Had you spent $27 on Bitcoin when it was created by Satoshi Nakamoto in 2009 your investment would now be worth over $37,000,000.
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Widely regarded as the greatest investment vehicle of all time, Bitcoin has seen a meteoric rise during 2017 going from $777 all the way to $17,000.
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Creating millionaires out of opportunistic investors and leaving financial institutions open-mouthed, Bitcoin has answered its critics at every milestone this year and some believe this is just the beginning.
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The launch of Bitcoin futures on December 10th, which for the first time will allow investors to enter the Bitcoin market through a major regulated US exchange, implies that we are just getting started.
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What makes Bitcoin so valuable is that there is a finite amount in existence. There will only ever be a maximum of 21 million Bitcoins and unlike normal fiat currencies you can’t just print more of them whenever you feel like. This is because Bitcoin runs on a proof of work protocol: in order to create it, you have to mine it using computer processing power to solve complex algorithms on the Bitcoin blockchain. Once this is achieved, you are rewarded with Bitcoin as payment for the “work” you have done. Unfortunately the reward you get for mining has decreased drastically almost every year since Bitcoin’s inception, which means that for most people the only viable way to get Bitcoin is buying it on an exchange. At the current price levels is that a risk worth taking?
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Many believe Bitcoin is simply a bubble. I spoke to cryptocurrency expert and long term investor Duke Randal who thinks the asset is overvalued, “I would compare this to many supply and demand bubbles over history such as Dutch Tulip Mania and the dot com bubble of the late 90s. Prices are purely speculation based, and when you look at Bitcoin’s functionality as an actual currency it is almost embarrassing.” For those who don’t know, the dot com bubble was a period between 1997-2001 where many internet companies were founded and given outrageously optimistic valuations based purely on speculation that later plummeted 80-90% as the bubble began to collapse in the early 2000s. Some companies such as eBay and Amazon, recovered and now sit far above those valuations but for others it was the end of the line.
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Bitcoin was originally created in order to take power away from our financial systems and put people in control of their own money, cutting out the middle man and enabling peer to peer transactions. However, it is now one of the slowest cryptocurrencies on the market, its transaction speed is four times slower than the fifth biggest cryptocurrency and its nearest competitor for payment solutions Litecoin. Untraceable privacy coin Monero makes transactions even quicker, boasting an average block time of just two minutes, a fifth of the time Bitcoin can do it in, and that’s without anonymity. The world’s second biggest cryptocurrency, Ethereum, already has a higher transaction volume than Bitcoin despite being valued at only $676 dollars per Ether compared to Bitcoin’s $16,726 per Bitcoin.
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So why is Bitcoin’s value so high? I asked Duke Randal the same question. “It all goes back to the same supply and demand economics, relatively there is not very much Bitcoin available and its recent surge in price has attracted a lot of media attention, this combined with the launch of Bitcoin futures which many see as the first sign Bitcoin is being accepted by the mass market, has resulted in a lot of people jumping on the bandwagon for financial gain. Like any asset, when there is a higher demand to buy than to sell, the price goes up. This is bad because these new investors are entering the market without understanding blockchain and the underlying principles of these currencies meaning they are likely to get burnt”.
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Another reason is that Bitcoin is extremely volatile, it has been known to swing up or down thousands of dollars in less than a minute which if you are not used to nor expecting it, causes less experienced investors to panic sell, resulting in a loss. This is yet another reason Bitcoin will struggle to be adopted as a form of payment. The Bitcoin price can move substantially between the time vendors accept Bitcoin from customers and sell it on to exchanges for their local currency. This erratic movement can wipe out their entire profitability. Will this instability go away any time soon? Not likely: Bitcoin is a relatively new asset class and although awareness is increasing, only a very small percentage of the world’s population hold Bitcoin. Until it becomes more widely distributed and its liquidity improves significantly, the volatility will continue.
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So if Bitcoin is pretty useless as an actual currency, what are its applications? Many believe Bitcoin has moved on from being a viable form of payment to becoming a store of value. Bitcoin is like “digital gold” and will simply be used as a benchmark for other cryptocurrencies and blockchain projects to be measured against and traded for. Recently there have been stories of people in high inflation countries such as Zimbabwe buying Bitcoin in order to hold on to what wealth they have rather than see its value decline under the recklessness of its central banking system.
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Is it too late to get involved in Bitcoin? If you believe in what these cryptocurrencies will do for the world then it is never too late to get involved, but with the cost of Bitcoin being so high is it a boat for some which has already sailed. You might be better off having a look at Litecoin, up 6908% for the year or Ethereum which is up an incredible 7521% for the year. These newer, faster currencies hope to achieve what Bitcoin first set out to do back in its inception in 2009 and replace government run fiat currencies.
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Who knows what the price of these currencies will be ten, fifteen or even twenty years from now? One thing is certain though, we better strap ourselves in as it is going to be a wild ride.
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Guide To Successfully Trade In The Major Cryptocurrencies
Cryptocurrency trading has taken the world by storm and this is what has become the norm for the majority of traders and investors. If you are keen enough to do your research before going into the trading, you stand a chance to enjoy real growth and profits in the end. The worst you can do when it comes to this kind of trading is going into it blindly simply because it is what everyone else is doing. A little research on the major currencies and getting deep into buying and trading fundamentals can make a huge difference. Below are a few guidelines that will jolt you into success with your trading.
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Take time to understand how the block chain works
Blockchain technology has redefined transactions and it is changing everything. Blockchain can be defined as a list of records that continually grow into blocks secured and linked using cryptography. The blockchains are data modification resistant and serve as public transaction ledger between parties. The transparent and decentralized nature of block chain makes it highly secure and in the world of hacking it is truly functional and reliable. It solves manipulation problems that have become so apparent in the world today. Whereas no single person can claim to understand everything that is blockchain, learning a few fundamentals will give you a much easier time with your trading.
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Know and learn the top currencies
The virtual currency space is becoming crowded thanks to how popular the currencies have become. The fact is that there are more than 100 cryptocurrencies today, which means you need to know which ones are top and popular, so you can choose your buying and selling properly with profitability in mind. Bitcoin accounts for half of the entire market with the highest volume, but Litecoin and Ethereum are also top and giving Bitcoin a run. Find out as much as possible regarding the currency you are interested in. The more you know the better you will be in making decisions; you can actually manage to trade more than one cryptocurrency without any challenge.
Mind the inherent risks
Bitcoin and other currencies are quite volatile even when compared the stock market and gold. Remember that this is still a technology in its early days and it does face lots of challenges. The profit probabilities are quite high but so are the risks to. Public sentiment about a currency can actually impact its prices. What goes up is most definitely bound to come down so be careful with the trade moves you make. The higher the risks the higher the rewards might be but be ready for losses as well. The best you can do whatever the cryptocurrency you choose is to keep an eye on events that can affect prices and act fast.
Once you know everything that matters in cryptocurrency trading, you can then go ahead and open a brokerage account and fund it then you can start buying and selling the currencies. The rewards are numerous for keen traders.
What Is a Cryptocurrency?
A cryptocurrency or cryptocurrency (cryptocurrency of the Saxon) is a virtual currency that serves to exchange goods and services through a system of electronic transactions without having to go through any intermediary. The first cryptocurrency that started trading was Bitcoin in 2009, and since then many others have emerged, with other features such as Litecoin, Ripple, Dogecoin, and others.
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What is the advantage?
When comparing a cryptocurrency with the money in the ticket, the difference is that:
They are decentralized: they are not controlled by the bank, the government and any financial institution
Are Anonymous: your privacy is preserved when making transactions
They’re International: everyone’s opera with them
They are safe: your coins are yours and from nobody else, it is kept in a personal wallet with non-transferable codes that only you know
It has no intermediaries: transactions are carried out from person to person
Quick transactions: to send money to another country they charge interest and often it takes days to confirm; with cryptocurrencies only a few minutes.
Irreversible transactions.
Bitcoins and any other virtual currency can be exchanged for any world currency
It can not be faked because they are encrypted with a sophisticated cryptographic system
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Unlike currencies, the value of electronic currencies is subject to the oldest rule of the market: supply and demand. “Currently it has a value of more than 1000 dollars and like stocks, this value can go up or down the supply and demand.
What is the origin of Bitcoin?
Bitcoin, is the first cryptocurrency created by Satoshi Nakamoto in 2009. He decided to launch a new currency
Its peculiarity is that you can only perform operations within the network of networks.
Bitcoin refers to both the currency and the protocol and the red P2P on which it relies.
So, what is Bitcoin?
Bitcoin is a virtual and intangible currency. That is, you can not touch any of its forms as with coins or bills, but you can use it as a means of payment in the same way as these.
In some countries you can monetize with an electronic debit card page that make money exchanges with cryptocurrencies like XAPO. In Argentina, for example, we have more than 200 bitcoin terminals.
Undoubtedly, what makes Bitcoin different from traditional currencies and other virtual means of payment like Amazon Coins, Action Coins, is decentralization. Bitcoin is not controlled by any government, institution or financial entity, either state or private, such as the euro, controlled by the Central Bank or the Dollar by the Federal Reserve of the United States.
In Bitcoin control the real, indirectly by their transactions, users through exchanges P2 P (Point to Point or Point to Point). This structure and the lack of control makes it impossible for any authority to manipulate its value or cause inflation by producing more quantity. Its production and value is based on the law of supply and demand. Another interesting detail in Bitcoin has a limit of 21 million coins, which will be reached in 2030.
How much is a Bitcoin worth?
As we have pointed out, the value of Bitcoin is based on supply and demand, and is calculated using an algorithm that measures the amount of transactions and transactions with Bitcoin in real time. Currently the price of Bitcoin is 9,300 USD (as of March 11 of 2018), although this value is not much less stable and Bitcoin is classified as the most unstable currency in the foreign exchange market.
Cryptocurrency Mining
Cryptocurrency mining is a never-ending game in this digital world. Bitcoin, the first decentralized currency introduced in early 2000. Mining cryptocurrency is a complex procedure of verifying transactions and adding them to public ledger (blockchain). This ledger of past transactions is called the blockchain as it is a chain of blocks. The blockchain serves to confirm transactions to the rest of the network as having taken place. The blockchain is also responsible for releasing new bitcoins. Each of the many crypto coins in presence depend on the core idea of the blockchain.
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Process of Mining
Cryptocurrency was intended to be decentralized, secure and unalterable. So each and every transaction is scrambled. Once that scrambled transaction happens it’s added to something many refer to as a “block” until the point that a settled number of transactions has been recorded. That block at that point gets added to a chain – the blockchain – which is available publicly. During mining cryptocurrency either Bitcoin, Dash, Litecoin, Zcash, Ethereum, & more, the miner has to compile recent transections into blocks and crack a computationally difficult puzzle. There are several online bitcoin mining sites. It has become a very popular way to earn money.
Cryptocurrency is cryptographic, which means that it uses a special encryption that allows controlling the generation of coins and confirming the transaction. A block is pretty useless in its currently available form. However, after applying the algorithm to a specific block. Upon matching, the miner receives a couple of bitcoins. For earing bitcoin via mining, the miner has to be technical. Bitcoin mining for profit is very competitive. Bitcoin price makes it difficult to realize monetary gains without also speculating on the price. The payment is based on how much their hardware contributed to solving that puzzle. Miners verify the transactions, ensure they aren’t false, and keep the infrastructure humming along.
Best Coins to Mine
Bitcoins are not a decent decision for starting diggers who take a shot at a little scale. The current in advance speculation and upkeep costs, also the sheer scientific trouble of the procedure, simply doesn’t make it productive for buyer level hardware. Presently, Bitcoin mining is saved for expansive scale activities as it were. Litecoins, Dogecoins, and Feathercoins, then again, are three Scrypt-based digital forms of money that are the best money saving advantage for apprentices. At the present estimation of Litecoin, a man may gain somewhere in the range of 50 pennies to 10 dollars for each day utilizing customer level mining hardware. Dogecoins and Feathercoins would return marginally less benefit with a similar mining hardware yet are ending up more famous every day. Peercoins, as well, can likewise be a sensibly fair profit for your venture of time and vitality.
As more individuals join the cryptocoin surge, your decision could get more hard to mine since the more costly hardware will be required to find coins. You will be compelled to either contribute vigorously on the off chance that you need to stay mining that coin, or you will need to take your income and change to a less demanding cryptocoin. Understanding the main 3 bitcoin mining strategies is likely where you have to start; this article centers around mining scrypt coins. Likewise, make sure you are in a nation where bitcoins and bitcoin mining is legal.
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Goal of Mining
How about we center around mining cryptocurrency. The entire focal point of mining is to accomplish three things:
1. Give accounting administrations to the coin network. Mining is essentially every minute of everyday PC accounting called ‘checking transactions’.
2. Get paid a small reward for your accounting administrations by accepting fractions of coins each couple of days.
3. Hold your personal expenses down, including power and hardware.
Some Basic Terms
A free private database called a coin wallet. This is a password-secured container that stores your earnings and keeps a vast record of transactions. A free mining software package, similar to this one from AMD, typically made up of cgminer and stratum. An enrollment in a web-based mining pool, which is a community of mineworkers who consolidate their PCs to increase profitability and wage stability. Enrollment at an online money exchange, where you can exchange your virtual coins for conventional cash, and the other way around. A reliable full-time web association, ideally 2 megabits for each second or faster speed. A hardware setup location in your basement or other cool and air-conditioned space.
A work area or custom-fabricated PC intended for mining. Truly, you may utilize your present PC to start, yet you won’t have the capacity to utilize the PC while the digger is running. A separate dedicated PC is ideal. Tip: Do not utilize a laptop, gaming console or handheld device to mine. These devices simply are not sufficiently successful to generate wage. An ATI graphics processing unit (GPU) or a specialized processing device called a mining ASIC chip. The cost will be anywhere from $90 used to $3000 new for each GPU or ASIC chip. The GPU or ASIC will be the workhorse of giving the accounting administrations and mining work.
A house fan to blow cool air across your mining PC. Mining generates substantial heat, and cooling the hardware is critical for your prosperity. Personal interest. You absolutely require a solid appetite for reading and constant learning, as there are continuous innovation changes and new methods for upgrading coin mining comes about. The best coin mine-workers put in hours consistently considering the most ideal ways to adjust and enhance their coin mining performance.
Cryptocurrency Mining Profitability Each time a mathematical issue is comprehended, a constant amount of Bitcoins are created. The quantity of Bitcoins generated per block starts at 50 and is halved each 210,000 blocks (about four years). The present number of Bitcoins awarded per block is 12.5. The last bock halving happened on July 2016 and the following one will be in 2020. The estimation of profitability can be made via use of various online mining calculators. Development of digital currency standards, for example, Bitcoin, Ethereum, and Bitcoin Cash has prompted tremendous ventures by companies and this is required to aid in substantial development of the market in the near future.
Cryptocurrency mining is a computationally intensive process, which requires network of several PCs for verification of the transaction record, known as the blockchain. The excavators are offered a share of transaction charges and gain a higher probability of finding another block through contributing high computational power. These support transactions help in giving enhanced security to network clients, and guarantees honesty, which is relied upon to be the noticeable factor affecting development of the global cryptocurrency mining market.
Thinking of Investing? Think the Bitcoin Way
What is Bitcoin?
If you’re here, you’ve heard of Bitcoin. It has been one of the biggest frequent news headlines over the last year or so – as a get rich quick scheme, the end of finance, the birth of truly international currency, as the end of the world, or as a technology that has improved the world. But what is Bitcoin?
In short, you could say Bitcoin is the first decentralised system of money used for online transactions, but it will probably be useful to dig a bit deeper.
We all know, in general, what ‘money’ is and what it is used for. The most significant issue that witnessed in money use before Bitcoin relates to it being centralised and controlled by a single entity – the centralised banking system. Bitcoin was invented in 2008/2009 by an unknown creator who goes by the pseudonym ‘Satoshi Nakamoto’ to bring decentralisation to money on a global scale. The idea is that the currency can be traded across international lines with no difficulty or fees, the checks and balances would be distributed across the entire globe (rather than just on the ledgers of private corporations or governments), and money would become more democratic and equally accessible to all.
How did Bitcoin start?
The concept of Bitcoin, and cryptocurrency in general, was started in 2009 by Satoshi, an unknown researcher. The reason for its invention was to solve the issue of centralisation in the use of money which relied on banks and computers, an issue that many computer scientists weren’t happy with. Achieving decentralisation has been attempted since the late 90s without success, so when Satoshi published a paper in 2008 providing a solution, it was overwhelmingly welcomed. Today, Bitcoin has become a familiar currency for internet users and has given rise to thousands of ‘altcoins’ (non-Bitcoin cryptocurrencies).
How is Bitcoin made?
Bitcoin is made through a process called mining. Just like paper money is made through printing, and gold is mined from the ground, Bitcoin is created by ‘mining’. Mining involves solving of complex mathematical problems regarding blocks using computers and adding them to a public ledger. When it began, a simple CPU (like that in your home computer) was all one needed to mine, however, the level of difficulty has increased significantly and now you will need specialised hardware, including high end Graphics Processing Unit (GPUs), to extract Bitcoin.
How do I invest?
First, you have to open an account with a trading platform and create a wallet; you can find some examples by searching Google for ‘Bitcoin trading platform’ – they generally have names involving ‘coin’, or ‘market’. After joining one of these platforms, you click on the assets, and then click on crypto to choose your desired currencies. There are a lot of indicators on every platform that are quite important, and you should be sure to observe them before investing.
Simply buy and hold
While mining is the surest and, in a way, simplest way to earn Bitcoin, there is too much hustle involved, and the cost of electricity and specialised computer hardware makes it inaccessible to most of us. To avoid all this, make it easy for yourself, directly input the amount you want from your bank and click “buy’, then sit back and watch as your investment increases according to the price change. This is called exchanging and takes place on many exchanges platforms available today, with the ability to trade between many different fiat currencies (USD, AUD, GBP, etc) and different crypto coins (Bitcoin, Ethereum, Litecoin, etc).
Trading Bitcoin
If you are familiar with stocks, bonds, or Forex exchanges, then you will understand crypto-trading easily. There are Bitcoin brokers like e-social trading, FXTM markets.com, and many others that you can choose from. The platforms provide you with Bitcoin-fiat or fiat-Bitcoin currency pairs, example BTC-USD means trading Bitcoins for U.S. Dollars. Keep your eyes on the price changes to find the perfect pair according to price changes; the platforms provide price among other indicators to give you proper trading tips.
Bitcoin as Shares
There are also organisations set up to allow you to buy shares in companies that invest in Bitcoin – these companies do the back and forth trading, and you just invest in them, and wait for your monthly benefits. These companies simply pool digital money from different investors and invest on their behalf.
Why should you invest in Bitcoin?
As you can see, investing in Bitcoin demands that you have some basic knowledge of the currency, as explained above. As with all investments, it involves risk! The question of whether or not to invest depends entirely on the individual. However, if I were to give advice, I would advise in favor of investing in Bitcoin with a reason that, Bitcoin keeps growing – although there has been one significant boom and bust period, it is highly likely that Cryptocurrencies as a whole will continue to increase in value over the next 10 years. Bitcoin is the biggest, and most well known, of all the current cryptocurrencies, so is a good place to start, and the safest bet, currently. Although volatile in the short term, I suspect you will find that Bitcoin trading is more profitable than most other ventures.
Can You Mine Bitcoins on Your Smartphone?
Let us have a look at the Bitcoin price index from July 2012 to September 2020 for better understanding of this digital currency –
Users who have traded Bitcoin have used many apps for Android, also which are used to store Bitcoins. There are several apps available and you can download best bitcoin app either from the Google or Google play store.
With the constant increase and decrease in Bitcoin price in India, Bitcoin is going to either stay at the present price or decrease. Further, Bitcoin mining has taken precedence over everything else, and there are several apps for smartphones to mine Bitcoin. If you are not interested in mining, you can purchase Bitcoins by using a Bitcoin exchange in India such as, WazirX.
Is it possible to mine Bitcoins using Mobile?
Yes, Bitcoin mobile mining is possible; but there are also several reasons for not proceeding with it. Further, there are few cryptocurrencies which do not require proof-of-work mechanisms, which are under the initial stage can be mined on a smartphone.
As we are aware that today’s smartphones are very powerful and it can be used for cryptocurrency mining. But, when we compare the tools that are used by the miners for Bitcoin mining, they are very powerful and sophisticated, mining in smartphones means they have less appeal in terms of rewards.
The user can mine Bitcoins on the smartphone on a smaller scale, or the user can join a mobile mining farm or mining pool. When the miners of the network share their rewards, you will receive a small percentage based on your computing power.
How can you Mine using Smartphones?
You can use your smartphone for Bitcoin mobile mining, by using Android as it is a mining-friendly OS for mobile devices. As the BTC rate in India is fluctuating, the market is developing more apps for Android, which allow you to directly mine bitcoin from the smartphone. These apps cannot be found on Google play store as the case may be.
Apps that can be used for mining Bitcoins through a smartphone
If you are still fixed on mining bitcoin through mobile, the only requirement is you need a mining app and a battery charger for standby. Below given are the few apps which could be used for mining Bitcoin through smartphones.
It is a mobile miner app which helps you to mine Bitcoins, and Altcoins. Some of them include Dash, and other altcoins. Further, MinerGate offers the best in-built wallet where you can store your bitcoins and other cryptocurrencies.
It is one of the most popular apps that are currently available on most of the devices. It offers a user-friendly interface and you can find its performance reviews good. The Bitcoin miner app supports several altcoins.
This app supports several cryptocurrencies which include Bitcoin, Litecoin, Dash, DigitalNote, and many more. This app is mainly used for mining cryptocurrencies for Android.
Final Thoughts
Even though mining through mobile does not offer more rewards, it is not a complicated process. The only requirement is, you need a smartphone and download best mining app. When you are using your smartphone, the app runs in the background; and these apps interfere with your smartphone’s performance. Succinctly, we can say that smartphone mining is one of the simple ways for earning some cash but not like using specialized hardware through computers.
Short History of Bitcoin
Bitcoin is the premier cryptocurrency of the world. It is a peer-to-peer currency and transaction system based on a decentralized consensus-based public ledger called blockchain that records all transactions.
Now the bitcoin was envisaged in 2008 by Satoshi Nakamoto but it was a product of many decades of research into cryptography and blockchain and not just one guy’s work. It was the utopian dream of cryptographers and free trade advocates to have a borderless, decentralized currency based on the blockchain. Their dream is now a reality with the growing popularity of bitcoin and other altcoins around the world.
Now the cryptocurrency was first deployed over the consensus-based blockchain in 2009 and the same year it was traded for the very first time. In July 2010, the price of bitcoin was just 8 cents and the number of miners and nodes was quite less compared to tens of thousands in number right now.
Within the space of one year, the new alternative currency had risen to $1 and it was becoming an interesting prospect for the future. Mining was relatively easy and people were making good money making trades and even paying with it in some cases.
Within six months, the currency had doubled again to $2. While the price of bitcoin is not stable at a particular price point, it has been showing this pattern of insane growth for some time. In July 2011 at one point, the coin went bonkers and the record-high $31 price point was achieved but the market soon realized that it was overvalued compared to the gains made on the ground and it recorrected it back to $2.
December 2012 saw a healthy increase to $13 but soon enough, the price was going to explode. Within four months till April 2013, the price had increased to a whopping $266. It corrected itself later on back to $100 but this astronomical increase in price rose it stardom for the very first time and people started debating about an actual real-world scenario with Bitcoin.
It was around that time that I got acquainted with the new currency. I had my doubts but as I read more about it, the more it became clear that the currency was the future as it had no one to manipulate it or impose itself on it. Everything had to be done with complete consensus and that was what made it so strong and free.
So 2013 was the breakthrough year for the currency. Big companies began to publicly favor the acceptance of bitcoin and blockchain became a popular subject for Computer Science programs. Many people then thought that bitcoin had served its purpose and now it would settle down.
But, the currency became even more popular, with bitcoin ATMs being set up around the world and other competitors started flexing their muscles on different angles of the market. Ethereum developed the first programmable blockchain and Litecoin and Ripple started themselves as cheaper and faster alternatives to bitcoin.
The magical figure of $1000 was first breached in January 2017 and since then it has increased four times already till September. It is truly a remarkable achievement for a coin that was only worth 8 cents just seven years back.
Bitcoin even survived a hard fork on August 1, 2017, and has risen nearly 70% since then while even the fork bitcoin cash has managed to post some success. All of it is due to the appeal of the coin and stellar blockchain technology behind it.
While coventional economists argue that it is a bubble and the whole crypto world would collapse, it is just not so. There is no such bubble since it is an observable fact that it has, in fact, eaten away the shares of the fiat currencies and money transaction corporations.
The future is extremely bright for bitcoin and it is never too late to invest in it, both for short-term and long-term.
Cryptocurrency for Beginners
In the early days of its launch in 2009, several thousand bitcoins were used to buy a pizza. Since then, the cryptocurrency’s meteoric rise to US$65,000 in April 2021, after its heart-stopping drop in mid-2018 by about 70 percent to around US$6,000, boggles the mind of many people – cyptocurrency investors, traders or just the plain curious who missed the boat.
How it all began
Bear in mind that dissatisfaction with the current financial system gave rise to the development of the digital currency. The development of this cryptocurrency is based on blockchain technology by Satoshi Nakamoto, a pseudonym apparently used by a developer or group of developers.
Notwithstanding the many opinions predicting the death of cryptocurrency, bitcoin’s performance has inspired many other digital currencies, especially in recent years. The success with crowdfunding brought on by the blockchain fever also attracted those out to scam the unsuspecting public and this has come to the attention of regulators.
Beyond bitcoin
Bitcoin has inspired the launching of many other digital currencies, There are currently more than 1,000 versions of digital coins or tokens. Not all of them are the same and their values vary greatly, as do their liquidity.
Coins, altcoins and tokens
It would suffice at this point to say there are fine distinctions between coins, altcoins and tokens. Altcoins or alternative coins generally describes other than the pioneering bitcoin, although altcoins like ethereum, litecoin, ripple, dogecoin and dash are regarded as in the ‘main’ category of coins, meaning they are traded in more cryptocurrency exchanges.
Coins serve as a currency or store of value whereas tokens offer asset or utility uses, an example being a blockchain service for supply chain management to validate and track wine products from winery to the consumer.
A point to note is that tokens or coins with low value offer upside opportunities but do not expect similar meteoric increases like bitcoin. Put simply, the lesser known tokens may be easy to buy but may be difficult to sell.
Before getting into a cryptocurrency, start by studying the value proposition and technological considerations viz-a-viz the commercial strategies outlined in the white paper accompanying each initial coin offering or ICO.
For those familiar with stocks and shares, it is not unlike initial public offering or IPO. However, IPOs are issued by companies with tangible assets and a business track record. It is all done within a regulated environment. On the other hand, an ICO is based purely on an idea proposed in a white paper by a business – yet to be in operation and without assets – that is looking for funds to start up.
Unregulated, so buyers beware
‘One cannot regulated what is unknown’ probably sums up the situation with digital currency. Regulators and regulations are still trying to catch up with cryptocurrencies which are continuously evolving. The golden rule in the crypto space is ‘caveat emptor’, let the buyer beware.
Some countries are keeping an open mind adopting a hands-off policy for cryptocurrencies and blockchain applications, while keeping an eye on outright scams. Yet there are regulators in other countries more concerned with the cons than pros of digital money. Regulators generally realise the need to strike a balance and some are looking at existing laws on securities to try to have a handle on the many flavours of cryptocurrencies globally.
Digital wallets: The first step
A wallet is essential to get started in cryptocurrency. Think e-banking but minus the protection of the law in the case of virtual currency, so security is the first and last thought in the crypto space.
Wallets are of the digital type. There are two types of wallets.
- Hot wallets that are linked to the Internet which put users at risk of being hacked
- Cold wallets that are not connected to the Internet and are deemed safer.
Apart from the two main types of wallets, it should be noted that there are wallets just for one cryptocurrency and others for multi-cryptocurrency. There is also an option to have a multi-signature wallet, somewhat similar to having joint account with a bank.
The choice of wallet depends on the user’s preference whether the interest purely in bitcoin or ethereum, as each coin has its own wallet, or you can use a third-party wallet that include security features.
Wallet notes
The cryptocurrency wallet has a public and private key with personal transaction records. The public key includes reference to the cryptocurrency account or address, not unlike the name required for one to receive a cheque payment.
The public key is available for all to see but transactions are confirmed only upon verification and validation based on the consensus mechanism relevant to each cryptocurrency.
The private key can be considered to be the PIN that is commonly used in e-financial transactions. It follows that the user should never divulge the private key to anyone and make back-ups of this data which should be stored offline.
It makes sense to have minimal cryptocurrency in a hot wallet while the bigger amount should be in a cold wallet. Losing the private key is as good as losing your cryptocurrency! The usual precautions about online financial dealings apply, from having strong passwords to being alert to malware and phishing.
Wallet formats
Different types of wallets are available to suit individual preferences.
- Hardware wallets made by third parties which have to be purchased. These devices work somewhat like a USB device which is deemed safe and only connected when required to the Internet.
- Web-based wallets provided, for example, by crypto exchanges, are considered hot wallets which purt users at risk.
- Software-based wallets for desktops or mobiles are mostly available for free and could be provided by coin issuers or third parties.
- Paper-based wallets can be printed bearing the relevant data about the cryptocurrency owned with public and private keys in QR code format. These should kept in a safe place until required in the course of crypto transaction and copies should made in case of accidents such as water damage or printed data fading through passage of time.
Crypto exchanges and marketplaces
Crypto exchanges are trading platforms for those interested in virtual currencies. The other options include websites for direct trading between buyers and sellers as well as brokers where there is no ‘market’ price but it is based on compromise between parties to the transaction.
Hence, there are many crypto exchanges located in various countries but with differing standards of security practices and infrastructure. They range from ones allowing for anonymous registration requiring just email to open an account and start trading. Yet there are others that require users to comply with international identity confirmation, known as Know-Your-Customer, and anti-money laundering (AML) measures.
The choice of crypto exchange depends on the user’s preference but anonymous ones may have limitations on the extent of trading allowed or could be subject to sudden new regulations in the country of domicile of the exchange. Minimal administrative procedures with anonymous registration let users start trading quickly while going through KYC and AML processes will take more time.
All crypto trades have to be duly processed and validated which can take from few minutes to few hours, depending on the coins or tokens being transacted and volume of trade. Scalability is known to be an issue with cryptocurrencies and developers are working on ways to find a solution.
Cryptocurrency exchanges are in two catergories.
- Fiat-cryptocurrency Such exchanges provide for fiat-cryptocurrency purchase via direct transfers from bank or credit and debit cards, or via ATMs in some countries.
- Cryptocurrency only.There crypto exchanges dealing in cryptocurrency only, meaning customers must already own a cryptocurrency – such as bitcoin or ethereum, – to be ‘exchanged’ for other coins or tokens, based on market rate
Fees are charged to facilitate the purchase and sale of crypto currencies. Users should do the research to be satisfied with the infrastructure and security measures as well as to determine the fees they are comfortable as different rates charged by various exchanges.
Do not expect a common market price for the same cryptocurrency with difference exchanges It may be worthwhile to spend time doing research on the best price for coins and tokens that are of interest to you.
Financial transactions online carry risks and users should factor in the caveats such as two factor authentication or 2-FA, keeping updated on the latest security measures and being aware of phishing scams. One golden rule on phishing is not to click on links provided, no matter how authentic a message or email is.
Bitcoin Thrives Against All Odds
Since it’s currently en vogue right now, I’d like to announce that I’m launching my own cryptocurrency next week.
Let’s call it “kingcoin.”
Nah, that’s too self-serving.
How about “muttcoin”? I’ve always had a soft spot for mixed breeds.
Yeah, that’s perfect – everybody loves dogs.
This is going to be the biggest thing since fidget spinners.
Congrats! Everyone reading this is going to receive one muttcoin when my new coin launches next week.
I’m going to evenly distribute 1 million muttcoins. Feel free to spend them wherever you like (or wherever anyone will accept them!).
What’s that? The cashier at Target said they wouldn’t accept our muttcoin?
Tell those doubters that muttcoin has scarcity value – there will only ever be 1 million muttcoins in existence. On top of that, it’s backed by the full faith and credit of my desktop computer’s 8 GB of RAM.
Also, remind them that a decade ago, a bitcoin couldn’t even buy you a pack of chewing gum. Now one bitcoin can buy a lifetime supply.
And, like bitcoin, you can store muttcoin safely offline away from hackers and thieves.
It’s basically an exact replica of bitcoin’s properties. Muttcoin has a decentralized ledger with impossible-to-crack cryptography, and all transactions are immutable.
Still not convinced our muttcoins will be worth billions in the future?
Well, it’s understandable. The fact is, launching a new cryptocurrency is much harder than it appears, if not downright impossible.
That’s why I believe bitcoin has reached these heights against all odds. And because of its unique user network, it will continue to do so.
Sure, there have been setbacks. But each of these setbacks has eventually resulted in higher prices. The recent 60% plunge will be no different.
The Miracle of Bitcoin
Bitcoin’s success rests in its ability to create a global network of users who are either willing to transact with it now or store it for later. Future prices will be determined by the pace that the network grows.
Even in the face of wild price swings, bitcoin adoption continues to grow at an exponential rate. There are now 23 million wallets open globally, chasing 21 million bitcoins. In a few years, the number of wallets can rise to include the 5 billion people on the planet connected to the internet.
Sometimes the new crypto converts’ motivation was speculative; other times they were seeking a store of value away from their own domestic currency. In the last year, new applications such as Coinbase have made it even easier to onboard new users.
If you haven’t noticed, when people buy bitcoin, they talk about it. We all have that friend who bought bitcoin and then wouldn’t shut up about it. Yes, I’m guilty of this – and I’m sure quite a few readers are too.
Perhaps subconsciously, holders become crypto-evangelists since convincing others to buy serves their own self-interest of increasing the value of their holdings.
Bitcoin evangelizing – spreading the good word – is what miraculously led to a price ascent from $0.001 to a recent price of $10,000.
Who could have imagined that its pseudonymous creator, fed up with the global banking oligopoly, launched an intangible digital resource that rivaled the value of the world’s largest currencies in less than a decade?
No religion, political movement or technology has ever witnessed these growth rates. Then again, humanity has never been as connected.
The Idea of Money
Bitcoin started as an idea. To be clear, all money – whether it’s shell money used by primitive islanders, a bar of gold or a U.S. dollar – started as an idea. It’s the idea that a network of users value it equally and would be willing to part with something of equal value for your form of money.
Money has no intrinsic value; its value is purely extrinsic – only what others think it’s worth.
Take a look at the dollar in your pocket – it’s just a fancy piece of paper with a one-eyed pyramid, a stipple portrait and signatures of important people.
In order to be useful, society must view it as a unit of account, and merchants must be willing to accept it as payment for goods and services.
Bitcoin has demonstrated an uncanny ability to reach and connect a network of millions of users.
One bitcoin is only worth what the next person is willing pay for it. But if the network continues to expand at an exponential rate, the limited supply argues that prices can only move in one direction… higher.
The Bottom Line
Bitcoin’s nine-year ascent has been marked with enormous bouts of volatility. Therewas an 85% correction in January 2015, and a few others over 60%, including a colossal 93% drawdown in 2011.
Through each of these corrections, however, the network (as measured by number of wallets) continued to expand at a rapid pace. As some speculators saw their value decimated, new investors on the margin saw value and became buyers.
The abnormal levels of volatility are actually what helped the bitcoin network grow to 23 million users.
Hey, maybe we just need some price volatility in muttcoin to attract new users…
Top Cryptocurrencies for 2018: What Are the Best Bitcoin Alternatives?
Important: This position should not be considered as an investment council. The author focuses on the best coins in terms of actual use and adoption, not from a financial or investment perspective.
In 2017, cryptographic markets set the new standard for simple profits. Almost every piece or chip made incredible returns. “A rising tide throws all the boats,” as they say, and the end of 2017 was a deluge. The increase in prices has created a positive feedback cycle, which is attracting more and more capital into Crypto. Unfortunately, but inevitably, this galloping market is leading to a massive investment. Money has been thrown indiscriminately in all kinds of dubious projects, many of which will not bear fruit.
In the current bearish environment, hype and greed are replaced by a critical assessment and prudence. Especially for those who have lost money, marketing promises, endless shillings, and charismatic oratorios are no longer sufficient. Well, basic reasons to buy or hold a coin are Paramount once again.
Fundamental factors in the evaluation of a cryptocurrency-
There are some factors that tend to conquer the hype and price pumps, at least in the long term:
Adoption Angle
Although the technology of a cryptocurrency or ICO business plan may seem surprising without users, they are just dead projects. It is often forgotten that widespread acceptance is an essential feature of money. In fact, it is estimated that over 90% of the value of Bitcoin is a function of the number of users.
While the acceptance of Fiat is entrusted by the State, the acceptance of cryptography is purely voluntary. Many factors play in the decision to accept a coin, but perhaps the most important consideration is the likelihood that others will accept the coin.
Security
Decentralization is essential for the I push Model of a true cryptocurrency. Without decentralization, we have a little closer to a Ponzi scheme than a real cryptocurrency. Trust in individuals or institutions is the problem-a cryptocurrency tries to solve.
If the dismantling of a coin or a central controller can change the transaction record, it is questioning its basic security. The same applies to parts with unproven code that have not been thoroughly tested over the years. The more you can count on the code to function as described, regardless of human influence, the greater the security of a coin.
Innovation
Valid coins strive to improve their technology, but not at the expense of safety. Real technological progress is rare because it requires a lot of expertise-and also wisdom. Although there are Always fresh ideas that can be screwed on, if doing so puts vulnerabilities or critics of the original purpose of a coin, misses the point.
Innovation can be a difficult factor to evaluate, especially for non-technical users. However, if a currency code is stagnated or does not receive updates that deal with important issues, it can be a sign that developers are weak about ideas or motivations.
Incentives
The economic incentives inherent in a currency are easier to grasp for the average person. If a coin had a large pre-mine or an ICO (initial part offer) the team held a significant share of chips, then it is quite obvious that the main motivation is the profit. By purchasing what the team offers, you play your game and enrich it. Be sure to provide a tangible and reliable value in return.
5 cryptocurrencies to buy in 2018
There has never been a better time to re-evaluate and balance a cryptographic portfolio. Based on their solid foundation, here are five pieces that I feel are worth sticking to or maybe buy at their current depressive prices (which, just warning, could go lower).
#1. Bitcoin (because of its decentralization)
The number one belongs to Bitcoin (BTC), which remains the market leader in all categories. Bitcoin has the highest price, the widest assumption, most of the security (because of the phenomenal energy consumption of Bitcoin mining), the most famous brand identity (the forks have tried to be appropriate), and most of the development Active and rational. It is also the only piece to date that is represented in the traditional markets in the form of Bitcoin futures trading on the American CME and CBOE.
Bitcoin remains the main engine; The performance of all other parts is highly correlated with the Bitcoin performance. My personal expectation is that the gap between Bitcoin and most-if not all-other parts will expand.
Bitcoin has several promising innovations in the pipeline that will soon be installed as additional layers or soft forks. Examples are the Flash system (LN), the tree, Schnorr signatures Mimblewimbleund much more.
In particular, we plan to open a new range of applications for Bitcoin, as it allows for large-scale, microtransactions and instant and secure payouts. LN is increasingly stable as users test their different possibilities with real Bitcoin. As it becomes easier to use, it can be presumed to benefit greatly from the adoption of Bitcoin.
#2. Litecoin (because of its persistence)
Litecoin (LTC) is a clone of Bitcoin with a different hash algorithm. Although Litecoin no longer has the anonymity technology of Bitcoin, amazing reports have shown that the adoption of Litecoin in the dark markets is now second, the only bitcoin. Although a currency that I have much more appropriate for the role of acquiring illegal goods and services, perhaps this presents itself as a result of the longevity of Litecoin: It was launched at the end of 2011.
Another factor in Litecoin’s favor is that it integrates the Bitcoin SegWit technology, which means that Litecoin is prepared for LN. The Litecoin can benefit from an exchange of atomic chains. In other words, secure peer-to-peer trading of currencies without third parties (i.e. exchange) participation. Since Litecoin keeps its code largely synchronized with Bitcoin, it is well positioned to benefit from the technical progress of Bitcoin.
#3. Ethereum (because of intelligent contracts)
Ethereum (ETH) has some major problems at the moment. First of all, governments are cracking on ICO, and rightly so: many have turned out to be either fraudulent or bankruptcies. Since most ico run on the Ethereum network as an ERC token 20, the ICO mania has brought a lot of value to Ethereum in recent years. If the appropriate rules are taken to protect investors Ethereum projects scams can claim a certain legitimacy as a crowdfunding platform.
The second major problem facing Ethereum is the delayed transition to a new hybrid work and battery detection system. Ethereum mining GPU is currently profitable, but Bitmain has just announced Ethereum ASIC minor, which is likely to have an impact on the lower lines of GPU miners. It remains to be seen whether this will change the POW-and how successful this change is going to be.
If the Ethereum can survive these two major problems-regulation and mining-will have shown a great resilience. Otherwise, there are several competing currencies tracking its shadows, such as Ethereum Classic (etc), Cardano (ADA) and EOS.
#4. Monero (because of his anonymity)
Although its adoption in the dark markets is not all that could be expected, I (XMR) remains the privacy of the Prime Minister. His reputation and market capitalization are still above those of his rivals-and for good reason.
Monero’s code requires less confidence that the Zcash “loyal” key ceremony, and had a fair start, unlike Dash. That Monero recently changed his Pow to defeat the development of a small ASIC for his algorithm confirms the commitment of the piece of mining decentralization. A significant drop in the hash rate is due to the new version, which is consistently reported against ASIC. This could also be an opportunity for GPU and even minor CPUs to get back to me. The new version of Monero, 0.12, also includes other improvements that show Monero continue to grow along sensitive lines.
#5. iPRONTO (A decentralized incubation platform)
iPRONTO is an incubation platform Ethereum chain dedicated to investors looking for a safe and reliable platform to invest in new ideas and future innovators that can present their ideas and receive opinions from users, Experts in the field on the practice and implementation of derived ideas.
The ideas of the innovators are supported as the NES in Smart Contract format will be signed between the expert platform and the customer if the business idea of the client to the Committee for the examination and registration on the platform. The idea will not be published for all users on the public platform of the chain, but only for selected members of the target community who are willing to sign the Smart contract to maintain the confidentiality of the idea.