When we use blockchain to store digital transactions, the result is cryptocurrency. You may recall from our last edition (B for Blockchain) that cryptocurrencies are one of the most popular use-cases of this technology.
For a cryptocurrency to work, a group of people who want to stop depending on banks get together and maintain a shared register of transactions among themselves. Now, if two people on this network want to do a transaction, they will mark the fund transfer in their respective registers and tell the whole network about it.
Other people on the network will then check whether you had enough balance to make the transaction. If yes, they will validate this exchange and the transaction will get completed.
The first cryptocurrency was Bitcoin, but it was soon followed by the launch of many other cryptocurrencies that sought to make transactions faster and more efficient.
If DC Comics created crypto…
If DC Comics created crypto, bitcoin would be Superman (the first costumed superhero). Just like superheroes, there are also many other cryptocurrencies in addition to bitcoin.
Bitcoin as Superman, Monero as Wonder Woman, Ethereum as Batman and Solana as Flash | Credits: Sri Vignesh (@0xSpicyOnion)
As of May 2022, there are about 19,509 cryptocurrencies in the world including the likes of Bitcoin, Ether, Dogecoin, Solana, and Polygon (MATIC). A superhero’s popularity is determined by the revenue generated by her films. In the case of cryptocurrencies, we determine popularity by calculating the market cap.
Currently, Bitcoin is the most popular crypto with a market cap of 44.63%, closely followed by Ether at 19.1%. Further, when this market cap of bitcoin drops, it usually indicates that the popularity of altcoins is growing.
What are altcoins?
Except for Bitcoin, all other cryptocurrencies are grouped as altcoins. These altcoins were created to either expand or improve the functionality of the bitcoin blockchain. Like how DC created superheroes like Batman, Wonder Woman, and Aquaman to match the taste of a wide range of audiences.
Let’s take the example of Litecoin, it is almost similar to bitcoin except for its ability to speed up transactions and make storage more efficient. For context, the bitcoin network processes five transactions per second whereas Litecoin can process 54 transactions per second. On the other hand, Solana (our Flash) can do an average of 2,700 transactions per second.
Bitcoin network processes 5 transactions/sec, Litecoin can process 54 transactions/sec
The second most popular crypto Ether runs on the Ethereum blockchain. This was created to expand blockchain technology from just storing financial transactions to also include digital agreements. These agreements are also known as smart contracts.
Then there are start-ups working on improving the Ethereum blockchain. Founded by Indian engineers, Polygon is one such platform powered by cryptocurrency MATIC. This crypto is used on the Polygon network to pay transaction fees on the network (platform fee equivalent in Web3 world), govern and secure the Polygon network.
Cryptocurrencies are bought and traded on various crypto exchanges like CoinSwitch Kuber, Coinbase, CoinDCX, and Binance among others.
How did it all start?
As we discussed in the previous edition, the idea of blockchain was fully developed in 2008 when a research paper titled Bitcoin: A Peer-to-Peer Electronic Cash System was published under the pseudonym, Satoshi Nakamoto.
Then in 2009, bitcoin software was launched to the public, and the process of recording and verifying transactions on blockchain started. This was followed by an interesting day in May 2010, when bitcoin was first time used to buy physical goods.
On May 22, 2010, a Floridian programmer, Laszlo Hanyecz used 10,000 bitcoins to buy two pizzas. This day is also known as Bitcoin Pizza Day.
Here’s what Laszlo wrote..
As bitcoin’s popularity surged, people started working on improving the bitcoin network giving birth to the first altcoin in 2011. Namecoin and Litecoin were among the first altcoins to be launched.
Cryptocurrency Risks
Well, we did talk about the vulnerabilities of blockchain in the past edition. So using this space to recommend this ace documentary which describes one of the biggest scams in the cryptocurrency world, along with depicting the volatility of crypto market.
That’s all from the C for Cryptocurrency edition. If you can think of any other Web3 terms starting from the letter C, please leave a comment and I will include them in later editions.
I apologize for the errors in B for Blockchain emails. Please note the changes here:
Satoshi Nakamoto published the research paper titled Bitcoin: A Peer-to-Peer Electronic Cash System in 2008. The earlier version of B for Blockchain edition erroneously mentioned 2018. I apologize for the error.
Nick Szabo came up with the proposal of bit gold in 1998. The earlier version of B for Blockchain erroneously mentioned 1990. I apologize for the error.
Disclaimer: The information in this newsletter does not constitute investment advice, financial advice, trading advice, or any other sort of advice. Web3 Alphabet does not recommend that any cryptocurrency should be bought, sold, or held. This is purely for educational purposes.
Simple and to the point!