Cryptocurrency or Crypto for short, is a digital currency that uses cryptography to ensure a transaction. Cryptography is the art of hiding communications from a 3rd party adversary. Bitcoin was the first of these, now there are thousands of alternative Cryptocurrencies.
The encryption technology makes this a trustless transaction, meaning you don’t have to worry about sending a transaction online because your transaction is encrypted and secure.
If I am using a credit card, I have to send my number and information to a company which I have to trust to keep that information confidential. How many times have we heard about companies being hacked and all credit card information being stolen?
Blockchain takes care of this as
no one can access your coins unless you give them your private key. If your key is properly stored offline on a Trezor, Ledger or a
paper wallet then you are completely safe.
Lets look at some popular Crypto coins that have been around for a while.
Bitcoin is the first, biggest and still the cryptocurrency that is trusted above all other
coins. It has been through the ringer,
tested, hacked had everything but the kitchen sink thrown at it and yet its
still the top coin in value and market share.
There are many coins that have faster transaction rates and have
more potential, but as of right now Bitcoin is the grandfather of all the
coins. Ethereum is a competitor taking Bitcoin technology to a new level.
Ethereum was made with the idea of creating smart contracts so other applications could
be written and then included onto the Ethereum network. A smart contract is programming an agreement such as buying Bitcoin from a seller at a given price, that can be compiled into the Ethereum Blockchain. There are thousands of cryptos running on the Ethereum blockchain.
Litecoin is a crypto that was created in 2011 by Charlie Lee with the idea of creating blocks in 2.5 minutes instead of
the 10 minutes that Bitcoin takes.
Litecoin uses the Lightning Network which can make transactions outside
of the blockchain by opening direct channels or tunnels.
This makes the transactions super fast, but it also utilizes more
oversite so the transactions can remain trustless.
Bitcoin Cash was a hard fork of Bitcoin in August of 2017. It was created to increase speed of
transactions so this could be more of a digital currency then Bitcoin’s store
of value investment concept. Those who
had Bitcoin when this hard fork was implemented received BCH at $240 each.
These are some more mature and well known Cryptos, not necessarily the best investing coins available. There are pros and cons to many of the crypto alt coins and it helps to see which ones are up and comers with tons of potential or the ones that are not.
Alt coins are very volatile meaning certain coins can skyrocket 100s of percent then crash just as fast. Bitcoin was at $20,000 at the end of 2017 then tumbled all the way down to $3100. Investing in Cryptocurrency takes very thick skin, but those who are smart and don’t give into the emotions will have the opportunity of a lifetime IMO.
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May 31, 20 05:17 PM