Cryptocurrency is a rapidly growing asset class, with more and more people trying to get involved.
In this article, we will introduce cryptocurrencies, discuss some of the largest cryptocurrencies and some of the issues surrounding them.
At Coin Fire, we run a piece of in-depth cryptocurrency news and trading analysis service.
Over the past couple of years, we have been focussing on trying to educate ourselves about the world of cryptocurrencies and building a trading platform that allows people to easily trade using the best crypto trading app and wallets available.
Introducing Crypto trading
In this series of articles, we will walk you through what Crypto trading is, where it stands compared to traditional financial markets, and provide a few tips on how to get started.
What is Cryptocurrency?
Cryptocurrency is a type of digital currency, which means it is digital, like electronic money.
Each cryptocurrency has its own dedicated blockchain, which is a decentralized and highly secure digital ledger of transactions.
You can create your own cryptocurrency, and people are also working to create an open-source, decentralized cryptocurrency, called Ethereum, which, like bitcoin, can be stored electronically on a hard drive or a mobile device, and is often called a ‘token’ or a ‘coin’.
Let’s take a look at a couple of popular coins, and how they work.
The biggest, most invested and best-known cryptocurrency, bitcoin was created in 2009 by an unknown person or group. At its launch price of $0.10, bitcoin cost about the same as a single US cent, and as of 1 December 2017, the total number of bitcoin in circulation has reached a total of 17,336,989, according to Coinmarketcap.
The transaction fee is 0.0009 of a bitcoin (10 cents) and the security is split between transaction processors and miners (users of bitcoin software to run the validation of transactions). The mining process is not free and requires energy and resources, with the reward being divided up among the bitcoin miners.
Is Bitcoin losing its shine?
Cryptocurrencies are a fairly young industry, and the number of cryptocurrencies has grown dramatically since their creation. The number of cryptocurrencies has exploded over the last year and as of November 2017, there were nearly 3,600 cryptocurrencies, according to Coinmarketcap. This has resulted in a large number of cryptocurrencies being dumped, with more and more coming online.
Bitcoin’s sharp rise this year has also led to a lot of speculation and, in turn, a lot of skepticism surrounding the currency. There were many reasons behind the success of bitcoin.
However, it is difficult to say exactly which cryptocurrency will replace bitcoin – it may be that some will perform better than others and there will always be a demand for a cryptocurrency that offers fast transaction times and security.
Bitcoin has suffered from government pressure in the past, most notably when China announced that it would outlaw all cryptocurrency trading and initial coin offerings (ICOs).
Still, it has made it past government attempts to suppress cryptocurrencies, including those in the US. In 2016, New York state proposed legislation that would ban cryptocurrency in the state, but backed down and ultimately backed off from plans to enforce the law after a massive backlash.
It’s worth mentioning that the Winklevoss twins, Tyler and Cameron, who are billionaires and avid bitcoin investors, have made public offers to purchase all of the outstanding bitcoin at $20,000 (or about 20,000 BTC), which would represent a premium of over $40 billion.
It remains to be seen which cryptocurrency will be the real cryptocurrency of choice. If you are looking for the best cryptocurrency exchanges in Australia then we are really happy to say that there are many option available as of now.
Check Out: Pros and cons of cryptocurrency
Ethereum was created in 2014 by Vitalik Buterin, a Russian-Canadian developer. Originally, the currency was called ‘ether’, but as of October 2017, it was renamed ‘ether’, in an attempt to separate it from bitcoin.
The currency is mined, and therefore one ether is worth about $1. Some believe Ethereum will replace bitcoin because of its bigger and more sophisticated applications. Ether is currently used for other cash.
Ethereum’s application possibilities include the development of ‘smart contracts or contracts that are automatically executed and executed in a set time period, called ‘blockchains’. Smart contracts can, for example, allow a company to execute a contract on a certain date, and then a payout happens when the contract is completed.
Unfortunately, Ethereum has suffered from a significant valuation decline. Bitcoin’s rise and fall have made Ethereum less popular than it was just a year ago.
A way to ensure the value of your Ether is to choose a long-term investment strategy. A strategy that can give you a 100% probability of a $1,000 return in five years.