Yahura System Review - So what EXACTLY are Digital Currencies ?
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The Yahura System invests in digital currencies. Many of us THINK we know what they are but sometimes its useful to delve a little bit deeper and understand what they are, how they work so we can understand what is coming next and which ones are the best ones to trade or hold as an asset for profit.
So What is a digital currency ?
Digital currencies are distributed, much like a form of digital cash. They allow for seamless, direct, and extremely fast transactions between parties. You have full control over your payments and balance, and can spend and earn with ease and transparency.
Because you have full control over your digital currency, you don’t need to rely on a central authority to validate your transactions, all validation is done by the digital currency network. Today, credit card companies, banks, and others act as the ‘gatekeepers’ to your money. You trust them to protect your information and your money, and in exchange, they manage transactions to ensure that everything is in order.
However, digital currencies don’t require a central authority and instead manages transactions in a distributed fashion. As such, while a bank might have a database that’s an obvious target for hacking for someone to steal your money, digital currencies aren’t susceptible to these attacks. Additionally, digital currencies can process transactions in a matter of seconds or minutes, and not hours or days as it may take to send money today.
Digital currencies, often referred to as coins, are stored in digital ‘wallets’ that you use to manage your payments. Your wallet is protected by a private key – think of it like an extremely complex password – that only you know about. You can spend or send money by submitting a transaction from your wallet to someone else’s.
Like cash, you can spend the money however you want – whether lending to a friend, paying for lunch, or even paying an employee. Unlike cash though, as digital currencies are digital you can pay with a wallet app on your phone, with a special keychain, and in other ways that make digital currency easier to use.
Digital currencies were developed as an application on top a cryptographic invention known as blockchain, hence the name cryptocurrency being used by some. Blockchain is a technology that will support multiple technologies – digital currency is just one of them. But importantly digital currencies, as we have them today, would not be possible without the blockchain technology. So, what is blockchain?
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Blockchain
A block is a complex mathematical problem based on a cryptographic technology (called a “hash”) which computers aim to solve. Once the mathematical problem is solved, the block is ‘complete’. The important property of a block is that if you change any information inside of it – like transaction data – becomes invalid, or broken. The only way to fix it is to replace the incorrect data with the correct, original, data.
When a new block is created, it takes data from the previous block, creating a link – hence the term blockchain. In a blockchain, if any data in any block is altered, the entire blockchain from that point onwards is broken. You can think of it like a tower of wooden blocks, if you break one block in the middle of the tower, all the blocks above it topple over. The only way to ‘fix’ the tower is by correcting the data that was tampered with. In fact, blockchains are often measured in terms of ‘height’ which is the total number of blocks in the tower. So, the older the data is, the more secure it becomes. Generally, a block will be considered ‘valid’ once enough additional blocks are added to the chain in order to ensure security. In digital currencies, the blockchain is used to store an immutable transaction ledger for the currency.
Mining
People called miners solve these mathematical problems. They are responsible for bundling together transactions and then solving the mathematical puzzle. Mining can be very computationally difficult and thus requires powerful computers to solve these puzzles. The computers cost money and importantly require electricity to run. In order to incentivize people to mine, they are given a prize for their work – either in new coins, transaction fees, both, or otherwise.
Part of a miner’s job is also to ensure that transactions are valid. They do this by ensuring that the person attempting to send coins has enough to send – they can examine the existing blockchain to determine a wallet’s balance. Because the blockchain is available for anyone to view, every transaction made by every wallet is visible to all. While this may seem like a privacy concern as someone can track your balance and spending, you can actually have as many wallets as you want, and there are technologies and specific digital currencies that exist to provide complete anonymity while still maintaining the integrity of the blockchain.
Distributed Ledger, and Confirmation
Anyone who wants can have a copy of the blockchain, so when a miner successfully solves a new block, they announce it to the network to get acceptance of the new block, or consensus. Other miners first verify the transactions – this is a security measure to ensure that a rogue miner doesn’t try to facilitate invalid transactions – and then add new blocks to the latest blockchain. As additional blocks are added to the chain, older transactions are considered confirmed. The more confirmations that a block has, the more it is trusted. As the network verifies the transaction ledger, it is called a distributed ledger. This is opposed to a central ledger that a bank might maintain. Unlike a bank’s central ledger though, the distributed ledger can’t be hacked, broken, or counterfeited.
Our top digital currencies
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Bitcoin
Bitcoin (BTC) is the original digital currency, it is the market leader due to its established reputation worldwide, its security and the huge community base powering it. It holds significant value and has received media attention around the world. Retailers such as Overstock.com accept payments and Bitcoin, and Amazon allows consumers to purchase gift cards with the digital currency. Currently, Bitcoin is the most valuable digital currency and is valued at $96 billion, or about 57% of the market.
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Ethereum
While Bitcoin was designed as a digital currency cash system, Ethereum (ETH) is designed to help companies deploy applications on the distributed blockchain. The underlying currency, called Ether, acts as the fuel that powers these applications. Ethereum is often referred to as a ‘Swiss Army knife’ and supports numerous use cases which can range from ticket sales, escrow agents, online gaming betting, and more. Currently, Etherum is valued at $28 billion.
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Ripple
Ripple (XRP) is a digital asset targeted to allow financial institutions to make global payments more easily and more cheaply. To meet the demand of these institutions, their technology also focuses on transaction throughput and already can handle about 200 times more transactions per second than Bitcoin can. They already boast a strong list of customers which includes RBC, UBS, Santander, CIBC, and more than a dozen other banks, exchanges, and payment providers. Ripple is currently valued at $7.8 billion.
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Litecoin
Litecoin (LTC) was released in 2012 as a ‘lite’ version of Bitcoin, built using much of the original Bitcoin code base. Its primary advantages are that it supports much faster payments and far more transaction throughput than Bitcoin, capable of handling global payments in less than one second. Litecoin is sometimes referred to as the ‘test bed’ for Bitcoin because it is known to adopt and implement technological advancements much quicker and more smoothly than Bitcoin. It is currently worth $2.9 billion.
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