Digital Money
- People tend to give more trust to things they can touch, like money for example. They trust more printed money instead of a virtual version of money. Why? This happens because printed money is issued by a central bank like the US dollar is issued by the Federal Reserve. This way central banks are a higher authority which is able to control the supply of printed money. Digital form of money does not have a controller.
- Bitcoin and its ‘friends’ are not regulated by a central bank or other authorities. Digital money is mined by millions of computers located in different parts of the world, called ‘nodes’. This network of nodes has the function of the Federal Reserve, Visa and MasterCard which enables online transactions. There is a big difference, because these nodes are spread around the world and they save and verify the data of the past and recent transactions. Records are kept on a public list which is available for anyone. Owners are identified by an e-wallet ID only.
- Usual transactions are made through banks, online forms, point-of sales and physical receipts. Banks keep fees for any transaction done by clients. Bitcoin blockchain achieve the same effect by adding in each node the transaction details done by interested parties. Nodes keep records and verifie into the future each time the same record wants to make a transaction.
Crucial Digital Money
Bitcoin
Bitcoin is the first form of digital money. In contrast with traditional money which is backed on papers, gold, silver, Bitcoin is mined through powerful trading algorithms. Traditional money is printed by central banks, bitcoins are mined by distributed computer networks.
Ethereum
Ethereum comes second after Bitcoin for its popularity and volume in the market. Ether is used to pay for transactions which are done through the platform. It provides developers with facilities to write code cheaper with other softwares available in the market.
Bitcoin Cash
Bitcoin Cash is a derivative of Bitcoin which was delivered in 2017. The main difference between Bitcoin and Bitcoin Cash is that Bitcoin Cash has a wider capacity to maintain and manage a larger number of transactions compared to Bitcoin.
Litecoin
Litecoin is another decentralized form of digital money. It was launched in 2011. It uses code from a Bitcoin client. Litecoin and Bitcoin have a close relationship, so many times Silver is called as Silver, while Bitcoin is called Gold.
