Tag Archives: Lite coin

Crypto Mining VS Crypto Validating – Beginner’s Guide

Blockchain technology is a strong network designed to assure that digital currencies remain stable and serve their inception purpose. Learning about blockchain and cryptographic processes is quite interesting to technology fans and beginner investors.

Generally, cryptocurrencies are released in the blockchain through a process called mining. Although mining adds the blocks onto the chains, a preceding process called validation streamlines everything for mining. Let us understand everything about validation and mining.

What is Crypto Validation?

Crypto validation is where transactions and blocks in a blockchain are authenticated and verified. A block validator looks into the details of specific transactions in a blockchain, determines their authenticity, and merges it with others to form a block.

The validator gets a notification of upcoming transactions, works to verify and approve; among the issues that a validator checks include the legality and accuracy of each transaction. Checking for double-spending is also another vital issue that a validator focuses on.

What is Crypto Mining?

It’s the process where consensus algorithms are used in the blockchain to accept a particular validator’s block. Today, there are two types of consensus used, i.e., proof of work and proof of stake.

Proof of work (POW) requires parties called miners to solve some complex computations for their work to be added to the blockchain. The person who solves the computation first gets their block posted.

When it comes to proof of stake (POS), investors hold some amount of particular crypto assets during the validation process and get a share of the reward.

Difference Between Validation and Mining

ValidatingMining
Complexity The difficulty level in Validating is relatively lowThe difficulty level in mining is relatively high when compared to Validating
CostCosts in the validating part are lower than the mining sectionCost is high because the process of mining uses large amounts of power and high processor computers.
Transaction Crypto validation begins when users send transactions through the blockchainMining focuses on posting the block onto the distributed ledger.
RewardingValidators’ work only ends after the mining process ends. The income earned after the mining process comes in the form of coins released.A miner will only receive the rewards after the mining process ends and his block has been chosen and added to the chain.

Proof Of Work

As a beginner, you may be excited about joining the mining or validation process; therefore, you need to be ready to complete the whole validation plus mining process. It requires vast amounts of electricity and some super-performing computers for successful block release.

However, lately, some crypto projects have been introducing options that ease the mining process by providing cloud-based computing machines. Leveraging cloud mining platforms will help ensure that you earn better rewards at a way lower cost.

Proof Of Stake

If you leverage a platform that uses proof of stake mechanisms, just run your master node and stake some amount of crypto. The stakers will hold some amount of crypto assets against the validation process. In POS, the amount of rewards depends on the stake value and length of stake.

Bottom line

Crypto validation focuses more on the transaction introduced in the blockchain, while mining works on blocks of transactions, including adding them to the blockchain. However, although there are many differences, the processes are complementary to each other. The twosome processes are vital to secure the blockchain and release new coins. A crypto beginner interested in either mining or validating should be ready for the entire process.

About Decentralized Finance & Digital Gold – Cryptocurrency

Decentralized finance refers to financial activities conducted without the involvement of a traditional bank. Think about all of the activities in which you’d normally use a bank or some other financial institution — getting a loan, insurance, investing, even using a credit card. All of these activities are traditional-finance-based and have intermediary companies. Now people are creating these products in a completely autonomous way with cryptocurrencies.

It can seem counterintuitive — where else would you go for a loan, if not an established lender? But that’s one of the appeals to DeFi (Decentralized Finance). In the same way, people have increasingly brought smart technology into their homes, proponents say the cryptocurrency has the potential to automate and digitize more and more aspects of the financial system. The appeal of this happening outside the conventional — or centralized — finance system depends on who you ask. 

Many peoples may not understand the appeal of a finance system that operates beyond government control. But things can be very different in countries with less financial stability. If cryptocurrencies offer as much or more stability as a given national currency, it’s an entirely different equation than if your national currency is safe and stable.

There are different types of accounts and tools in conventional finance — from savings accounts to investment accounts to credit cards — that are used for different purposes, different cryptocurrencies can have similarly unique uses in this emerging decentralized finance system.

Instead of going to a bank to draw out a loan, you might go to a decentralized application that’s not owned or operated by anyone in particular.

Where conventional loans involve humans at a bank who take part in the processing, reviewing, and approving loans, a DeFi loan — with funding in the form of cryptocurrency — could run via an app on a network like Ethereum with an algorithm processing it. The borrower would put up some cryptocurrency as collateral, which they’d get back minus interest when they repay the loan.

The code runs autonomously using smart contracts. So once the developers release the data they’re pretty much hands-off, and everything runs automatically so there’s no intermediary.

Ethereum’s website offers a comparison chart contrasting decentralized from traditional finance. Along with these technical differences, a big consideration to keep in mind is that the conventional financial system is regulated to serve the interests of everyday customers, while cryptocurrency and decentralized financial systems are largely unregulated, and subject to governance and oversight only by their creators/users.

Unlike the money kept in a bank account, the money you have in crypto may not be FDIC insured. Some exchanges offer this insurance while others don’t — something you’ll want to look into before buying crypto from one or another. For exchanges that don’t offer this insurance, there’s no guarantee you will be repaid if there is a hack or the exchange goes out of business.

Decentralized FinanceTraditional Finance 
You hold your moneyMoney held by financial institutions 
Transfers happen in minutesPayments can take days to process
Transactions are pseudonymous Financial activity is coupled to your identity
Market is always openMarket closes 
Built on transparency – anyone can inspect the systemFinancial institutions are closed books

Digital Gold

Digital gold refers to cryptocurrency comparable to the real gold in its ability to store and increase in value. There’s a limited amount of gold on earth, in the same way, that digital gold cryptocurrencies have a limited supply. 

People buy gold not because they expect to be able to go to the store and spend it, but because they expect it to hold its value and maybe probably, increase in value over time.

The primary example of a digital gold cryptocurrency is Bitcoin, though that was not its original intention. Bitcoin was originally put forth as an electronic peer-to-peer cash system, but its volatility, among other things, limited its potential for that purpose. 

In use, such digital gold cryptocurrencies are bought and held for the same reason people would have diamonds, or some $100 bills, or some gold coins in a safe. Lite coin is another example — it’s been described as silver to Bitcoin’s gold.

What Is Cryptocurrency and why it is so popular?

A cryptocurrency is a form of payment that can be exchanged online for goods and services. It’s a peer-to-peer system that can enable anyone anywhere to send and receive payments. Instead of being physical money that is carried around and exchanged in the real world, cryptocurrency payments exist purely as digital entries to an online database that describe specific transactions. Cryptocurrencies work using a technology called a blockchain. Blockchain is a decentralized technology spread across many computers that manage and records transactions. 

Cryptocurrency got its name because it uses encryption to verify transactions. This means advanced coding is involved in storing and transmitting cryptocurrency data between wallets and to public ledgers. Encryption aims to provide security and safety.

Is cryptocurrency real money?

Cryptocurrencies are an alternative to traditional money. Today, some outlets accept cryptocurrencies as a form of payment. However, they bear little resemblance to other asset classes because they are intangible and extremely volatile. They are mainly used by traders for speculating on rises and falls in value.

How many cryptocurrencies are there?

There are over 2000 cryptocurrencies available to buy and sell, though most have little value. Of these, bitcoin, ether (the token of the Ethereum network), ripple, bitcoin cash (an offshoot of bitcoin), and litecoin are among the most valuable by market capitalization.

Why it is so popular?

Cryptocurrencies appeal to their supporters for a variety of reasons. Here are some of the most popular:

1. Supporters see cryptocurrencies such as Bitcoin as the currency of the future and are racing to buy them now, presumably before they become more valuable.

2. Some supporters like the fact that cryptocurrency removes central banks from managing the money supply since over time these banks tend to reduce the value of money via inflation.

3. Other supporters like the technology behind cryptocurrencies, the blockchain, because it’s a decentralized processing and recording system and can be more secure than traditional payment systems.

4. Some speculators like cryptocurrencies because they’re going up in value and have no interest in the currencies’ long-term acceptance as a way to move money.

Regulation

The fact that the cryptocurrency market is not regulated has both – brighter side and a darker side. For those willing to invest massively without having to deal with any obstacle whatsoever, it is an advantage. Those unwilling to take risks need to extra cautious of not investing money that they aren’t willing to lose. A nicely laid out plan as to how should cryptocurrencies be classified and a clear regulation would make it easy to predict the future.

Uses 

1. Though cryptocurrencies can be used to make purchases, what is worth noting is that they are not yet widely accepted among retailers and other businesses.

2. Some look at cryptocurrencies from an investment point of view. People invest in them hoping that the future would see an increase in value. However, what needs to be understood here is that the demand cycle is just unpredictable. So, assuming that the future would give a higher return on investment might sound vague for many.

Future

With an exponential increase in the number of people becoming aware of cryptocurrencies, it is evident that the future would see huge investments in the same. That said, it is always better to have a fair idea pertaining to the volatility and risk factors of cryptocurrency before investing. 

Ultimately, the future of cryptocurrencies — their value, security, and staying power — is still up in the air. But the experts spoke to believe owning some crypto could create value over time. Whatever your interest or motivation, experts stress the importance of making sure you understand the unique volatility and risk factors of cryptocurrency before investing.