Everyone has heard how Bitcoin and other cryptocurrencies have made millionaires of those who bought only a year ago. Profits of 1000% or more are not just possible, they are common with many of these cryptocurrencies. Someone who bought Bitcoin in May 2016 at less than $500 would have a 1400% profit in about 17 months. Then in the last few days we have seen Bitcoin lose almost $1000, so to say that these cryptocurrencies are volatile would be a huge understatement.
Since the inception of Bitcoin in 2008, we at Trend News have been skeptical about the ability of cryptocurrencies 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 that this technology will be a significant disruptor in the way data is managed, and that it will affect every sector of the global economy, similar to how the Internet has affected media.
Here are some questions and answers to get you started…
Q: What are cryptocurrencies?
The most famous crypto currency (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 believed to be 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 upcoming news posts.
Q: What is BLOCKCHAIN?
Blockchain is the technology that underlies all CCs. Every 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 explored for applications in many other industries.
Q: Are CC exchanges regulated by the government?
For the most part, the answer is NO, which for some consumers is a big draw in this market. It’s the “wild west” at the moment, but governments in most developed countries are studying this market to decide what regulation might be needed. A big decision is whether to treat CC as a currency or as a commodity / security. Canada and the US have so far declared CCs to be legal, but the situation remains volatile 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 a broker. You start by selecting an exchange, creating an account, and transferring fiat currency into your account. You can then place your BUY and SELL CC orders. There are many exchanges around the world. Opening an account is relatively easy and all these exchanges have their own rules for initial funding and withdrawals.
Crypto TREND will recommend CC Exchanges in the future.
Q: Where do I keep my CC?
To have the freedom to move your cryptocurrencies and pay 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 are FREE, but 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 cryptocurrency is growing rapidly and includes big hits like Microsoft, GAP, JC Penny, Expedia, Shopify, Bloomberg.com, Dish Network, Zynga, Subway and WordPress.
Q: What’s next?
To begin with, we will keep each of the Crypto TREND articles short and keep the scope of each one as narrow as possible. As we noted earlier, we believe that cryptocurrency technology will be a game-changer and potential investment opportunities like this come along once or twice in a lifetime. Make no mistake, early investing 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 an advantageous position to take advantage of 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. It is a volatile market and may not appeal to all investors, but Crypto TREND will be your guide if and when you are ready.
Stay on the line!