Everyone has heard how Bitcoin and other cryptocurrencies have made millionaires of those who bought just a year ago. Profits of 1000% or more are not just possible, they have been the norm for many of these cryptocurrencies. Someone who bought Bitcoin in May 2016 for less than $500 would have made a 1400% profit in about 17 months. Then in the last few days we’ve seen Bitcoin lose almost $1000, so to say these cryptocurrencies are volatile would be a huge understatement.
Since Bitcoin’s inception in 2008, we at Trend News have been skeptical of cryptocurrencies’ ability to survive, given that they pose a very obvious threat to governments that want to see and tax all transactions. But while we may still be cautious about cryptocurrencies, we are well aware of the potential of the underlying technologies that power these electronic currencies. In fact, we believe this technology will fundamentally disrupt the way data is managed and impact every sector of the global economy, much like the Internet has impacted 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 established in 2008. There are over 800 CCs today, including Ethereum, Litecoin, Dash, Zcash, Ripple, Monero, all of which are “virtual”. There are no “physical” coins or currency.
Q: How does CC 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 verify transactions. One CC called Ethereum uses “smart contracts” to verify transactions. Crypto TREND will provide more details in upcoming news.
Q: What is BLOCKCHAIN?
Blockchain is the technology behind 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 considered for applications in many other areas.
Q: Are CC exchanges regulated by the government?
For the most part, the answer is NO, which is the big appeal of this market for some users. It’s the “wild west” right now, but governments in most developed countries are studying this market to decide what regulation might be needed. An important 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, 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 services. You start by choosing an exchange, setting up an account, and transferring fiat currency to your account. You can then place BUY and SELL CC orders. There are many stock exchanges around the world. Opening an account is quite 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 your bills, you need a digital wallet. These wallets come in multiple formats such as desktop, cloud, hardware (USB), mobile and paper. Many of them are FREE, however security is an important 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?
Besides 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 fast and includes biggies like Microsoft, GAP, JC Penny, Expedia, Shopify, Bloomberg.com, Dish Network, Zynga, Subway, and WordPress.
Q: What’s next?
As we begin, we will keep each of the Crypto TREND articles short and keep the scope of each one as narrow as possible. As we’ve noted before, we believe cryptocurrency technology is a game-changer, and potential investment opportunities like this come along once or twice in a lifetime. Make no mistake, early investments in this sector will only be directed at your most speculative capital, money you can afford to lose.
Even if you don’t want to invest at this time, understanding this new breakthrough 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 embark on this journey into what may at first seem like a strange jungle. It is a volatile market and may not appeal to all investors, however Crypto TREND will be your guide if and when you are ready.
Stay tuned for updates!