Bitcoin and Litecoin are the two biggest cryptocurrencies around. Today we give a bit of a primer on cryptocurrencies, Bitcoin, Litecoin, and doing business on the deep web.
What are cryptocurrencies?
Cryptocurrencies are a form of online currency that has no physical representation. So while you can see dollars in your bank account online, you can also withdraw them to get yourself some cold, hard cash – the stuff you can keep in your wallet. This is not the case with cryptocurrencies.
Cryptocurrencies also use a different system of control – no one overarching body (such as a bank or government) is in control of the issuing system. They were designed to work independently of any country’s financial system, to be a truly fair global denomination.
They are called “cryptocurrencies” due to the cryptography involved in conducting these transactions online. Each transaction is done between exactly two people – the giver and the receiver – which means no financial institutions need to be involved in the process to skim fees. Each transaction is also anonymous – cryptocurrencies are not linked to a person, only a computer.
Each cryptocurrency uses a “blockchain ledger”, where every transaction is public and verified by multiple other sources. In fact, with each block (containing multiple transactions) that is “mined,” the source that manages to complete the block first is rewarded with an amount of the currency – which means that it is in the public’s (or the miners’, rather), best interests to complete the block as soon as possible.
Each cryptocurrency has a finite higher bound on the amount of the cryptocurrency that will ever be in circulation, which means the price can fluctuate depending on the popularity of the coin.
Bitcoin is the world’s most well-known cryptocurrency. Released in 2009, the currency was spawned from an academic paper by Satoshi Nakamoto – a mysterious figure whose true identity has been allegedly identified as an Australian known as Craig Wright.
The upper limit on the amount of Bitcoin that will ever be in circulation is 21 million – and Satoshi owns over 1 million of these.
Bitcoin is now acceptable as a currency in many commercial enterprises and institutions around the world, including Amazon, WordPress, OkCupid, and Target. There is a huge community built up around Bitcoin, involving meetups and groups, various trading platforms, and Bitcoin mining conglomerates. There is now almost 700 Bitcoin ATMs installed worldwide, both one-way (turn cash into Bitcoin), and two-way (exchange your Bitcoin for cash, and turn cash into Bitcoin).
Bitcoin is now truly a legitimate currency, for those who doubted it in its infancy.
Litecoin is one of hundreds of altcoins that burst onto the market in the initial wake of Bitcoin. Litecoin operates in an almost identical fashion to Bitcoin, except confirmation on the block chain ledger is designed to be faster, and the upper limit on the amount of Litecoins that will ever be in circulation is 84 million.
In existence since 2011, Litecoin is now the second most widely used cryptocurrency online. While it initially followed the rise and fall of the value of Bitcoin quite closely (albeit at a much lower rate), the price has now decoupled, and Litecoin appears a less volatile currency overall.
Conducting transactions on the Deep Web
While there are plenty of uses of cryptocurrencies on the Clearnet, and in day to day merchant transactions like your Bitcoin accepting coffee shop around the corner, one of the most proliferative uses of cryptocurrencies is in performing transactions on the deep web.
In fact, in many places on the deep web, such as the darknet markets, cryptocurrency is the only acceptable form of payment – so that transactions can be performed completely anonymously. This is because on these markets many of the goods and services are highly illegal in most countries around the world – and sellers are not going to risk prosecution by using their own bank accounts or PayPal addresses!
While the majority of marketplaces accept Bitcoin only (such as Dream Market and AlphaBay), still others accept a combination of Bitcoin and Litecoin, along with other altcoins too (such as Tochka).
Many buyers and sellers will own a number of different altcoins and have profiles on a number of different marketplaces, so they can avoid the pitfalls of fluctuating currencies and the instability of marketplaces.
While Bitcoin remains strong, if you are looking to conduct business on the deep web, it simply makes sense to spread yourself around a bit – both with different cryptocurrencies, and different marketplaces.