t bitcoin.
All-Time-High – we’ve witnessed a lot of them this year!
To put it simply, the blockchain is a way of recording data and also the foundation for cryptocurrencies such as Bitcoin. This innovative form of technology is made up of blocks of transactions (think of it like strands of DNA being joined together), and are added in chronological order.
It acts as a public decentralised ledger, which means that it is simple to query any block by using an explorer (detailed information about Bitcoin blocks, addresses, and transactions can be found at Blockchain Info) and there is no centralised issuing authority.
Block(s) are like a record keeping book. The transaction data is bundled up into a block that is then verified and ‘chained’ to the most recently verified block and permanently saved on the blockchain.
This term refers to taking cryptocurrency wallets (your public and private keys) offline as a way of protecting your digital assets from potential cyber attacks. There are quite a few ways of using cold storage. Some of the popular methods include printing a hard copy of a QR code from a software wallet to storing your wallet on a USB drive, or simply just writing down on a piece of paper your keys, but make sure you don’t get them wrong! Hardware wallets that encrypt the contents and control access are popular, especiallly for large sums. Market leaders are Nano Ledger and Trezor.
This occurs when a blockchain splits into two separate chains. It can happen when a new rule is decided by developers. The new chain keeps the network transaction history of the original chain up until the block where it forks.
This is the first block that’s created on a blockchain.
A hard fork is a software upgrade that introduces a new rule set by developers that isn’t compatible with the previous software. For example, a new rule that allows a block size capacity of 3MB instead of 2MB would require a hard fork.
A hash algorithm encrypts data into a fixed-length hash. Hashes are large numbers are written as hexadecimal.
The Hash Rate how powerful a miner’s machine is. It measures the number of times a hash function can be computed per second.
As you’ve already guessed, hot storage is the opposite to the cold storage process. Hot storage is a hardware wallet that’s connected to the internet.
Think of hot storage/having a hot wallet as carrying a real wallet around all the time.
The main risk with this method is that there is more of a chance of your digital coins being stolen from hackers. If you go for this option make sure you have a back-up.
An ICO (Initial Coin Offering) is a way of fundraising a new project and selling crypto tokens in exchange for bitcoin or ether. It’s similar to an IPO (Initial Public Offering) where investors purchase company shares.
The crypto term refers to the process of verifying transactions, packaging them into blocks along writing them to the blockchain by mathematically solving complexed algorithms. Miners are incentivised to do this work through the payment of a mining reward. For the bitcoin network the mining reward is 12.5 bitcoins per block.
Pump and Dump
This term is used when an altcoin gets a lot of attention and gains a rapid price increase until the bubble bursts.
A signature in the crypto world is a mathematical operation that shows a user’s ownership of their coins, wallets, etc. Each transaction is ‘signed’ with the owner’s signature and is impossible to hack; they are protected by complex algorithms.
SegWit (Segregated Witness) involves certain parts of a transaction being removed in order to free up space to add more transactions to the blockchain. The concept was coined by Bitcoin Core developer Dr. Pieter Wuille.
A smart contract consists of code that’s capable of monitoring and enforcing an agreement. For all you developer types out there you’ll be familiar with creating statements – “if X occurs then do Y”, smart contracts are no different. They take such coding and interact with the blockchain. A two-way smart contract is stored on it and is unalterable.
A soft folk is where old nodes accept blocks that are created by new nodes. In this instance, miners can upgrade to a new version to handle the new blocks but can continue to accept old block versions. Users of that particular crypto and merchants respectively can continue to run older nodes which will be recognised by the newer blocks.
In crypto terms, tokens refer to “currency” of projects that have raised money by issuing their own tokens. For example, anyone familiar with the Ethereum network might have heard of the likes of Golem (GNT), Augur (REP), and Iconomi (ICN), all big projects that have issued digital tokens. The token usually gives the owner access to, for example, certain services on the associated network, a share of profits or perhaps the right to buy a product.
Cryptocurrency wallets come in many forms from online, desktop, and mobile to paper and hardware wallets. They store the public and private key associated with your coin holding. The various types of wallets represent the numerous ways a user can keep their private key(s) safe. (Refer back to cold and hard storage in the glossary).
A century ago Argentina was one of the most richest countries in the world and was part of an ‘elite club’ of prosperous nations and as we have seen in recent years countries such as neighbouring Brazil overtook Britain in terms of total GDP. However, this was expected, as World Finance’s Tom Bailey points out in a recent article, European nations comprise a small corner of the earth, and as larger nations turn their subsistence farmers into industrial workers (and then service sector employees), overtaking the old powers of Europe is inevitable. It is less of a fall and more of an expected correction and relative decline.
Sadly, those prosperous years of being part of an ‘elite club’ are well and truly over. Cast your minds back to 2001/2002 the Argentinian Peso lost three-quarters of its value (linked to various external shocks such as low prices for agricultural commodities and the devaluation of the Real in Brazil) and registered unemployment exceeded 25% which resulted in numerous public protests and violent scenes on the streets of Buenos Aires.
The Kirchner dynasty maybe over in Argentina, but newly elected Mauricio Macri (former Buenos Aires mayor and pictured above) has got a mammoth task of steering his country to economic safety. The centre-right leader intends to attract investment flows that will make Argentina globally competitive again.
As mentioned in Foreign Policy Magazine, Macri’s macroeconomic challenges are vast, however, and success will depend on his administration’s ability to curb a 5.4 percent GDP budget deficit (the biggest since 1982), temper soaring inflation (current annual levels are about 36 percent), and stimulate economic growth.
The question that remains in the Latin American country is whether Macri has enough time and support to put his agenda in place. Unfortunately unlike when Cristina Fernández de Kirchner was in power she had a full congress to back her, for Macri, he has less back-up when things take a nose dive. If that happens, you’ll bet your bottom Peso that Peronists will be ready to pounce.
Moving away from the politics slightly, with a volatile currency and a string of dysfunctional banks in the country, could cryptocurrencies such as bitcoin be an alternative for Argentina?
It seems that quite a few in Argentina are pondering this very question and have already adopted the digital currency. Argentina has had the most bitcoin enthusiasts per capita, troubled economies in Latin America have also looked at the idea, with neighbouring Brazil and Venezuela playing catch up.
Bitcoin has proven to be a solution for many of the problems caused by inflation and subsequent capital controls. (Tech Crunch, March, 2016) As a result merchants and workers alike have started to look for an alternative and have started to use the cryptocurrency.
Bitcoin start-up BitPagos, is currently helping more than 200 hotels, both cheap and boutique, take credit-card payments from foreign tourists according to the NY Times. The money brought to Argentina using Bitcoin payments bypasses the high level of bureaucracy which is usually involved with receiving conventional payments from overseas.
A popular online retailer in the country, Avalancha, has been accepting bitcoin since last summer and has seen a large amount of bitcoin transactions grow steadily since using the cryptocurrency on the site. Avalancha offers their customers a 10 percent discount when they use Bitcoin. The reason behind this is because credit card payments cost Avalancha more than 10 percent as a result of the troubled Argentine financial system.
Looking for alternative methods such as bitcoin has led to like-minded people joining in unison and creating a bitcoin embassy in Buenos Aires; a four-story building that’s home to eight start-ups whose businesses depend on Bitcoin transactions.
From start-ups to even local politicians have shown an interest in the cryptocurrency, Argentina’s youngest mayor Martín Yeza tweeted back in January about having a bitcoin agenda in place as well as regulatory approval for the popular ridesharing platform Uber.
Adopting bitcoin as an alternative for Macri aka “President Facebook” because of his big social presence would be a massive step in countering its current economic crisis. Argentina and the rest of Latin America has a lot of opportunities to push the cryptocurrency and make it more mainstream.