What is Monero?

Monero has created a cryptocurrency that is truly anonymous. The sender is anonymous, the receiver is anonymous, and the amounts are anonymous. Monero has other competition in the “privacy coin” space such as ZCash, and Dash. At the time of writing, the technology behind Monero appears to be superior in its ability to be private, fungible, and decentralized.

What problem is Monero solving?

Monero is best understood in comparison to Bitcoin.

Bitcoin is a decentralized digital currency. With Bitcoin you can send money to anyone in the world without a middleman (e.g. You can send money online with a free open source bitcoin wallet and without having to involve a bank). In contrast, Monero was started in 2014 as an alternative currency to Bitcoin…

According to the Monero team there are two problems with Bitcoin:

1. Bitcoin is traceable — Every bitcoin transaction is recorded on a public ledger. You can’t see the sender and recipients names, but you can see their wallet addresses. So bitcoin is not fully anonymous, most people refer to Bitcoin as being pseudonymous (or mostly anonymous). Listen to The Bitcoin Hunter on the Reply All podcast to learn about how a Bitcoin analytics company called Chainalysis is able to trace some bitcoin transactions in less than 30 minutes.

2. Bitcoin is not fungible —

What does it mean to be ‘fungible’?

Fungible: The property of a good or a commodity whose individual units are essentially interchangeable.”

The US dollar is mostly fungible. For example, you and I could exchange 1 US Dollar, and each dollar is equal. 1 dollar = 1 dollar.

Bitcoin is not fungible Because Bitcoin is traceable, there have been attempts to block, or blacklist bitcoin that comes from addresses where Bitcoin has been stolen, or gained illegally.

How does Monero solve Bitcoin’s problems of traceability and fungibility?

Monero is untraceable — Every Monero transaction, by default, obfuscates sending and receiving addresses as well as transacted amounts.

Monero is fungible — Because it is untraceable, Monero cannot become tainted through use in previous transactions. This means Monero will always be accepted without the risk of censorship.

Monero is private — Monero is often referred to as a “privacy coin” due to it’s untraceable and fungible qualities.

Where do I buy Monero?

Monero (XMR)

Monero Logo

What is it? An untraceable, fungible, and private cryptocurrency
Inventor Riccardo “fluffypony” Spagni, Francisco “ArticMine” Cabañas and 5 other core team developers
Went live April 2014
Supply Style Inflationary
Supply Cap Once 18.4 million moneroj (the plural of monero is moneroj) is reached the inflation rate will continue at 0.3 XMR per minute, which is 0.87% per year.
Smallest Unit 1 tacoshi = 1/trillionth of 1 monero
Price View price

Monero hardware wallets:

At the moment there aren’t any hardware wallets available for storing Monero. Although Monero support is available through the Ledger Wallet’s roadmap and could be coming in 2018.

Monero storage at cryptocurrency exchanges

You can store your Monero at a variety of exchanges such as Bitfinex and Binance. However, it’s not advisable to leave a large amount of coins on an exchange as all exchanges are an at-risk point for hackers, regulation, and third-party negligence.

Monero full node storage and paper wallet storage

The safest way to store Monero is with Monero’s full node. When you download the Monero full node you’ll be downloading the entire history of Monero to your computer — so you’ll need at least a few gigabytes worth of disk space.

Monero also offers a paper wallet storage, and a web wallet. Read more about Monero storage options on the official Monero website.

Monero’s technology

Unlike other cryptocurrencies, Monero is not a fork of Bitcoin, it is a fork of the CryptoNote protocol. The Monero team has created three new technologies in order to make Monero transactions completely anonymous:

Monero competitors

Dash and ZCash are often listed as the two coins competing with Monero to become the “privacy coin” of choice.

Where do I learn more about Monero?

Bitcoin vs. Litecoin

bitcoin vs. litecoin

Bitcoin and Litecoin are both cryptocurrencies. Today, money is created and managed by individual countries (e.g. the US issues USD, England issues pounds, etc). Bitcoin and Litecoin are revolutionary because the founders have created a global currency that can be used by anyone in the world, and isn’t tied to any country.

Bitcoin was announced in 2009 via an online academic paper. Two years later in 2011 Litecoin was forked (aka. copied) directly from the Bitcoin code because Litecoin’s founder Charlie Lee believed Litecoin could make some adjustments to the code that would offer consumers lower fees, and quicker transaction times.

The innovation behind both Bitcoin and Litecoin is that they allows two people to send money on the Internet without a third party (like a bank). For example, at the moment I can send you money via Paypal, Citibank or Bank of America, but in all of these scenarios we are trusting these companies to manage our transaction. The problem with this current system is that banks take fees to manage our money, and banks are being attacked by hackers daily. Bitcoin and Litecoin allow you and me to exchange money without using a bank, and without relying on a company.

Today, Bitcoin is often regarded as a store of value (similar to how the gold is valued as a global store of value), and for sending higher amounts of money (think: like a wire transfer), rather than for small casual transactions. Litecoin is often regarded as a currency for day-to-day transactions. The popular analogy is that: if Bitcoin is gold, Litecoin is silver (or a credit card).

Bitcoin is:

  • A decentralized global digital currency
  • Stored on a public ledger (known as a blockchain) where each transaction takes 10 minutes to clear (to be approved)
  • Developed by Satoshi Nakamoto — an unknown figure or group of people

Litecoin is:

  • A decentralized global digital currency
  • Quicker than Bitcoin because transactions take 2.5 minutes to clear
  • Developed by Charlie Lee (aka SatoshiLite)

Takeaway: Bitcoin is more like digital gold, whereas litecoin is often thought of as a digital cash.

Comparison chart: Bitcoin vs. Litecoin

Bitcoin (BTC)

Bitcoin

Litecoin (LTC)

Litecoin

 

What is it? A currency (store of value) A currency (medium of exchange)
Inventor Satoshi Nakamoto Charlie Lee
Went live January 2009 October 2011
Supply Style Deflationary (a finite # of bitcoin will be made) Deflationary (a finite # of litecoin will be made)
Supply Cap 21 million in total 84 million in total
Smallest Unit 1 Satoshi = 0.00000001 BTC 1 Litoshi = 0.00000001 LTC
New token issuance time Every 10 minutes approximately Every 2.5 minutes approximately
Amount of new token at issuance 12.5 new bitcoin are issued every 10 minutes. This number will half (to 6.5 new bitcoin) everytime Bitcoin creates 210,000 new blocks. The next halving will be reached 2020. 25 new litecoin are issued every 2.5 minutes. This number will half (to 12.5 new coins) everytime Litecoin creates 840,000 new blocks. The new halving will be reached in 2019.
Utility Bitcoin has been trending towards becoming a store of value like code. Although it is also used for purchasing goods and services Used for purchasing goods and services, as well as storing value (much like how we currently use a checking account).
Price View price View price
Purpose  “Bitcoin is an innovative payment network and a new kind of money.”[฿]

 “Litecoin is a proven medium of commerce complimentary to bitcoin.”[Ł]

Coinbase Bitcoin

Where do I buy bitcoin and litecoin?

Coinbase is the easiest place to buy both bitcoin and litecoin. If you want slightly lower service fees and a more robust interface, then Gdax (a site owned by Coinbase) offers an alternative to Coinbase.

How much does it cost?

Cryptocurrency prices are constantly fluctuating given the supply and demand. To keep an eye on bitcoin, litecoin, or any other altcoin (an altcoin is coin other than bitcoin) head to coinmarketcap.

bitcoin vs. litecoin

bitcoin vs. litecoin: How many tokens are available?

  • The max supply of Bitcoins is 21 million. Every 10 minutes a new block of bitcoin is generated. The final Bitcoin will be mined 2140.
  • The max supply of Litecoins is 84 million. Every 2.5 minutes a new block of litecoin is generated.

bitcoin vs. litecoin: What can I do with them?

Bitcoin is trending towards a replacement of gold as a store of value. Whereas gold exists with mass and weight in the physical world, bitcoin is an improvement to gold because it can be split into into very small fractions, and instantly sent to people, businesses, and banks around the world.

Litecoin is promising to replace cash. Due to its lower price and faster transaction times, it’s the perfect solution for buying a coffee, tipping a YouTuber, or gifting a friend or family member.

How to store bitcoin and litecoin:

Both web wallets, and hardware wallets exist for Bitcoin and Litecoin, and there are a multitude of options ranging high to low levels of security.

bitcoin (฿) and litecoin (Ł) bitcoin (฿) only
Hardware Trezor
Ledger
Mobile Coinomi Samourai
BitPay
Mycelium
Desktop Exodus Electrum
Web Jaxx Blockchain.info
Paper Bitcoin Paper Wallet
Litecoin Paper Wallet

Learn more about Bitcoin and Litecoin:

 

* This piece was researched and co-written by Gregg Sandler.

Is Bitcoin dead? Thoughts on the Bitcoin crash

Bitcoin dropped 30% in value this week. Today it’s still down. Many friends and students emailed me, “Chris is Bitcoin dead?”

Here’s a video explaining my thoughts on “The Big Bitcoin Crash.”

In this video I cover:

  • Why I’m not worried…
  • Long-term thinking on the technology
  • Utility value vs. speculative value
  • Mr. Bean rides the bitcoin wave!

If you have any questions, let me know!

Bitcoin vs. Ethereum

What’s the difference between Bitcoin and Ethereum?

First, it’s important to understand that there are two categories of digital coins: Cryptocurrencies (e.g. Bitcoin, Litecoin, ZCash, Monero, etc) and Tokens (e.g. Ethereum, Filecoin, Storj, Blockstack, etc.)

Bitcoin is a “cryptocurrency.” Bitcoin and other cryptocurrencies are competing against existing money (and gold) to replace them with a truly global currency.

The promise of Bitcoin is that it is:

  • A global currency which allows individuals to own their own money (without having to rely on national banks).
  • Lower fees for transferring money across geographic borders.
  • Financial stability for people who live in countries with unstable currencies. (e.g. In 2016, the Venezuela’s currency hit an inflation rate of 800%). In addition, two-thirds of the current global population has no access to banking, or limited access — Bitcoin is changing that.

Ethereum is a “token.” What Bitcoin does for money, Ethereum does for contracts. Ethereum’s innovation is that is allows you to write Smart Contracts: basically any digital agreement where you can say “if this” happens, “then something else happens.” For example:

  • If I vote for the President, then my vote is official and no one else can vote as me.
  • If I sign my name on this document, then I own the car, and you no longer own the car.
  • Up until now we’ve carried out these agreements with a signature at the bottom of a paper document. Ethereum dramatically improves this model because it is digital, and proof of the transaction can never be deleted.

Comparison chart: Bitcoin vs. Ether

Bitcoin (BTC) Ether (ETH)
What is it? A currency  A token
Inventor Satoshi Nakamoto Vitalik Buterin; Other co-founders include Gavin Wood and Joseph Lubin
Went alive January 2009 July 2015
Supply Style Deflationary (a finite # of bitcoin will be made) Inflationary (much like fiat currency, where more tokens can be made over time)
Supply Cap 21 million in total 18 million every year
Smallest Unit 1 Satoshi = 0.00000001 BTC 1 Wei = 0.000000000000000001 ETH
New token issuance time Every 10 minutes approximately Every 10 to 20 seconds
Amount of new token at issuance 12.5 at the moment. Half at every 210,000 blocks 5 per every new block
Utility Used for purchasing goods and services, as well as storing value (much like how we currently use gold).  Used for making dApps (decentralized apps) on the Ethereum blockchain. 
Price Around $17,500 at the moment Around $800 at the moment
Purpose A new currency created to compete against the gold standard and fiat currencies A token capable of facilitating Smart Contracts (For example: a lawyer’s contract, an  exchange of ownership of property, and voting)

Coinbase Bitcoin

Ethereum vs. ether

Let’s go a step further:

Bitcoin itself is two things: (1) it’s a digital currency known bitcoin (lowercase, also referred to as BTC) and Bitcoin is a technology (also known more generally as  blockchain). Both are called the same thing which admittedly can be confusing for newbies.

  • Bitcoin = The name of the Bitcoin network
  • bitcoin = The currency (or BTC)

With Ethereum it’s similar, but slightly different: the token is called ether (or ETH) and the network is Ethereum. 

  • Ethereum = The Ethereum network
  • ether = The token (of ETH)

Bitcoin vs. Ethereum

Where do I buy bitcoin and ether?

Coinbase is the most popular, and easiest place to buy both bitcoin and ethereum. Other popular exchanges where you can buy them include: Gdax (owned by Coinbase), or Kraken

Join Coinbase now and get $10 of free Bitcoin if you buy or sell $100.

How much does it cost?

You can visit Coinmarketcap anytime for the latest price of BTC and ETH.

It’s important to know that you don’t have to buy one entire BTC or ETH, you can buy a smaller percentage of either.

bitcoin vs. ether: How many tokens are available?

For Bitcoin, the total supply cap is set at 21 million. At the moment, according to CoinMarketCap, the circulating supply is around 18,586,737 BTC

A new BTC is generated approximately every 10 minutes. And after 2140 no more new bitcoins will be created, which is why Bitcoin is said to be deflationary (the opposite of inflation).

When new bitcoins are created miners compete to get them. Miners are people with can play one of two  possible roles: they use their computers to claim new bitcoin AND/OR they help verify transactions on the network — much like a bookkeeper. 

There’s no set cap for a total supply of ETH. At the moment, around 96,815,798 ETH are circulating.

bitcoin vs. ether: What can I do with them?

You can use Bitcoin to send or receive money, or to purchase goods at popular sites like Overstock.com, Namecheap, or Tesla. You can also hold your bitcoin as an investment, or for long term storage of value (kind of like how people invest in gold). 

Ether is not as popular as BTC for purchasing goods. At the moment ether is mainly being used by developers building applications on top of it. Over time, and as more apps are developed, the value of ether will likely move from being speculative (as it is now), to more useful in everyday life. 

How to storage bitcoin and ether 

Once you buy digital currency you’re going to want to store it in cold storage (this is a much more secure place to store your currency. Exchanges like Coinbase are where you want to buy currency, but after you purchase the currency it is not advisable to leave your money at the exchange.)

Bitcoin, ether and many other types of coins can be stored on a cold storage option like Trezor or a Ledger.  If you’re serious about buying, sending, or storing larger amounts of cryptocurrencies I’d suggest you pick one up.

Bitcoin vs. Ethereum: Want to learn more?

I teach about Bitcoin and Ethereum at Columbia University’s Business School. And also teach online with One Month.

Join my online Bitcoin and Blockchain tutorial or leave a comment below if you have any questions!

 

5 Essential Books for Learning Bitcoin and Blockchain

How do you learn about Bitcoin and Blockchain?

First, it’s important to know there are five audiences Bitcoin appeals to: the bitcoin user (someone who sends and receives bitcoin), miner (aka. the bookkeeper of the network), developer, investor and business owner.

I’ve read about a dozen books on Bitcoin, and I’m happy to share the top five that I think appeal to all bitcoin users, the beginners as well as the more intermediate.

You could read all five of these without feeling they are overly redundant, therefore I’ve put them in order of a curriculum that I’d suggest:

1. The Internet of Money

The Internet of Money is your best introduction to Bitcoin. At a slim 150 pages, the book is a collection of transcripts and highlights from eleven lectures that Andreas Antonopoulos gave on Bitcoin between 2013 and 2016.

“Saying Bitcoin is like digital money is like saying the Internet is just a fancy telephone.”

The Internet of Money is a must-read whether you’re a bitcoin beginner, or already a seasoned pro. I came into this book knowing quite a bit about Bitcoin (I head read Antonopoulos’s other book Mastering Bitcoin), but still took away a lot! Antonopoulos explores Bitcoin as both a currency, and a technology, and then reframes the social impact through the lens of history, politics, and social change. One of my favorite chapters is his lecture on how Bitcoin will give 4 billion people in the world, without regular access to stable banks, immediate access to a global banking system. It’s hopeful, inspiring, and a book I come back to again, and again.

2. The Age of Cryptography

The Age of Cryptocurrency explores the who, what, where, why and when of Bitcoin:

  • What is Bitcoin?
  • When did it start?
  • Where did Bitcoin come from?
  • Who are the major players in the Bitcoin community?
  • Why is Bitcoin important?

This book is a fabulous intro to Bitcoin, but parts of it may seem redundant if you’re very familiar with the lore of Satoshi Nakamoto, the fall of Mt. Gox, and the controversy of Bitinstant. I’d suggest you check out the documentary The Rise and Rise of Bitcoin, and if you enjoy this kind of linear history of the Bitcoin, then you’ll love this book because it starts at the beginning, and walks you year by year through to the present of where we are today with Bitcoin.

3. Cryptoassets

Cryptoassets is a bitcoin book for investors. The authors (Chris Burniske & Jack Tatar)  define a cryptoasset taxonomy, made up of cryptocurrencies, cryptocommodities, and cryptotokens. The book covers portfolio management of cryptoassets, historical context, tips for how to make sense of ICOs (Initial Coin Offerings), and predictions on the future of digital currencies.

4. Mastering Bitcoin

Mastering Bitcoin is not for Bitcoin beginnersThe book starts with a brief overview of Bitcoin and blockchain, and then goes pretty deep into the code, and underlying features of the blockchain technology. Overall I feel like Mastering Bitcoin covers everything you would want to know about the technical aspects Bitcoin. And while I didn’t understand every single mathematical equation, between the code there are very readable takeaways, as well as a comprehensive glossary of terms for understanding the technology behind Bitcoin.

Topics covered: bitcoin mining, public and private keys, bitcoin addresses, paper wallets, transaction outputs and inputs, the bitcoin network, merkle trees, proof-of-work, blockchain forks, and mining pools.

5. The Starfish and the Spider

While this isn’t a book specifically about bitcoin, it’s a book about how decentralized systems work. The title is based on the idea that: If you cut off a spider’s head, it dies; if you cut off a starfish’s leg it grows an entirely new starfish. The Starfish and the Spider looks at a variety of use cases for decentralized systems such as Napster, P2P networks, Wikipedia, and even gives examples from history looking at the Aztecs, and the Soviets. This is a philosophical book on decentralization, and while it doesn’t mention bitcoin explicitly , it lays the groundwork for understanding the philosophies behind why bitcoin is so powerful.

What are smart contracts?

Smart contract: a digital agreement where you can programmatically code “if this” happens, “then something else happens.”

For example, you could write a smart contract to replace your paper contract for something like a mortgage, loan, employment agreement, smartphone payment installment term, or a terms of service agreement.

vitalik-buterins-amazing-tshirt-techcrunch-disrupt

Glasses-wearing cats riding unicorn llamas, UFOs, and rainbows represent
Ethereum co-founder Vitalik Buterin’s vision for smart contracts.

 

Ethereum isn’t the only early-stage smart contract platform in existence right now (e.g. Blockstack is an up-and-coming contender), but for now Ethereum has first-mover advantage and a market capitalization currently second only to Bitcoin, so for this article we’ll focus exclusively on Ethereum and its rapidly emerging ecosystem.

Bitcoin has some very limited scripting capabilities, but the core functionality of Ethereum lies both in its blockchain design and use of its Ethereum Virtual Machine (aka. EVM, and commonly described as a “world computer”).

ETH-landing-page

Behold! WORLD COMPUTER.

 

The EVM operates similarly to Bitcoin in that its decentralized nodes are connected by a peer-to-peer networking protocol. Beyond that, the EVM offers opportunities for much more complex computation than Bitcoin.

Bitcoin is a protocol designed specifically for payments, whereas the EVM is “Turing-complete” (meaning any computation run on one EVM node is able to be run on another node), and any smart contract instruction set runs on each one of these nodes. Similar to functions, smart contracts can call other smart contracts, creating a complex ecosystem.

The ether token, through the use of “gas”, is designed to be the fuel that pays for the execution of these smart contracts.

The EVM allows for the development of decentralized applications (dapps), therefore greatly extending the usefulness of blockchain technology.

The Ethereum Foundation documentation refers to this dapp platform as “Web 3.0”, a backend for a new kind of decentralized and secure internet.

matrix-image

Whoa.

Pros and Cons of Smart Contracts

As with any major new technological innovation, it is difficult to foresee exactly what the most popular use cases will be, and also how unexpected bugs affect the system.

Pros:

  • Decentralized: removal of single points of failure with workflows such as VPNs (dramatic privacy improvements vs.centralized VPNs), distributed computation (imagine an Amazon Web Services-like platform that pays you for free CPU cycles on your computer), and distributed storage (imagine a Dropbox-like platform where you get paid to host small, encrypted shards of someone else’s data)
  • Inclusive: Anyone can write a smart contract, it’s not just for big companies, or the coding elite
  • Intermediary-free: Smart contracts replace expensive intermediaries from contract negotiation and execution
  • Income: Many smart contracts are pay-to-use, with you as a prospective service provider receiving the platform’s token as payment

Cons:

angry-crowd-with-pitchforks

The pitchforks come out when there is major community disagreement, such as Ethereum’s decision to hard-fork after the disastrous 2016 DAO hack.

  • Hacking: Smart contracts have a large attack surface, evidenced by major hacks as was the case with The DAO Hack and multiple Parity wallet multisig hacks
  • Irreversibility: Major hacks destabilize the ecosystem both technically and economically because value transfer between smart contracts is generally irreversible
  • Unintended consequences: Smart contracts are a very permanent form of agreement and current technology does not include essential elements of a mature legal system, such as appeals, arbitration, and mediation

The smart contract space is just now beginning to set a rubric for security best-practices, ICO critiques, and many other key guidelines necessary to producing a healthy ecosystem.

Current Examples of Smart Contracts

Ethereum Name Service

Have you ever seen an ether address? A checksummed address looks like this:

0x7cB57B5A97eAbe94205C07890BE4c1aD31E486A8

For most people this is very difficult to read, and blockchain addresses in general tend to look similar. The ENS fixes all this through its smart contract, which is also interacted with via an ether address. The goal of the ENS is to radically improve the internet’s current domain name system with addresses that appear similar to email, such as “onemonth.eth”.

Initial Coin Offerings

ICOs allow startups to raise massive amounts of capital in incredibly short time periods compared to the traditional venture capital method. Even companies without working prototypes have raised millions in the span of days, without any vetting from educated investors. ICOs have their own pros and cons which are worthy of a separate article.

There are a few promising projects, and a massive amount of scams. ICOs have dramatically impacted the tech industry in just this past year, and startups and venture capitalists are working as fast as they can to leverage this new method of fundraising.

Ethereum’s 2014 pre-sale is commonly considered the first ICO. Most ICOs create ERC-20 tokens, a standard that enables token transfer on Ethereum’s blockchain.

Decentralized Exchanges

For most people it is convenient to purchase tokens on user-friendly exchanges such as Coinbase, Bittrex, Bitfinex, and many others. One of the core value propositions of blockchain technology however, is that it is decentralized, and centralized exchanges are a point of vulnerability, as was brutally demonstrated by the 2014 Mt. Gox hack.

Centralized exchanges are also running into issues with regulatory bodies like the SEC all over the world and due to legal concerns do not always list in-demand ICO tokens when they become available for trading. China, for the moment, has banned both token exchanges and ICOs entirely. There is much ongoing debate regarding how regulators should treat blockchain-based assets and the exchanges on which they are traded.

Enter the decentralized exchange: an automated exchange that serves any jurisdiction. There are a couple to pick from currently, and more on the way every day:

Conclusion

Smart contracts are an innovation that are here to stay, although the technology is immature and needs better scaling and security. Much learning is required to get up to speed on what happened, what’s currently happening, and what trends to expect. We’re here to help you grasp what this brave new world means for you, and for society in general.

 

Five Alternatives to Coinbase

Coinbase receives a lot of attention because it’s easy for beginners. The company also made headlines in 2017 when they raised their Series D funding of $100 million. With that said, Coinbase’s fees can be as high as 7%, they only offer three digital currencies at the moment, and you might not like how Coinbase handles their Bitcoin fork (e.g. they chose not to distribute Bitcoin Cash to Coinbase users).

Coinbase Bitcoin

Bithumb Bitfinex Bittrex Gdax HitBTC
Base South Korea Hong Kong U.S. U.S. Europe
Trading volume $900 million $600 million $257 million $183 million $286 million
Trading pairs 10 53 261 9 296
Fiat Currency Accepted Korean Won USD N/A USD, EU, GBP N/A
Country eligibility Open Excluding the U.S Impose restriction on selected states in the U.S. Only available for selected countries; 3 states within the U.S. not eligible Limitation on North Korea, Washington, and the New York States; Otherwise open
Fees 0.15% 0.1% – 0.2% 0.25% 0.1% – 0.25% 0.1%
Major Hack Yes Yes N/A Flash crash N/A

So you may wonder any other alternatives. In this blog, we will give an introduction to five exchanges other than Coinbase across the globe and provide a snapshot of what they are and how they are different. A very useful tool for navigation is CoinMarketCap which tracks the price for most cryptocurrencies, tokens and the trading volumes for exchanges. Most of our following discussion will refer to it.

There are two main reasons we selected these five: liquidity and geography. Market trading volume can reflect how active the exchange and gives you a relative idea whether your buy/sell order can be fulfilled instantly. While cryptocurrencies are traded 24/7, the geographic location of an exchange informs where most of its users and the customer support are likely to be based so you may want to trade during a time that most of them also stay active.  

1. Bithumb

Coinbase alternative: Bithumb

Coinbase alternative #1: Bithumb

Based in South Korea, Bithumb has around $400 million trading volume in the past 24 hours based on CoinMarketCap. Given its location, the only fiat currency Bithumb accepts is Korean Won, either by bank wire or credit card so you don’t have to physically be in South Korea. It offers 10 trading pairs, including Bitcoin, Bitcoin Cash, Ethereum, Qtum, Ripple, Litecoin, Ethereum Classic, Zcash, Dash and Monero.

For transactions, Bithumb charges 0.15% for makers and takers. You don’t need to pay for depositing funds to the exchange but it does impose a fee for withdrawals, depending on the exact coin you are dealing with. Here you can find a full price list.

While it tops the list of worldwide exchanges by its trading volume, Bithumb was also said to have been hacked in July 2017, with some customers reporting the loss of money due of the security breach.

2. Bitfinex

Coinbase alternative: Bitfinex

Coinbase alternative #2: Bitfinex

Bitfinex is based in Hong Kong and accepts U.S dollar. The trading volume is at a similar level with Bithumb, around $400 million but it has a total of 53 trading pairs. Some of them are crypto-to-fiat (BTC/USD) and rest are crypto-to-crypto (ETH/BTC). This page provides a full list for your reference.

However, do take note that Bitfinex has issues with depositing and withdrawing U.S. dollars directly from bank wire, and it bars U.S. residents from trading due to banking compliance issues.

In terms of the security: Bitfinex was hacked in 2016 during which $60 million was exploited. Following the hack, investors were issued BFX token as an equity representation for 36% of the total hacked amount which Bitfinex later obliged to buy back in 2017.

The fee structure is similar with Bithumb. Deposition is free while transaction charge can vary from 0.1% to 0.2% based on the transaction amount, and the withdrawal of any asset also comes with an associated fee.

3. Bittrex

Coinbase alternative #3: Bittrex

Coinbase alternative #3: Bittrex

Bittrex, is based in the U.S. and regulated by the U.S. government. A major difference between Bitfinex and Bithumb is that Bittrex is a crypto-to-crypto only exchange, meaning Bittrex doesn’t accept USD (or any fiat currencies). But if you have Ether stored in a wallet somewhere, you can send it to your Bittrex account to buy Bitcoin.

Given this feature, Bittrex offers 261 cryptocurrency trading pairs, and amounting approximately $370 million market volume. For each transaction, they charge a 0.25% commission, slightly higher than the previous two options. But it would be a go-to if you have a wide interest in different coins.

Finally, Bittrex hasn’t seen any security hack that was to the level Bitfinex had suffered. That said, at least one user has reported a hack which resulted in his nearly 7 Bitcoins being stolen.

4. GDAX

Coinbase alternative: Gdax

Coinbase alternative #4: Gdax

GDAX is owned and operated by Coinbase. While you can buy/sell cryptocurrencies on both Gdax and Coinbase, the core difference lies in the order book: When you buy Bitcoin on Coinbase, you are buying the inventory from Coinbase’s own stock, which means you pay the real-time price of bitcoin — for which Coinbase charges you a higher fee.

GDAX, on the other hand, plays the order book role, which matches your bid/ask with someone’s ask/bid. The exchange is also based in U.S. and offers a total of 9 trading pairs, both fiat-to-crypto and crypto-to-crypto. Compared to Bitfinex and Bithumb, Gdax is more diverse in terms of supporting global major fiat currencies, including the US dollar, Euro, and British Pound. The fee ranges from 0.1% to 0.25% depending on the transaction volume.

While no major security hack was reported on GDAX, there was once a price flash crash where Ether just plunged from over $300 to as low as 13 cents, which triggered a margin call that liquidated the positions held by many leveraged traders. But Coinbase later announced it would reimburse the amount to investors.

5. HitBTC

Coinbase alternative: HitBTC

Coinbase alternative #5: HitBTC

And finally, after Asia and America, we move to the Europe, where HitBTC is based in. In terms of the liquidity, HitBTC and Gdax are at a similar level, both somewhere between $150 to $200 million. But HitBTC operates in the same style as Bittrex, which provides only crypto-to-crypto trading. Yet, it offers even more options than Bittrex – 296 trading pairs according to CoinMarketCap, beating Bittrex’s 261, with a smaller transaction charge, at 0.1%, compared to Bittrex’s 0.25%.

How to find the exchanges where you can trade specific cryptocurrencies?

 

Visit Coin Market Cap: They have over 1200 coins listed, among which you should find the one you would like to invest. For example, if you are particularly interested in Ripple, locate Ripple from the top and click on it. Then the next page you will see a chart for the historical price of Ripple, as shown in the screen capture.

Go to the “Market” tab, after which you will be able to see all the exchanges that offer the trading of Ripple, as well as their corresponding trading pair and volume in the last 24 hours.

Proof of Work vs Proof of Stake

trezor bitcoin wallet

There are two common ways that blockchain networks mine new coins: proof-of-work and proof-of-stake. In this article we’ll explain the difference and what it means for bitcoin, Ethereum, and other altcoins.

Proof-of-work Proof-of-stake
Which blockchain adopts it Bitcoin, Ethereum*, Litecoin Nxt, Peercoin, BlackCoin, Gridcoin
How to select the block creator The one who has the proof of solving a math function. The one who locks up the wealth as a bet to enter a random selection algorithm
Reward Block reward + Transaction fee No block reward, just transaction fee
Hardware reliance Heavy Light
Potential issue 51% attack Nothing-at-stake attack

New to Blockchain?

Before reading you should know that blockchain refers to the record of transactions being sent and received on a network, for example, Bitcoin; and that miners are essentially the bookkeepers of those transactions. 

Proof-of-work: a method which requires miners to validate transactions on a blockchain by working out a mathematical function (called hash).

Proof-of-stake: a method which allows miners to validate block transactions according to how many coins they choose to put at stake on that network (as deposits). Here is a post where the founder of Ethereum explained a design philosophy of PoS.

Both methods exist to serve a common purpose on the blockchain: To validate that the person sending bitcoin (or any digital currency) has the correct amount of funds in their account. And that after the transaction is done, he or she no longer has the coin in their account (aka. to avoid double spending).

And yet, the two take an inherently different approach towards that goal.

PoW v.s. PoS: Buying a shovel v.s. Deposit in a bank

By definition, Proof-of-Work means to solve the hash function and prove the result is correct. While it’s hard to unravel the function, it’s easy for other miners to verify the result once a miner gets it – just putting it back to the function to see if it works out, like an algebraic problem. If it does, congrats! Here’s the prize. So take out your shovel, do the physical work, and show everybody you have mined the gold.

Proof-of-Stake, however, is a mechanism that needs no math. Instead, inside the network, you simply lock up a certain amount of your stake, i.e. your whatever cryptocurrency generated in this blockchain. That is your proof because something is at stake. The network uses a random selection algorithm to determine who the next block creator is, with factors like how many coins you lock up, what the coin’s age is, or how long you have locked up already, etc. Different PoS-based blockchain has various criteria, but the gist is not much hardware work is required. It’s somewhat like deposition and interests.

PoW v.s. PoS: Block reward v.s. No block reward

In PoW-based blockchain, miners do the hard work and will be rewarded. Recall Bitcoin and Ethereum, where a new block rewards 12.5 Bitcoins and 5 Ethers. But there’s another thing called a transaction fee. When you send a Bitcoin to me, that transaction needs to be validated and documented on the blockchain through the hash function math that miners are doing. But they are not doing it for free so you need to attach a transaction fee. The next lucky miner who creates the next block will receive all the transaction fees and the block reward itself, so it’s 12.5+ Bitcoins.

In PoS method, the blockchain has no block reward. Only transaction fees. That’s also why participants in the PoS blockchain should be called validators, not miners. They only facilitate the validation process of transactions without the mining activity like PoW does.

Ethereum Mining

Ethereum Mining

PoW v.s. PoS: Hardware heavy v.s. Light reliance

Because of the hefty math solving, PoW requires supercomputing power. For example, Bitcoin mining involves tons of mining chips which consume lots of electricity, depreciate fast, and could pile up at the landfill.

On the other hand, PoS relies substantially less on hardware. By just locking up your stake inside the blockchain network, you won’t expect a daunting electricity bill as you would from Bitcoin mining rigs.

PoW v.s. PoS: Potential Threat

Following the point above, since PoW mining requires physical hardware, the more powerful mining chips you have, the stronger computing capacity you own, then the more likely you can create the new blocks. It leads to a potential danger when one place accumulates over 51 percent of the entire network mining power. It is then capable of becoming a center, which is the fundamental situation that blockchain tries to eliminate. This is called 51% attack.

On the other hand, PoS imposes a threat called Nothing at Stake attack. The details can be very technical. But the important concept is that just as validators lock up a lot of their stakes, they can also lock up nothing. They may have no chance of creating the next block but because nothing is at stake for them, they have nothing to lose just to purposely mess up the blockchain. This video is recommended if you’d like a more technical explanation.

*Ethereum currently is still running on the proof-of-work protocol. But it is confirmed that proposals for Ethereum to switch to proof-of-stake, known as Casper, are being developed by the network’s founder Vitalik Buterin.

The Newbie Guide to Ethical Hacking

I hack websites. I’ve been doing it for a long time, across various industries, tech stacks, and programming languages. When I tell people what I do, especially those in the tech community, they often ask how I started and how can they learn more. So today, I’m going to give you a quick intro into the tools and tricks to get started with web hacking. The best way to start is to dive into the details, using some hacking tools.

Here’s how I recommend starting:

  1. Understand the tools of the trade
  2. Understand common attacks and defenses
  3. Practice on test sites

Since we will be focusing on web hacking, a basic understanding and/or refresher may be useful. If so, check out my post on, “Understanding HTTP Basics,” then come back. Don’t worry, its pretty simple but lays the groundwork for later.

Tools of the Trade

The first thing I think anyone trying to get involved with web app security needs to know is how to use the most common web hacking tool, the proxy. Proxies let you intercept HTTP requests and responses, allowing you to fully understand how a website works and lets you uncover security issues. I wrote a post, “Web hacking Tools: Proxies,” which walks through installing and using the most common web proxy used by security people, Burp.

After you spend some time using a web proxy, it’s pretty eye opening to see how some of your favorite sites work, under the covers at the HTTP layer. This is also super-useful during normal development to debug and troubleshoot web application problems.

Common Attacks

Next, you need to gain an understanding of the common attacks hackers use to break-in, so you can test your sites and code for these vulnerabilities. You should check out my article on the iCloud attack here. OWASP provides a list of the top 10 attacks. This is a great place to start, although I should warn you that some of them get into the weed fairly quickly. Once you understand those, you can review sites you build to make sure they are protected.

Practice makes perfect

Armed with your first hacking tool, the web proxy, and an understanding of common attacks, it’s time to put your newfound knowledge to the test with a few hacking challenges. There are a few great sites out there where you can learn and try out hacking techniques without being worried about breaking the law. These are a few of my favorites:

After you brush up on your skills, you can take it to the next level with a few public bug bounty programs. These programs are great because they pay for you finding vulnerabilities in public websites, such as Google, Facebook, and Paypal. Make sure you read all the rules before starting:

If you don’t want to deal with these companies directly, you can also join a bug bounty program through a dedicated bug bounty company. These work with various businesses to test security using a pool of freelance hackers, including you! These two are the best: