Everyone has heard how Bitcoin and other cryptocurrencies have made millionaires out of those who bought a year ago. Profits of 1000% or more are not only possible, but common for many of these cryptocurrencies. Someone who bought Bitcoin in May 2016 for less than $500 would have a 1,400% gain in about 17 months. Then in the past few days we have seen Bitcoin lose almost $1,000, so it would be hard to say that these cryptocurrencies are unstable.
Since Bitcoin’s inception in 2008, we at Trend News have been skeptical of cryptocurrencies’ ability to survive, given that they pose a very clear threat to governments that want to see and tax all transactions. But while we may still be wary of actual cryptocurrencies, we are very aware of the potential of the underlying technology that powers these electronic currencies. In fact, we believe this technology will be a significant disruption in data management and will affect every sector of the global economy, much like the Internet has affected media.
Here are some questions and answers to get you started…
Q: What are cryptocurrencies?
The most famous cryptocurrency (CC) is BITCOIN. It was the first CC, launched in 2008. Today there are more than 800 CCs, including Ethereum, Litecoin, Dash, Zcash, Ripple, Monero, and they are all “virtual”. There are no “physical” coins or currency.
Q: How do CCs work?
CCs are virtual currencies that exist in very large distributed databases. These databases use BLOCKCHAIN technology. Because each Blockchain database is widely distributed, it is considered immune to hacking, as there is no central point of attack and every transaction is visible to everyone on the network. Each CC has a group of administrators, often called “miners”, who validate transactions. One CC called Ethereum uses “smart contracts” to validate transactions. Crypto TREND will provide more details in the next news.
Q: What is BLOCKCHAIN?
Blockchain is the technology that underpins all CCs. Each transaction to buy, sell or exchange CC is entered into a BLOCK which is added to the chain. This technology is complex and will not be explained here, but it has the potential to revolutionize the financial services industry, as transactions can be completed quickly and easily, reducing or eliminating fees. The technology is also being tested for application in many other industries.
Q: Are CC exchanges regulated by the government?
Mostly the answer is NO, which for some users is a big attraction of this market. It’s the “wild west” at the moment, but governments in most developed countries are examining this market to decide what regulation might be needed. The big decision is whether to treat CC as a currency or a commodity/security. Canada and the US have so far declared CCs to be legal, however the situation remains fluid in terms of reporting and tax implications. Crypto TREND will monitor and report on these developments.
Q: How do I invest in this market?
You can buy, sell and exchange CC using the services of specialized “Exchanges” that act as brokerage. You start by choosing an exchange, setting up an account, and transferring fiat currency to your account. You can then place your BUY and SELL CC orders. There are many exchanges around the world. Opening an account is quite simple and all these exchanges have their own rules about initial funding and withdrawals.
Crypto TREND will recommend CC exchanges in the future.
Q: Where do I store my CC?
To have the freedom to move your cryptocurrencies and pay your bills, you will need to have a digital wallet. These wallets come in several formats, such as desktop, cloud-based, hardware (USB), mobile and paper. Many of them are FREE, however, security is a big factor as no one ever wants to lose their wallet or have it stolen. Crypto TREND will recommend digital wallets in the future.
Q: What can I do with my CC?
In addition to investing in CC products, you can also use cryptocurrency for some financial transactions, such as money transfers and bill payments. The list of companies accepting cryptocurrencies is growing rapidly and includes major players such as Microsoft, GAP, JC Penny, Expedia, Shopify, Bloomberg.com, Dish Network, Zynga, Subway and WordPress.
Q: What’s next?
In the beginning, we will keep each Crypto TREND article short and keep the scope of each one as narrow as possible. As we mentioned earlier, we believe that cryptocurrency technology will be a game changer and that potential investment opportunities like this will come around once or twice in a lifetime. Make no mistake, an early investment in this sector will only be for your most speculative capital, money you can afford to lose.
Even if you don’t want to invest right now, understanding this new disruptive technology early will put you in a good position to profit from our recommendations as we move forward.
Expect to see more news and specific recommendations from Crypto TREND as we begin this journey into what may at first seem like a foreign jungle. This is a volatile market and may not appeal to all investors, however, Crypto TREND will be your guide if and when you are ready.