A Beginner´s Guide to Buying, Selling, Using, and Mining Blackcoin:
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Bitcoin (BTC) is currently the most important digital currency in the world. However, Bitcoin has been faced with several issues including the high cost of maintaining its network.
Bitcoin uses the Proof of Work (PoW) system to solve a computationally intensive math problem to secure its protocol. Blockchain is generated in the process while the computation effort contributes to the coin's scarcity and value.
The PoW system has become expensive. At some point, it costs about $1.8 million every day to secure the Bitcoin network. Most of the money goes into paying for energy costs and specialized computer equipment. This will likely increase as the value of Bitcoin increases.
While expensive, the PoW system is also considered to have slower transactions. Another issue is that the system enables a user with 51% of the current computer power to attack the network.
These issues have caused some digital currencies to consider switching from PoW to the Proof of Stake (PoS) system. PoS is seen as a better alternative to PoW as it addresses some of the issues earlier outlined. But not all these currencies have been able to offer Bitcoin's features with PoS. One of such that seems to match Bitcoin's offer is the peer-to-peer currency, BlackCoin.
Blackcoin is a cryptocurrency considered faster than Bitcoin and less expensive to secure. It was developed in 2014 as an upgrade to the Bitcoin protocol. It was meant to be an alternative to Bitcoin but many users see them as having too many similar features. Its proponents see it as a better currency to Bitcoin. They regard it as one of the currencies of the future.
BLK is the first coin to use the PoS system for the majority of its existence. Its initial distribution was done with PoW and it had no pre-mine.
The high costs of the PoW system is as a result of the total sum spent on mining labor and related hardware. With PoS, the total sum of transaction fees is enough to compensate for bandwidth and storage space. Rather than use computer power to generate security, PoS uses the scarcity of the coin itself.
All BLK transactions are managed by a network of users who are free to join. Its decentralized public ledger is viewable and easily audited by anyone.
Buying BLK could be a way to start investing in the digital currency. The main cryptocurrency exchange that trades in BLK is Poloniex. There are several other exchanges where buying and selling BLK is possible. They include Bittrex, BTC38, LiteBit.eu and Livecoin.
Fiat currencies like USD or EUR can be exchanged to buy BTC on one of these exchanges before using it to buy BLK. This exchange to BTC could be done via online bank transfers. It can also be done in some countries using credit/debit cards. The bought BTC could later be traded for BLK within any of the exchanges.
Buying BLK directly with cash or credit/debit cards is almost impossible. This is mainly because it is not possible to reverse transactions with cryptocurrencies. In the few cases where it is possible, a huge premium has to be paid to use the services (up to about 25%). Some of the platforms include Coinmama, bitcoininsanity, Coin.mx, eNumbered and C-Cex. On Virwox, credit cards can be used to exchange USD for Linden dollars then to BTC.
BLK can be traded mainly for BTC on the cryptocurrency exchanges mentioned earlier (Poloniex also offers a BLK/XMR (Monero) pair). The traded BTC can be converted to cash or to other cryptocurrencies.
If going for cash, the converted BTC can be liquidated and withdrawn through the banks. It is also possible to cash out through banks' automated teller machines. Alternatively, there are Bitcoin-backed debit cards like BTCC's Mobi Card. The enable quicker and direct access to cash.
The combination of PoS and fast transaction times makes BLK a long-term store of value. It is also suitable for day-to-day transactions.
Investing in BLK can facilitate secure and anonymous transactions between peers. It is open-source and can be audited by anyone making it completely transparent. Users have total control over their accounts since there are no intermediaries. This is because the PoS system eliminates the need for miners.
The system also allows those who stake their BLK to secure the network to enjoy interest rates from 1% to 8% interest per year. To stake is when new coins are released to those who hold BLK in their wallets. PoS allows fast confirmation times which can average 10 seconds each. In comparison, BTC averages 10 minutes to confirm while Litecoin takes 2.5 minutes. Faster confirmation times is advantageous for merchant adoption.
There are some other major developments that differentiate BLK from other currencies. Its NightTrader feature prevents the network against security breaches like hacks. It also has a Legionnaire feature that enables users to enjoy anonymity that comes with stealth addresses. Its BlackHalo feature makes BLK the first digital currency to integrate smart contracts.
With an inflation rate of 0.95%, its current price of $0.22 seems too low for its total supply of approximately 76 milion coins.
BLK is no longer mineable since it is now only PoS. PoW mining only happened for the coin in its first week. By the 10,000th block, mining was stoppe d for the system to go PoS. The PoS system enables users stake coins to verify new transactions. This puts less demand on the system's processing power and transactions are done more quickly.
The process of creai ng more BLK via PoS is called minting. It enables users to earn 1% of the total amount of coins held in their wallets over a period of a year. This starts as soon as the user unlocks their wallet after eight hours. Minting stops when wallets are locked.
The minting process requires less energy (0.5 watts per miner). This is unlike the case for Bitcoin or Litecoin which require hundreds or more watts.
While BLK's price has changed in the last three years, its market cap has not surpassed the $20 million mark.
Some changes were introduced to improve security in BLK's PoS protocol. The changes enable BLK to continue using PoS to scale for mass adoption while mitigating potential risks.
One of the changes is the taking out of the Coin Age. It makes getting all nodes to be online more - to get their stake reward - a requirement. With more nodes staking, the chances of security issues like 51% attacks are also less. Instead, it makes the network work faster.
Another change is the stake modifier getting changed at every modifier interval. This is to mitigate against the possibility of a pre-computation attack.
Changes were also made to the block timestamps to work more efficiently with PoS. The block time was increased from its original 60 seconds to match the granularity. Its block hash was changed back to SHA256d.
In all, possible attack vectors on the protocol have been reduced while the incentive to support the network has increased.