A cryptocurrency is a digital currency that is created and managed through the use of advanced encryption techniques known as cryptography. Cryptocurrency made the leap from being an academic concept to (virtual) reality with the creation of Bitcoin in 2009. While Bitcoin attracted a growing following in subsequent years, it captured significant investor and media attention in April 2013 when it peaked at a record $266 per bitcoin after surging 10-fold in the preceding two months. Bitcoin sported a market value of over $2 billion at its peak, but a 50% plunge shortly thereafter sparked a raging debate about the future of cryptocurrencies in general and Bitcoin in particular. So, will these alternative currencies eventually supplant conventional currencies and become as ubiquitous as dollars and euros someday? Or are cryptocurrencies a passing fad that will flame out before long? The answer lies with Bitcoin.
The US hasn’t been immune to these crises, either. The US began its foray into fiat currency with the issuance of Continental Currency in 1775. Just three years later, Continental Currency was worth less than 20% of its original value. 13 years later, hyperinflation entirely collapsed the currency, and the US had to pass a law guaranteeing that all future currencies would be backed by gold and silver, and that no unbacked currencies could be issued by any state.
Bitcoin fundamentally changes this equation. Unlike even gold, bitcoin is nigh impossible, when stored correctly, for anyone to confiscate without consent. The addresses at which bitcoin values are stored are protected by ‘private keys’, which can be thought of as a password or a key to a lockbox. Without this private key, it is generally impossible to steal the bitcoins held at the public address to which the private key corresponds. So long as you keep this private key secure, your bitcoins are secure.
Hence, no rationally self-interested bitcoin miner would ever try to mount a 51% attack, as in all likelihood, they would lose massive amounts of money doing so and gain almost nothing from the effort. The only reason someone would want to conduct a 51% attack is to attempt to destroy faith in bitcoin — large governments, for instance, who might one day feel that their fiat currencies that presently provide them great value to them are becoming threatened by bitcoin. However, the likelihood even of these enormous entities to successfully conduct a 51% attack is already becoming vanishingly small, as mining power increases.
Many investors are nervous about trying to invest directly in bitcoin, given the high-profile hackings of several major bitcoin exchanges over the years. The Bitcoin Investment Trust (NASDAQOTH:GBTC) offers an alternative method of investing in cryptocurrency, making it possible to buy shares of an entity that itself holds a substantial amount of bitcoin. Here, we'll take a closer look at Bitcoin Investment Trust to see if it's worth adding to your portfolio.
Now that the benefits of a long term-investment strategy have been made clear, it is also important to consider which cryptocurrencies you want in your long-term portfolio, or how to build your portfolio. Before that, let’s identify some indicators that we can use to measure the potential of the crypto project in the long term. These are just a few indicators that we have identified; feel free to include yours in the comments section below.
What I ended up learning was something the smartest people in the investment world had learned a long time ago. Benjamin Graham, the mentor of Warren Buffett, who became the richest man in the world by practicing the principle of value investing, has a pretty wonderful analogy that I think is worth repeating here. You should buy your stocks (or any investment, generally) like you buy your groceries — not like you buy your perfume.
Beyond that, for most people, the best (i.e. simplest) way to invest in bitcoin starts with setting up a cryptocurrency wallet. Some of the better-known sites where you can do this are Coinbase, Bitstamp and Bitfinex, although there are a number of other platforms out there, as well. Once you establish an account, connect it to your payment source — a bank account or a credit or debit card — via two-factor authentication. Of note: It’s important to use a tool like Google Authenticator rather than just relying on text-based authentication, which can be more vulnerable to cybertheft, when investing in bitcoin.
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Cardano (ADA) is a fully open-source, decentralized, public blockchain and cryptocurrency. Cardano is very similar to Ethereum, and the team wants to build on that. Cardano aims to operate a global smart-contract platform which will deliver much more advanced features compared to its competitors. Loads of existing investors are excited because Cardano is the first blockchain founded on scientific philosophy, and also the very first provably secure proof of stake algorithm.
If the underlying blockchain won’t be the one to be used, the application is definitely doomed. If, for example, Ethereum fails to scale, its applications will fail to deliver. I do believe that the utility tokens that will enter the mainstream will do so by creating a service that’s much better than anything we have right now. These will be the so-called “killer applications,” whose returns will be beyond imagination. High risk, high reward.
This type of cryptocurrency is on the rise. In this model, a cryptocurrency represents the value of an underlying asset such as gold, art, fiat currencies, etc. It represents a new, more accessible way to invest in assets other than cryptocurrencies, through cryptocurrencies. Stable coins provide an excellent way to take shelter from a corrective storm. I’m only interested in projects leveraging blockchain technology to create completely new business models and disrupting existing ones, but these cryptos are very interesting nonetheless.
You have to be the best story in the entire world of crypto currency that I have heard to date, and I have to say that you have got to be feeling about the best in your life! Congrats! I’m not anywhere near the same, but quite the opposite I might have to say. I’m learning as I go, and I have never been so dedicated to my success and I’m more interested in this as my possibly one chance to get to pay for the rest of my Mom’s mortgage and let her stop driving a school bus all to pay for a single signature that she was trying to get dinner for 7 as always and with 2&4 year old girls screaming and the stress that I now have as a little bit of motivation to help. Only one little signature from her husband and my step father, with no explanation, well, he’s passed on and the grieving process was not enough, she’s just been buried with a contract that she is the responsible person for the signature that 25 years later is a million dollar loan and the details are not my business but I’m told it has ballooned to be several million with the late fees and penalties… if you have any time to contact me please send me a message through Facebook or email. I just need a little more of a clear strategy and I just don’t have anyone to ask that has any level of success as you
Tom is a cryptocurrency expert and investor from Edinburgh, United Kingdom, with over 5 years of experience in the field. He holds an MA in diplomacy and BA in politics from the University of Nottingham, giving him a firm understanding of the social implications and political factors in cryptocurrency. He believes in long-term projects rather than any short term gains, and is a strong advocate of the future application of blockchain technology. Contact Tom: [email protected]
When all is said and done, there will hence be 21 million bitcoins. Exactly that, no more, no less. Elegant, no? This eliminates yet another risk with extant currencies, gold included: there are absolutely no surprises when it comes to knowing the present and future supply of bitcoin. A million bitcoin will never be found randomly in California one day and incite a digital gold rush.
I don’t chase the market. I have, and I have been burned. FOMO is not part of my strategy and I covered this in my blog. When a coin is making a parabolic move, and you chase it you can easily be caught as it drops back. If something goes up 20x in a short space of time, it has to do another 20x from the original position for you to achieve a 2x. There are always other trades out there.
Please note that virtual currency is a digital representation of value that functions as a medium of exchange, a unit of account, or a store of value, but it does not have legal tender status. Virtual currencies are sometimes exchanged for U.S. dollars or other currencies around the world, but they are not currently backed nor supported by any government or central bank. Their value is completely derived by market forces of supply and demand, and they are more volatile than traditional fiat currencies. Profits and losses related to this volatility are amplified in margined futures contracts.