In case you may have missed it, the world is currently being taken by storm. Cryptocurrencies are nearly everywhere and all investors want to get a piece of the action. Coins such as Ethereum and Bitcoin are now joined by a whole host of others such as Litecoin and Ripple.
Why is the world going crazy for these coins? Why are they driving so much interest and why are their prices going through the roof?
We will answer all of these questions in our analysis below.
Basic introduction to Cryptocurrencies
Cryptocurrencies are essentially transactions that have been crypographically signed, verified and placed on an immutable public ledger. They are digital assets in the sense that they can be sent to anyone else on a public ledger that makes use of blockchain technology.
These currencies, such as Bitcoin, are also limited in supply to a certain maximum amount. This means that there is a certain number above which no more coins can be “mined”.
What is most interesting about these crypotcurrencies is that no one issues them. Unlike with traditional Fiat money there is no central issuing authority that is in control of the issuance of these crypto assets. They are created by miners (computers) on the network.
Another really great benefit of cryptocurrencies is that they are secure and cannot be faked. Unlike with paper money, cryptocurrencies are secured by the most advanced cryptographic disciplines that cannot be forged.
Lastly, because there is only going to ever be a certain amount of Bitcoin ever created, this means that the coins are naturally deflationary. In other words, the value of the coins should go up in time as the limited supply becomes well known.
Why Cryptocurrencies will Overtake
Back in 2011, cryptocurrency was considered a simple plaything of computer scientists. They were looked on as a weird concept that had no chance of ever surpassing traditional money.
The computer scientists developed it because they felt that the financial institutions had let the country down during the financial crisis. They wanted an alternative that would give people trust.
Out came Bitcoin. A currency that is only as powerful as those that use it. It is completely backed by mathematics and established internet protocols. There is no uncertainty around the state of the currency as everyone knows the rules.
Everything is also fully transparent. When the US government bailed out the largest banks on Wall Street and the Federal Reserve pumped billions of dollars into the US economy, no one knew what was going on. There was a sense that the “elite” were undercutting main street.
With Bitcoin and crypto currency, that is not the case. Every transaction since the beginning of time on the Bitcoin blockchain is available for public audit. Everyone can where Bitcoin has flowed and how much.
Yet, even though the Blockchain is public, the identities of the people using it are not. Unlike a bank account, there is no name that is attached to your Bitcoin address. It is only a string of numbers and digits. This means that you have privacy and no “Big Brother” can monitor your transactions and tax you for it.
Simple and Effective
If you want to open a bank account, there are usually a lot of things that they will require before they will allow you the “privilege”. They will want information such as your social security number, proof of address, previous banking history, proof of employment etc.
This can be onerous and take a lot of your time. Moreover, it requires you having to deal with bank employees who are not the most pleasant of people to deal with. Then, when you have a bank account, you have bank at the whim of the bank.
A bank can very quickly and easily freeze your account and lock you out of all your money. This happened during the bank runs in 2008. Moreover, if you want to send funds, it can sometimes take a day or more. If you are sending funds to another country it could take more than 3 days.
Compare all of this to banking with Bitcoin. You can open up a Bitcoin address in a manner of seconds. No one can close you out of your address, you are in full control of it. Moreover, when you send someone Bitccoin, it usually reaches them in a mere manner of seconds. There are also minimal transaction fees on the payment.
How to Trade Bitcoin
If you have decided that you would like to make the conversion and join the digital revolution, then there are a few things that you can do in order to enter a Bitcoin position. Firstly, you will need to find yourself a cryptocurrency broker. One of the best brokers for this is IQ Option. You can read all about their platform and the currencies on offer in this review of IQ Option.
Once you have an account, you can trade Bitcoin just like you would any other currency. You can enter positions and close those positions based on how much it has moved over the past few days. It is also a really volatile currency so make sure that you have stop losses.
How to Buy Bitcoin
If you would prefer to buy the currency and hold it for a long term investment, then you can do that as well. You can use an exchange such as Coinbase. This is then stored on your wallet at Coinbase. You can keep your coins there as long as you like but just make sure that you enable 2 factor authentication.
What was once a novel concept is greatly transforming the way we think about finance, money and technology in general. Bitcoin and cryptocurrncey have entered the public lexicon and are giving people an alternative to the status quo.
No longer will the world of finance be run by the Central bank as well as all the commercial banks who make their bread and butter on the likes of you and me. Bitcoin is giving us the power to take back control.