At first it was just Bitcoin, then we also got Ethereum and Ripple. They are cryptocurrencies, they do not exist but represent one of the most popular assets of the moment. Let’s point out a few points and tips to invest best on them.
A cryptocurrency is a digital asset that is used as a mode of exchange through encryption to make transactions secure and control the creation of new currency.
While there are hundreds of different cryptocurrencies, most of them are derived from one of two protocols: Proof-of-work or proof-of-stake. All cryptocurrencies are maintained by a community of ‘miners’ who are members of the same audience who have established through their computers a participation, validation and processing of transactions.
The Wall Street Journal has censored at least 80 cryptocurrencies. Here is a list of the most famous:
- Bitcoin (BTC), born in January 2009, based on the proof-of-work protocol, it is the first cryptocurrency by value, the first to be known and to be recognized as a form of payment from various Internet sites;
- Ripple, (XRP) born in 2012, thought for intercontinental payments, it grew by 4.000% in the first half of the year and only in the second quarter of 2017 recorded record transactions of $30 million;
- Litecoin (Ł), born in December 2013 with a value of $41 million, it is the second cryptocurrency, uses script as a proof-of-work system and it processes blocks every 2,5 minutes instead of every 10 as Bitcoin;
- Ethereum (Ξ), released in 2015 and whose concept is to give small programs (decentralized applications or smart contracts) on the blockchain.
The king of cryptocurrencies is Bitcoin and all the other created after that (i.e., altcoins) were just an imitation/alternative to Bitcoin.
Since the cryptocurrencies exist in the internet, governments or banks have no control on them.
Everything is predetermined (there is a Bitcoin maximum roof, which is about 21 million), and it is virtually impossible to alter the value of Bitcoin.
They can be transferred faster than normal banking transactions as they move among users as a real international transfer.
The cryptocurrencies market is as unstable as it is expanding. The highly variable price allows traders to make big gains in a short time.
By being directly linked to the Internet, the security factor plays a very important role in cryptocurrencies trading.
Cryptocurrencies are very safe due to two factors: the first is due to the difficulty of finding bugs in hash sets, a task done by “miners”. The second (the most likely one) is a “51%” attack. In this scenario, a miner that has the power to extract more than 51% of the network can take control of the global blockchain network and create an alternative blockchain. But the hacker will be limited because it could only reverse its transactions or block other operations.
Anonymity is also a sign of high security. All cryptocurrencies are pseudo-anonymous, and some coins have added functionality to create more anonymity.
Until recently, buying bitcoin was very complex and only the most experienced could speculate on bitcoins, but now they entered fully in the world of legal investment.
Cryptocurrencies represent a big and real chance of profit, especially easy to grasp for those who are not experienced. To achieve this goal without risk, however, it is really important to choose the right tools.