Fork
If you've heard of cryptocurrencies or are starting to get interested, then you've easily heard of FORK.
What is a Fork?
A Fork is a split into two different “directions” of the software of a cryptocurrency.
The most famous forks were the Bitcoin forks in 2017 and the Ethereum fork, which led to the creation of Ethereum Classic.
Let's start from basic by explaining the Bitcoin fork.
Bitcoin is made up of its own protocol and blockchain.
Since the protocol has rules written inside that can make its development slow in some parts, some developers may think they can improve their bitcoin by modifying the protocol.
The developers will copy the original BTC protocol and will create the necessary changes to make it work by adding only the improvement developments.
The modified protocol will create a new COIN, which will be incompatible with the BlockChain mined before.
After that it will be decided which block to start the modified protocol from. Some miners will continue to mine with the source protocol, while others will support the modified protocol. This will create two distinct blockchains that are incompatible with each other and consequently an additional coin, separated from this chosen block that will go on independently of each other.
The case we mentioned is called Hard Fork.
It should be noted that there is also a "soft Fork", which does not create a different blockchain but simply implements important software changes but still compatible with the pre-existing BC.
Users of the coin see the results of a hard fork in their wallets as a new coin is created while there are no evident results for a soft fork since this remains the prerogative of the developers. We users will be unaware.
Silk Road
When people think about cryptocurrencies and bitcoin in general, the first thought of many is that they are dealing with something in the world of illegality, something that is used to trade weapons and drugs, a payment instrument that is impossible to track and with which the great interests of the criminal world have made an indestructible pact.
Nothing could be more false.
Whenever we think about this, we subconsciously associate Bitcoin with what was the "luckiest" and "most famous" online store of illegal material and services in the world, we talk about Silk Road. Born from an idea of Ross Ulbricht, this shop has linked its payment method, Bitcoin, to the world of organized crime, fomenting the belief of the untraceability of our favorite cryptocurrency.
Silk Road was an e-commerce site that worked through the TOR browser. This e-commerce was specialized in drugs and everything that revolved around the world of illegal activity and goods.
TOR is a protocol through which it is possible to encrypt the data and paths of internet traffic through servers that make it impossible to trace the IP addresses of the computers used in order to be able to reach a site in total anonymity. In this way, by creating his online store on a Tor site, Ulbricht would be in complete anonymity, having his IP hidden.
The payment system of SilkRoad was bitcoin, chosen precisely for its anonymity and confidentiality within the network.
Now, we know very well that Bitcoin is pseudonym and not anonymous.
And that all transactions are tracked in the Blockchain.
Definitely a tool not really suitable for making illegal transactions disappear.
Maybe the usual briefcases full of cash were better ...
However Silk Road was launched in February 2011, after three months of development, the Silk Road business was drugs, pornography, counterfeit products, fake documents and weapons, although the administrators prohibited the sale of goods and services intended to harm other people. The main operators were based in the United States and Great Britain and the main products sold were MDMA, heroin, LSD and cannabis
On October 3, 2013, Silk Road was closed by the FBI with the arrest of Ross Ulbricht, the founder of the site. The FBI also seized a large number of Bitcoins. On May 30, 2015, he was sentenced to life in first instance for crimes of conspiracy, cyber fraud, distribution of false identities, money laundering, drug trafficking, internet drug trafficking and conspiracy to trade drugs.
In early November 2013, it was announced that it would reopen and was then definitively closed on November 6, 2014
This was briefly the story of Silk Road and how Bitcoin became a tool fo criminal activity.
Now, it is likely that Bitcoin has been used to launder money but it is a tool not fit for purpose, basically like using a Formula 1 to go shopping.
Satoshi Nakamoto
In this article we are going to explore the legend about the "person" who first created Bitcoin and the Blockchain. We are going to talk about Satoshi Nakamoto.
It all starts in November 2008, when a person with the pseudonym of Satoshi Nakamoto published the Bitcoin protocol, the whitepaper and started a revolution.
But who is Satoshi? There are various theories that we are going to explore.
We dont know if he is a he or a she, he is a single person or a team. We know that before the birth of Bitcoin as we know, there were a group of crypto enthusiasts who evolved the technology and bitcoin could be their creation.
Anyone who over the years has been referred to as the true Satoshi has always denied and whoever claimed to be, has never brought irrefutable evidence.
It should be noted that in Japanese "satoshi" means "clear, quick and wise thought", "Naka" can mean "medium", "within" or "relationship". "Moto" can mean "origin" or "foundation".
Whether this meant it or not, it has never been possible to trace it back to the person or group of people who invented the Bitcoin system. In fact, Satoshi Nakamoto's last contact was in 2011, when he declared that he had moved on to other projects and that he had left Bitcoin in good hands with Gavin Andresen. From then on Satoshi disappeared, fueling the doubts and the legend of him.
Let's go see the theories developed by fans
- Satoshi Nakamoto is probably a group of HiTEch Companies
Some even suggest that Samsung, Toshiba, Nakamichi, and Motorola together created Bitcoin, as you can tell from their names:
"Satoshi Nakamoto" ...
- Samsung and Toshiba —- Satoshi
- Nakamichi and Motorola —- Nakamoto
We are not sure about it, but it could be a group of technicians from these companies who invented the technology
- Satoshi Nakamoto is Nick Szabo
Nick Sazbo is an American cryptographer and computer scientist. He is considered by some to be the creator of BTC since he conceived the idea of digital currency by creating Bit Gold, which was its unfortunate predecessor due to its limitations. After some analysis of the BTC whitepaper, some bloggers indicated Szabo as the real Satoshi, a thesis he always disavowed.
- Satoshi Nakamoto is Craig Steven Wright
Craig Wright, an Australian entrepreneur, told the BBC on May 2, 2016 that he was the inventor of BTC. But he never brought really interesting evidence in favor of his declaration and even some time later he wrote "sorry" on his blog putting an end to the story.
- Satoshi Nakamoto is Dorian Nakamoto
In March 2014, some sources said they had found the real Satoshi Nakamoto and that he lived in California. Dorian Prentice Satoshi Nakamoto is a physicist and engineer. But he withdrew from all entanglement by denying that he was the right Nakamoto.
- Satoshi Nakamoto is Hal Finney
Hal was a cryptographer well before his involvement in BTC and it was on the first mailing list that he received the whitepaper written by Satoshi. Hal has repeatedly claimed that he has been in contact with Satoshi to help him, and his writing style is very similar to that of the whitepaper. However, he showed some e-mails where he wrote to Satoshi. He was also the first to receive a BTC transaction on January 12, 2009 from Satoshi after the creation of the Genesis Block
History of Bitcoin
Learning hystory is always helpful.
Bitcoin, as the first cryptocurrency ever created, has an interesting history, which allows us to understand from which ideology this currency movement started
The known origins of Bitcoin date back to August 2008 with the registration of the bitcoin.org domain, and then follow with the publication on October 31st of the link to the whitepaper signed by Satoshi Nakamoto.
The link was sent in a cryptographic mailing list and the document was titled Bitcoin: A Peer-to-Peer Electronic Cash System
On January 3, 2009, the Genesis block, the first block of Bitcoin, was mined from Satoshi's PC
Inside the block, there is the following text message:
The Times 03 / Jan / 2009 Chancellor on brink of second bailout for banks.
A few days later, on January 9, 2009, the first Open Source Bitcoin client (version 0.1) is released. Subsequently, the first 10 Bitcoin transaction takes place, carried out on January 12, 2009 in favor of Finney directly from Nakamoto.
From here begins a slow but inexorable spread of Bitcoin, with the birth of the BitcoinTalk forum
2010 opens with the birth of the first real exchange dedicated to the exchange of Bitcoin. In fact, on March 6, 2010, Bitcoin Market was born.
A few weeks later, on May 22, 2010, the first purchase via Bitcoin is made. These are two pizzas, paid with 10,000 Bitcoins, for a value of 25 Dollars.
On July 17, 2010, Mt.Gox, the historic Bitcoin exchange, was born.
At the beginning of 2011, SilkRoad was born, an online market for narcotics paid in bitcoin
On March 9, 2011, Bitcoin reaches the value of one dollar, reaching a capitalization close to 6 million dollars.
In the month of June, Bitcoin touches $ 10 on MtGox and then collapses after a hacker attack on the exchange.
In the month of July 2012 the giant Coinbase was born. The Bitcoin Foundation was born on October 27.
The first Halving takes place on December 28th, the Bitcoin mining difficulty grows with the Reward going from 50 to 25 BTC per block.
2013 is a very important year, the diffusion of the coin increases and various online shops are starting to accept it for payments.
on March 28, 2013, Bitcoin's capitalization reaches $ 1 billion.
The first Bitcoin ATM is shown in May.
Bitcoin mania breaks out, thanks to the acceptance of BTC payments by the Chinese giant Baidu. The price begins to rise suddenly.
On 29 November 2013, the price exceeded 1000 dollars, a figure that was adjusted on 3 December, with a new high of 1147 dollars. A few days later, however, China's BAN arrives for Bitcoin transactions. This leads to a collapse of the currency, which returns below 700 Dollars.
At the beginning of February 2014, the Mt. Gox exchange suspended withdrawals for technical reasons. At the end of the same month, Mt Gox filed an application for bankruptcy protection in Japan, announcing that it had suffered a theft of 750,000 Bitcoins. Panic arises among the crypto community and the price of Bitcoin suddenly drops below $ 300.
On 8 October 2015, the Winklevoss Brothers created the Gemini exchange.
On January 14, 2016, the Lightning Network WhitePaper was published, Bitcoin's off-chain solution aimed at improving scalability and reducing transaction fees.
In April 2016, Steam begins accepting Bitcoin payment for video games and other online media.
At the end of the year, the price of Bitcoin goes up approaching 1000 Dollars.
2017 is the year of the first records, in which Bitcoin and all cryptocurrencies have reached their new ATH, obtaining the maximum diffusion and popularity.
on April 1, 2017, Japan passed a law recognizing Bitcoin as a payment tool by implementing a series of anti-money laundering (KYC) policies for local exchanges.
A hard fork takes place on August 1st, from which Bitcoin Cash is born.
The capitalization of Bitcoin on 20 October 2017 touches 100 billion dollars.
On November 29th, BTC reaches 10 thousand dollars, and on December 1st 2017 the first American Bitcoin Futures is approved.
On December 17, 2017 Bitcoin touches the record value of 19,783.21 Dollars, marking the new ATH.
2018: Crypto Crash, Lightning Network, hashrate growing.
2018 is the year of the great correction, as well as of the crypto crash, which saw the capitalization of the cryptocurrency market drop significantly and channel a downward trend.
Step 2 - What is a Blockchain?
Blockchain, a term now abused and inserted inappropriately in many contexts because it is cool and makes us feel important.
Sounds like in the early 2000s we heard from our shoemaker who had opened his website and he has no idea about what doing with a website.
But what is a blockchain ? What is his purpose? And why is it useful in some situations?
The BlockChain is a distributed and decentralized digital database, shared on a series of nodes, verifiable by anyone and immutable over time.
It is a digital register, whose entries are grouped into blocks linked together in chronological and sequential order, whose integrity is guaranteed by the use of cryptography
Decentralization is guaranteed by the network of nodes distributed around the world, and each of these has a copy of the database, which is distributed among all nodes in the network. To put it simply, nodes are computers around the world owned by individual enthusiasts or large mining companies.
Each new block addition to the distributed blockchain is globally governed by a shared protocol.
Once the addition of the new block has been authorized, each node updates its private copy with the guarantee of automatically discarding fraudulent or incorrect blocks.
Therefore the information written inside the distributed blockchain, owned by each node will always be visible to everyone and this information will never be changed in the future.
It is practically impossible to change information within a block, the computing power required would be enormous.
Thanks to these characteristics, the blockchain is intrinsically superior to normal databases and central controlled registers, managed even by recognized and regulated authorities.
As with every product, variants are developed and various types have also been developed for the Blockchain, created to meet the various needs of every actor operating in the world.
in detail:
- Public blockchains: Blockchains are open to everyone and accessible to anyone. Each node holds a copy of the database and can participate in the decision-making process regarding the state of the ledger. They are defined as "permissionless". Example: the Bitcoin blockchain
- Private Blockchains: They are closed Blockchains where only one or more pre-selected nodes can perform the function of validating the network. They are defined as "permissioned". Example: the Blockchain of a private foundation or a company
- Mixed Blockchains: They are partly public and partly private Blockchains
- Sidechains: They are blockchains derived from the mother blockchain but connected to it. They are in effect autonomous blockchains on which it is expected that there are coins / tokens different from those circulating on the parent chain but which, if necessary, can "move" from the sidechain to the parent chain and vice versa.
To recognize a blockchain we need to find these elements:
- Transaction (transfer of value from one address to another)
- Block (element that contains transactions)
- Node (element of the network that performs for example mining or validating transactions)
- Peer to peer network (network in which all nodes can communicate with each other)
- Smart contracts that deal with the management, fulfillment, execution and payment of the agreements between the parties
In these days, the blockchain is used practically only for payments and exchange of goods and services.
But we can already speculate that in the future, its usefulness may be much wider.
To date, it is assumed that the blockchain can be used for situations where traceability and information security are required, such as:
- Sharing of health information between different platforms and institutions;
- Schools, academia, training areas, issuing of certificates
- Management of sporting events, demonstrations, Olympics
- Management of betting in general and casinos
- Real estate sales and land registers
- Traceability of non-profit and charitable donations
- Monitoring of guns, ammunition and explosives trade
- Law enforcement and public safety management
- Cybersecurity
- Systems for digital and biometric identification
- Production and sale of diamonds or raw materials
- Insurance and leasing sector
- Wills and inheritance
- Tourism
- Traceability of supply chains
- Certification of works of art
- Transparent online voting, safe from manipulation and fraud
- Banking, finance and investment platforms
- Payment and money transfer systems
- Loyalty cards and gift cards
- Telephony
- Trade and industry
- Automotive sector
Summarizing the Blockchain:
- It is decentralized (it does not have central authorities, everyone can see, use and consult it but no one owns it)
- The protocol is open (in public blockchains)
- Certifies that "something" (a transaction of value, a change of ownership) has taken place. The transaction cannot be censored by a central authority
- A transaction cannot be prohibited, censored or regulated by a sovereign entity (e.g. credit or debit card blocking)
- It is verifiable by anyone (in the traditional financial system, the system controls everyone while in the blockchain ecosystem, everyone controls the system)
- Cannot be tampered or falsifiable (intrinsically safe consensus protocol)
- Solves the problem of double spending
- It is immutable over time. Once a transaction has been validated, it is fixed for "life"
- It is dynamic in the sense that blocks are always added
Step 3 - Wallets
In this article we're going to talk about cryptocurrencies wallets. We will face all types of wallet to discover this super important tool of the crypto world.
The wallet is the tool to use to interact with a blockchain.
Wallets can be divided into software, hardware and paper wallets. These can be considered Hot or cold wallets.
Let's start by saying that most wallets are of the software type because they are more practical to use than the others. However, hardware wallets are the safest option, while paper wallets are now an outdated option. But let's see how it works.
Any wallet allows you to interact with the Blockchain, creating the information necessary to create transactions, receive and send the crypto currencies compatible with the wallet. The wallet does not "physically" contain the coins, but rather the public and private keys to operate on the blockchain and the public address that is created based on public and private keys.
The address is a specific point on the blockchain from which to receive and send coins. Coins never leave the Blockchain but simply change their address.
For this reason, you now understand why the private keys of the wallet should never be revealed. In fact, the private key is the only way to access your coins. In case of a possible loss of your mobile phone, you will be able to access your wallet again with the private key.
Now let's face the difference between cold and hot Wallet. In fact, wallets can operate in a different way.
A hot wallet is any wallet connected to the Internet. When you create any exchange account and transfer coins from your wallet to the address assigned on that exchange, you are transferring funds to the exchange's hot wallet, so that your funds are immediately available for trading.
Cold wallets have no Internet connection, so they are safer from cyber attacks and better set up to store coins over the long term.
Now let's see the different types of wallets and which is the best compromise of use.
Let's start with the Software wallets, there are of all types and characteristics, and specific by currency. Obviously, the vast majority are connected to the internet, so they are hot wallets. Software wallets are divided into web, desktop and mobile wallets.
Web Wallet
With a web wallet, you can access the blockchain with a browser interface without having to download or install anything. The most classic example is the wallet of any exchange.
You create a new wallet and set a password to access it. In the case of an exchange wallet there is no private key, you are entrusting your funds to another person, in this case the exchange
Desktop Wallet
The desktop wallet is software that you download and use on your computer.
A desktop wallets give you full control over your keys and funds.
When the desktop wallet is created, in most cases a file called "wallet.dat" is created and stored locally on your computer. This file contains the private key information used to access your addresses, so it must be protected. Remember that if you delete it or lose your computer and don't have a backup, you lose all the funds on the wallet.
A good solution is to export the private key or seed phrase corresponding to your newly created wallet, so that it can also be used on other devices at a later time. Since the wallet is on your PC, it must be protected from malware or viruses.
Mobile Wallets
Mobile wallets are a very similar alternative to desktop wallets but designed for smartphones. They are the most practical wallets for everyday use as they allow you to send and receive crypto by scanning QR codes. The problem of viruses and malware is also present here, so you need to protect your device. In addition, given the daily use of the smartphone, it is necessary to have all the back up of the wallet for any recovery following theft or loss.
Hardware Wallets
Hardware wallets are physical electronic devices, not connected to the network except for their use. They generate random numbers to create public and private keys that are stored within them. Their intrinsic greater safety, however, is balanced by a less simple and quick use.
Hardware wallets are used in case you want to keep large amounts of crypto for a long time. The access PIN must always be set and the recovery phrase saved as in web wallets.
Paper Wallet
the paper wallet is a piece of paper on which a public address and its private key are physically printed via QR codes. Code scanning allows you to perform cryptocurrency transactions. This kind of wallet can be considered a good alternative to long-term crypto storage, given its resistance to online attacks.
The biggest problem lies in the fact in order to use the paper wallet, the total amount of crypto currencies in it must be moved.
If we have a 15 Bitcoin wallet and we only have to move 3 of them, we will first have to make an intermediate step to another address where you will send all 15 bitcoins, and then from there send the 3 you need. The remaining 12 will then have to be put back safely on another paper wallet
Remember that your paper wallet will be empty after its first outgoing transaction. So don't hope you can use it again later.
As we have already repeated, it is essential for each wallet to have the back up and the seed phrase to recover their wallet in case of problems.
Learn more about safety about your Coin here.
Step 1 - Cryptocurrency and Blockchain
In the first educational post of the CY Mood Team, we believe it is correct to start with the most useful base for the average user and define the tools that we are going to use in this strange world.
In this post we are going to define what is a cryptocurrency and we will introduce some of the "technical" terms that you will come across as you enter this environment and which you will find in future articles.
This terminology will then be the subject of further articles.
Cryptocurrency
First concept to learn: in general a cryptocurrency is a digital asset that uses cryptography to protect financial transactions, to control the creation of additional units and verify the transfer of assets from one address to another.
A cryptocurrency is designed to function as a medium of exchange, one of the fundamental functions of money.
True cryptocurrencies are decentralized and are not controlled by a central entity. This feature will be studied more deeply for future articles.
Blockchain
This decentralization works through a tool called blockchain, a distributed ledger in a network of connected computers.
The BlockChain, it is a live record of all bitcoin transactions. The blocks are made of the transactions within them, and the blocks are linked together in an indissoluble way.
The block is created when a set number of transactions are made and the block can contain a maximum number of transactions. Arriving at this number, the block is closed and added to the block previously mined and linked to it.
When a Bitcoin transaction happen, the data is communicated to the network of computers that validate the transaction, this add the transaction to the bitcoin ledger and transfer the ledger change to all computers on the network. Since there is a maximum of data that can be saved in a block, a block is closed approximately every 10 minutes.
Bitcoin
The first cryptocurrency created in the world was Bitcoin, currently the most famous and expensive. It was created in 2009
Over the years, other types of cryptocurrency other than Bitcoin have been created, which can easily be described as Altcoin or Alternative Coin or more generically Token.
Token
A cryptographic token is a currency on Blockchain that not only concerns any financial payments, but also the application of decentralized apps or tools and the so-called smart contracts
Mining
Cryptocurrencies are created through a process called mining, which is the validation of transactions in the networks of this cryptocurrency. There are different types of mining, but this will be addressed later in another article. Learn more here.
Wallet
The wallet is where you can keep all your coins. Different types of coins have different types of wallets. Learn more here
Legality
Cryptocurrency is legal in most of the world. There are only a few contexts where they are completely banned while in other countries like Japan, cryptocurrencies are just an investment tool like others.
Why does Bitcoin have a shadow of illegality?
Most people think that Bitcoin is illegal, but this idea was created by the media with the story of the market for illegal goods and services called the Silk Road, where the payment tool of choice was Bitcoin. Learn more here
Satoshi Nakamoto
Satoshi Nakamoto is the inventor of Bitcoin and the Blockchain. At least that's what we know, what the legend says. Who is he? Nobody knows. Is he a person? Mystery. Learn more here