The Rise of Cryptocurrency

The Rise of Cryptocurrency

A cryptocurrency, a digital currency or crypto coins is a digital asset structured to function as a virtual medium of transaction where public coin ownership information is stored in a distributed ledger usually in a trust model. This ledger is controlled by a network of individual servers all over the world that act as intermediaries to facilitate the safe, instant, and reliable transfer of funds. The major benefit of cryptosystems is the security properties that make them immune to hacking, fraud, and other threats that may come from a volatile banking system. The system is highly secure because it requires multiple backups to each and every public coin ownership so that in case of a disaster one copy will still be functioning.

Cryptocurrency

There are several different types of cryptosystems including Litecoin, Dogecoin, Nxt, Peercoin, Terracoin, and Bitshares. Unlike traditional cryptocurrencies that use Proof of Work (POW) to award new coins, a Cryptocurrency is based on a Proof of Stake (POS). The POS system is an agreement among diverse individuals that govern the distribution and sale of their stake in the market capitalization. The distribution of this stake is done through what is called “exchange pools”. The advantage of these systems compared to centralized cryptocurrencies is that it is less prone to outside influences like a centralized organization. In the event of a decentralized system being hacked, unlike the case with a POW system, most of the exchanges can self-correct without having to resort to a voting process.

Unlike other forms of Cryptocurrency like stocks and shares, which have limited supply, Cryptocurrency is traded globally and there is a high demand for it. The demand for Cryptocurrency is attributed to several factors including its high-profit potential, its high volatility, and its fast speed. The fastest and highest profit potential of any Cryptocurrency is seen in the buy and sell cryptosystem called “bitfinex”. Other Cryptocurrencies like Dash, Zcash, Monero are much slower and have lower trading volumes. Despite the large gaps in terms of volume and profit potential, all cryptosystems are volatile in nature and tend to follow the trend of the market, increasing in value and decreasing in value over short periods of time.

Like any other type of market, Cryptocurrency markets tend to exhibit “trend overlaps” with other markets. This is where two cryptosystems, such as the Dash and cash, tend to follow the same trend as the Dogecoin market. This is because both of them have built their business on the same premise – to empower ordinary people to participate in the economic activity of the country. Both Dash and Zcash are popularly traded over the Internet. There is also a close relationship between Dash and PIVX, another well-known tokenized Cryptocurrency. The two currencies almost seem to swap the role of the major players in the Cryptocurrency market, with each one taking advantage of the other’s network effect.

Most of the Cryptocurrency players are based in China, Japan, South Korea, and Hong Kong. In terms of market capitalization, four major Cryptocurrencies – ETH, BTC, BNB, and Tether. Some of the lesser-known Cryptocurrency such as SRK is worth less than a dollar each. Some of the more volatile and profitable Cryptocurrency is still relatively new on the marketplace and also face high trading costs and are thus not traded on major exchanges.

There are several forms of Cryptocurrencies that are currently being traded on major exchanges. Most of the tradable Cryptocurrencies follow the same principle of supply and demand. There are very few exceptions to this principle. One of the few exceptions is Monero, which is not actually a Cryptocurrency but rather a digital currency that was designed by a group of computer geeks. This type of Cryptocurrency is difficult to obtain and not recognized by most central banks.

Should You Invest in Ethereum?

should you invest in ethereum
Vitalik Buterin co-creator of Ethereum

Should you invest in Ethereum?

Consider this; Bitcoin has many clones and competitors.  On the playing field of cryptocurrency there is one clear second-place winner; Ethereum.  What is Ehtereum? Ehtereum itself is a global computer network with its own virtual currency called Ether. Vitalik Buterin was a fan of Bitcoin before he created the Ethereum network and Ether. With a market price of $365 (compared to Bitcoin’s $8200) it’s an affordable and tempting alternative when it comes to cryptocoin investing. Should you invest in Ethereum just because it’s cheaper?

Yes.  Since a picture is worth a thousand words here’s why….

should you invest in ethereum
The Price of Ethereum as of November 22nd 9:20 AM PST

What is Ethereum?

Ethereum is a global computing network operating according to rules defined by Ethereum software.

Those rules allow the Ethereum network to be programmed to complete specific computing tasks  with every computer processing Ethereum tasks completing any given task in parallel to ensure it is done correctly. Generally the tasks involve money.

 Vitalik Buterin has likened Ethereum to a global smartphone that can run “apps” called Dapps because they are run by a decentralized network of computers.  (Side note — Many SAFTs are using leveraging the Dapp model with their own coin offerings.)

Vitalik chose Ethereum as the name of this new network as a reference to the ethereal, something that is seemingly there but not tangible.  While he announced his intentions in 2013, Ethereum didn’t come into existence until 2015.

The Ethereum network has its own virtual currency, Ether.However, most cryptocurrency exchanges and indexes refer to the name of its parent Ethereum to eliminate ambiguity. Ether coins are needed to compensate the computers running on the network to complete the tass that are out there.

People have also decided to buy and hold Ether, betting that it will become more valuable as more people want to use the network and need Ether to pay for the network’s computing power.  With the value of Ether rising steadily the answer to the question Should you invest in Ethereum? Most definitely.

Bitcoin and Ethereum: Kissing Cousins in the Cryptocoin World.

Vitalik was a Bitcoin fan and was impressed with everything he saw. In the spirit of capitalism itself he set out to build something that could do more than Bitcoin: He wanted to build a system that could accommodate more complex financial transactions.

The shared records of the Ethereum network — of every transaction and computation it has ever performed — are known as a blockchain, just as the shared records of all Bitcoin transactions are known as a blockchain. But Ethereum’s blockchain database is totally independent of Bitcoin’s blockchain. (Side note — we’re going to take a very deep dive into blockchain itself in a future article.)

Large companies are turning to Ethereum to track supply-chain transactions.  Now very much on the world stage and used by multinational corporate giants, the rising price of Ether makes sense.  Any Ethereum investor who simply buys and holds Ether just as they would Bitcoin are speculating that more and more corporations will turn to Ethereum to solve sophisticated accounting nightmares and those plugged into the Ethereum network are being paid handsomely – and in higher amounts – to complete these tasks.

How do you buy Ether?

Just as with Bitcoin, you can buy Ether from people who already own them on virtual currency exchanges. Most large countries have exchanges where a variety of virtual currencies can be bought with the local currency.  Coinbase, based in San Francisco, is one such place you can buy and sell Ethereum as well Bitcoin and Litecoin.  In fact you can buy and sell the different cryptocoins and often trade one for the other.  Some investors ride this wave and track all three of them and jump in and out as market prices change. Some cryptocoin investors ended up making a lot of money in Bitcoin AFTER taking the profits they made on Ethereum.

Should you invest in Ethereum? Heck yeah!

How are Ether created?

Just as with Bitcoin, Ethereum are “mined,” or created by computers joined into the Ethereum network. In the not too distant past CPU power was (that is to say raw computing power) was sufficient to mine Ether now GPUs (think: graphics cards) are now required to make mining Ether make any economic sense.   This has turned into a the computing equivalent of an arms race as the fastest Ether miner rigs make more money faster. .

As with Bitcoin, Ethereum mining serves a dual process of getting new Ether on the market while providing a profit motive for people to join the network and help maintain the Ethereum blockchain.

Should you invest in Ethereum? Hell yes!

With millions of coins still to be mined and then the finite number of those coins positioned to only go up in value investing in Ethereum is something to be considered.

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