Cryptocurrencies and Blockchain-based Payment Systems
Cryptocurrency is a digital or virtual currency based on blockchain technology and used for exchanging goods and services online.
1. Cryptocurrency and blockchain-based payment system
- Cryptocurrency is a digital or virtual currency, secured by cryptography that can be exchanged online for goods and services.
- Cryptocurrencies work using blockchain technology, a distributed ledger enforced by a disparate network of computers.
- According to CoinMarketCap, there are more than 6,700 cryptocurrencies trading publicly, and as of Feb. 18, 2021, the total value of all cryptocurrencies was more than $1.6 trillion.
- Some reasons for the rising popularity of cryptocurrencies include minimal usage fees, no involvement of governments, potential profits, ease of use, and security.
Working of blockchain-based payment system
- A blockchain-based payment system is a decentralized payment system facilitating payment messaging, clearing, and settlement for cross-border fiat and digital currency transactions in a single network.
- Blockchain-based payment systems are essentially a method of making payments with the help of blockchain technology that facilitates fast, secure, low-cost international payment processing services through the use of encrypted distributed ledgers that provide trusted real-time verification of transactions without the need for intermediaries such as correspondent banks and clearinghouses.
- Some advantages of blockchain-based payments include the elimination of Intermediaries, transparency, safe and faster cross-border payments, and automation with smart contracts.
2. Major cryptocurrencies and their comparison
- According to CoinMarketCap, the top 3 cryptocurrencies by market capitalization are Bitcoin, Ethereum, and Cardano.
- Bitcoin was the first and is currently the most popular cryptocurrency that was invented in the year 2009 by an unknown person or group of people using the name Satoshi Nakamoto.
- According to CoinMarketpCap, it is the largest cryptocurrency measured by market capitalization and the amount of data stored on its blockchain.
- One of the biggest advantages of Bitcoin is that it has greater liquidity as compared to other cryptocurrencies and is widely accepted for making payments.
- Ethereum is a decentralized, open-source blockchain featuring smart contract functionality and is the second-largest cryptocurrency by market capitalization after Bitcoin.
- It uses a different and more flexible blockchain than bitcoin that allows other coins to be created on the actual blockchain.
- Ethereum also enables smart contracts and distributed applications (dApp) to be built and run without any downtime, fraud, control, or interference from a third party.
- Cardano (ADA) is the third-largest cryptocurrency by market capitalization and is a fully open-source, decentralized public blockchain and cryptocurrency.
- It combines ground-breaking technologies to provide unparalleled security and sustainability to decentralized applications, systems, and societies.
- It is considered to be the most reliable cryptocurrency through the use of the Proof of stake (PoS) algorithm, which results in eliminating the requirement for extra machines within the system as the nodes will be responsible for throughput, and the system will be less vulnerable to interference as a result.
Bitcoin vs Ethereum
- One of the major differences between Bitcoin and Ethereum is that Bitcoin is just a currency, while Ethereum is a ledger technology used by companies to build new programs.
Bitcoin vs Cardano
- Cardano is faster than Bitcoin in facilitating peer-to-peer transactions.
- Cardano, with a capacity of 257TPS, is also stronger in terms of transaction throughput as compared to Bitcoin, which has a capacity of 4.6TPS.
Cardano vs Ethereum
- Ethereum is considered to be the second generation of blockchain that unlocked the potential of blockchain technology on its arrival in the form of smart contracts. However, Cardano is considered to be the third generation technology, specifically designed with the aim of offering all the necessary functionality while overcoming the problems faced by other cryptocurrencies.
3. Platforms used to buy/sell cryptocurrencies
- Based on a mention in multiple articles and publications, some of the best platforms used to buy/sell cryptocurrencies include Binance, Coinbase, and Kraken.
- Binance was founded in the year 2017 and is the largest cryptocurrency exchange that provides a platform for trading various cryptocurrencies.
- The exchange platform offers more than 100 different trading pairs between different cryptocurrencies and also allows some fiat-crypto pairs transactions.
- It has a standard trading fee of only 0.1%, which can even be reduced further if the payment is made in Binance coin (BNB).
- Some pros of the platform include own platform token, fewer transaction fees, more advanced charting, and worldwide availability.
- Founded in the year 2012, Coinbase is another popular crypto exchange platform that allows merchants, consumers, and traders to transact with digital currency.
- The exchange platform allows its users to create their own digital wallets for buying or selling cryptocurrencies connecting with their bank accounts.
- Some pros of the Coinbase platform include reputation, security, high trading volume, ease of use, and simple user interface.
- Kraken was founded in the year 2011, and it allows users to buy/sell cryptocurrencies like Bitcoin, Ethereum, Litecoin, Ripple, Dogecoin, among others.
- It has the highest volume of BTC/Euro of any exchange, which gives them incredibly high volume and liquidity.
- The exchange platform offers margin trading for experienced users.
- Some advantages of the platform include a good reputation, easy-to-use interface, high trading volume, minimal deposit fees, great user support, security, and worldwide support.
4. Quantum Financial System and its future applications
- Quantum Financial System (QFS) provides flawless and clean integrity in the movement of funds from Central Bank sources to destination accounts.
- It covers the new global network for the transfer of asset-backed funds, thus being able to replace the centrally controlled SWIFT System in the US.
- QFS can protect all involved parties from corruption and manipulation within the banking system.
- Another feature of QFS is that it ensures that banks are monitored and protected with regard to the agreed-upon contract of the transfer fund process.
- QFS is also independent of the existing centralized system and is not a cryptocurrency, but an asset-backed digital currency.
- QFS makes use of a photonic technology of 3.5 billion frames per second.
- According to Juniper Research report, cybercrime will result in the theft of nearly $33 billion by 2023, and QFS will be the future-proof system for financial transactions in the future.
- QFS will help in reducing cybercrimes in the future as it is developed to run through a quantum computer placed on a satellite and not on conventional computers.
- Another enticing feature of QFS is its security system which is protected by Secret Space Programs (SSP), providing enhanced security.