If you’ve been using Bitcoin for a while, chances are you’ve used a hot wallet.
The term “hot wallet” refers to an online wallet that enables you to store, receive, and send money and tokens while online. Cryptocurrency wallets are available in a variety of shapes and sizes because they just need an internet connection to conduct transactions, unlike traditional currencies that need banks or physical wallets.
A hot wallet and a cold wallet differ primarily in terms of their internet connectivity. Whereas cold wallets cut off internet access, hot wallets do not.
Understanding the benefits and drawbacks of having your coins connected to or removed from the internet is crucial if you use Bitcoin. Because each approach has advantages of its own, many bitcoin owners have both hot and cold wallets.
The significant advantage of using a hot wallet is that you can easily use your crypto for purchases, payments, and regular transactions.
However, hot wallets are more susceptible to security risks and potential hacking compared to cold wallets. This doesn’t mean that hot wallets are inherently unsafe, but their internet accessibility makes them slightly more vulnerable. In contrast, a cold wallet is completely isolated from the internet, similar to keeping a valuable gold brick in a home vault.
Both hot and cold wallets store the essential elements of a cryptocurrency wallet, namely the public and private keys that ensure secure transactions.
In a hot wallet, these keys and any funds are exposed to potential attacks since they are stored on an internet-accessible device.
To protect your funds from theft, it is advisable to keep only a small portion of your holdings in a hot wallet and store the rest in a cold wallet. If you plan to spend a specific amount in the near future, it can be kept in your hot wallet.
For reference, hot wallets typically come in various forms such as USB sticks, exchanges, or wallets on your phone, all of which connect to the internet. On the other hand, a cold wallet can be as simple as a piece of paper containing your public and private keys.
A blockchain consists of blocks that are stacked on top of each other, forming a chain. The block height represents the number of blocks in the chain. The first block, called the genesis block, has a block height of zero, while subsequent blocks have positive integer heights.
Each block contains a batch of transactions, like when Alice sends 1 bitcoin to Bob. Along with transactions, blocks include cryptographic hash and timestamps.
Various cryptocurrencies use blockchains. For example, in the Bitcoin protocol, a new block is added approximately every 10 minutes. The block height indicates the number of blocks in the blockchain since the genesis block.
Blockchain technology enables the creation of secure and permanent digital records. It extends beyond cryptocurrencies and can store various transactional information, such as smart contracts on the Ethereum network.
You can easily find the current block height of any blockchain network through a simple Google search.
Privacy coins are a type of cryptocurrency designed to offer users enhanced financial control and privacy. While some media outlets may portray privacy coins negatively, associating them with illicit activities like drug trafficking or money laundering, it is important to recognize that similar concerns exist with cash as well. It would be incorrect to label privacy coins solely as tools for illegal trade, as this perspective would be dystopian.
Allowing governments, banks, or private companies to have full visibility into your financial activities can lead to profiling, targeted marketing, or even the sale of your spending habits to other entities. Just as individuals value privacy in their own homes, it is reasonable to desire privacy in financial transactions.
Presently, there are approximately 63 different privacy coins available, collectively worth over $2 billion. Each project offers unique features and approaches to privacy. Some privacy coins prioritize default privacy, while others require users to opt in for specific transactions. They employ a range of technologies, some of which are groundbreaking, while others leverage different strategies to shield various aspects of transactions.
It is important to note that Bitcoin, once considered a privacy coin, no longer provides complete privacy. The Bitcoin blockchain functions as a public ledger, enabling traceability of transactions. Even if you purchase Bitcoin anonymously, careful consideration is required regarding where and how you spend it, as transactions can still be linked to your IP address and other identifying information.
If you value full control over your money and wish to explore privacy coins, it is advisable to learn more about them and their usage.
The development of dynamic proof of work (dPoW) is still in its infancy. There aren’t many brand-new blockchain projects testing it.
It does, however, have some promise. In essence, dPoW prioritizes transactions according to how much labor the user has completed. So, you can offer more computational power rather than paying higher costs to complete your transaction more quickly. Your transaction will be prioritized higher by the network and processed more quickly the more processing power you dedicate.
The advantages are noticeable when the network is overloaded with low-value POW transactions, and you choose to allocate extra processing power to prioritize your transaction, pushing it ahead of the other transactions.
You might have noticed that there is a fee associated with every Bitcoin transaction. The mining fee is the name of this charge.
Your transaction will be executed on the Bitcoin network thanks to the mining fee. The Bitcoin network levies a fee to use its blockchain, much like VISA levies a fee for utilising their network.
But there is a significant distinction. Under conventional payment systems like VISA, the party receiving the money is responsible for paying the fee, which is then passed along to you in the form of increased costs. The charge in Bitcoin is covered by the sender. The sender can choose how much of a fee they are ready to pay thanks to this design decision. You can select a low cost for a slower processing speed or a larger fee for a faster processing speed.
In order to secure the network and choose which transactions to execute first, miners are essential. Depending on the fees involved, they rank transactions. Higher fee transactions are normally processed first, whereas lesser fee transactions may take longer to process until a miner decides to include them in a block.
This system incentivizes miners to process transactions by compensating them for their computational power and electricity usage. Despite the fee associated with each transaction, using the Bitcoin network is often more cost-effective compared to traditional money transfer services like Western Union.
A parent chain is the primary blockchain in a network, while sidechains are parallel blockchains connected to the parent chain. Sidechains function by locking value in the parent chain and transferring it to a separate distributed ledger. For instance, in the case of Bitcoin, funds are locked in a designated Bitcoin address, and once confirmed by the network, a message is sent to the sidechain indicating that new tokens can be distributed based on the locked funds.
The main benefit of sidechains is that they can increase transaction speed. Before moving the value back to the parent chain for further usage, they permit some transactions to be completed in particular contexts, such as a single store or game. This is comparable to a parent assigning homework to a child, who then completes it at home and brings it back to the parent, who then distributes it to the appropriate parties.
Scaling slower cryptocurrencies like Bitcoin has been addressed with the use of sidechains. The concept is to use sidechains for smaller transactions involving very little amounts of cryptocurrency and reserve the main blockchain for larger transactions. With the help of this strategy, Bitcoin will be presented as a more useful currency that can be used for regular activities like buying
What makes SmartCoins unique is that their value is pegged to another asset, such as the US Dollar, gold, or another stable coin.
With this pegging, they might fluctuate when tied to gold or another resource with a limited supply or remain stable when linked to the US dollar. Because SmartCoins are always stable and have at least 100% of the BitShares core currency supporting their value, a central authority is not necessary.
They are an open-source peer-to-peer cryptocurrency that has the fungibility and divisibility properties needed to function as a currency. They make it possible to send fast payments to anyone in the world.
SHA-256 encryption is used by SmartCoins to prioritise security, enabling users to securely store their currencies in hardware wallets or even make their own paper wallets. Payment transfer assurance and transparency are provided by the public database that keeps track of transaction information and account balances.
In various financial markets, whether it’s the traditional stock market or the world of cryptocurrencies, a trading pair represents the combination of two items being exchanged against each other. In traditional markets, trading pairs like Gold/USD and USD/EURO are commonly observed.
In the realm of cryptocurrencies, trading pairs are formed by combining two distinct digital currencies. Among the most prevalent trading pairs are those involving Bitcoin, such as Bitcoin/USDT and Bitcoin/ETH. Given Bitcoin’s status as a highly sought-after cryptocurrency and a benchmark in the market, numerous other cryptocurrencies are traded against it.
There are many different trading pairs available when you engage in bitcoin trading. Certain pairings are connected to stablecoins like USDT, which help traders keep the value of their money stable. Some trading pairs require careful attention to the price swings of both coins because they incorporate various alternative coins (altcoins).
As you delve into the world of cryptocurrency trading, it is crucial to consider which trading pairs align with your goals. Opting for pairs that involve stablecoins can help safeguard the value of your funds, while other pairs may require more active monitoring of price fluctuations.
SmartBridge is a technology proposed by the cryptocurrency project ARC. It allows different blockchains to connect and communicate with each other.
With SmartBridge, the question of which coin will replace Bitcoin becomes irrelevant because it enables users to combine the best features of all cryptocurrencies. By using a special token called ARK, even Bitcoin can gain the functionalities of other altcoins.
ARK’s SmartBridge Technology uses Vendor Fields and Encoded Listener nodes to analyze data from different blockchains and perform user-requested tasks. Implementing a small piece of code allows any existing blockchain to connect with ARK securely and easily.
Once a blockchain is connected through the SmartBridge, various transactions become possible. For example, you can trigger an Ethereum smart contract by sending instructions through the ARK SmartBridge.
The potential of ARK’s SmartBridge technology goes beyond these examples. As more use cases for cryptocurrencies arise, smartbridges offer the whole ecosystem the opportunity to benefit from seamless communication between different blockchains.
Block lattice architecture is an alternative to blockchain, aiming for faster transaction times.
One key feature is that each user’s blockchain tracks their account balance, reducing storage requirements and providing balance history that can only be updated by the owner.
In a block-lattice system, transactions are divided into send and receive blocks on the sender’s and receiver’s account chains, respectively. This allows for transactions to occur at any time.
To initiate a transaction, the sender creates a send block containing the recipient’s address, coins to be sent, and a reference to the last block on the sender’s chain. The block is added to the sender’s chain and broadcasted to the network. After network agreement, the coins are deducted, and the transaction is settled within approximately 3 seconds.
The receiver creates a corresponding receive block and attaches it to their account chain. Once the block is broadcasted, the funds are added to their balance, also taking about 3 seconds.
Unlike traditional blockchain systems that rely on Proof-of-Work, block lattice employs Delegated Proof-of-Stake (dPoS). Each account owner selects a representative to verify blocks on their behalf.
If an attempt is made to double-spend coins, representatives vote to determine the valid block, preventing double spending. The representatives’ voting weight depends on the number of coins delegated to them.
A block in the block lattice can only be settled when verified by representatives with a combined voting weight exceeding 50%. Conflicting blocks are resolved, ensuring security against double spending.
Thanks to independent chains for each account holder, transactions can continue during the voting process.
Through its dPoS (Delegated Proof of Stake) architecture, the system facilitates feeless and nearly instantaneous transactions by settling them on separate chains that are verified by representatives. This approach achieves higher transaction throughput without relying on resource-intensive block mining to secure the network.
