No, Bitcoin is not the only cryptocurrency, in fact there are hundreds. This infographic from Best Accounting Schools outlines that as well as exchanges, how to buy, and how to store your cryptocurrencies.
The Definitive Guide to Cryptocurrencies
The world of cryptocurrencies can seem as alien as it is exciting?even if you aren’t interested in investing yourself, it can never hurt to be hip to the explosively popular tech trend.
What is Cryptocurrency?
Cryptocurrency is digital currency backed by a secure network instead of a bank, which can be bought, sold, and traded like stock in a company in exchange for other cryptocurrencies, fiat currencies, or goods and services.
Major companies that accept cryptocurrency (Bitcoin)
Most traded and talked about cryptocurrencies on the market
Highest market cap: $331 billion
Developed in 2009 by a programmer known as “Satoshi Nakamoto”
Market share: 34.4%
Highest market cap: $138 billion
Developed in 2014 by Vitalik Buterin and a small team of co-founders
Market share: 19.8%
Highest market cap: $149 billion
Developed in 2012 by Arthur Britto and Chris Larsen
Market share: 9.9%
Highest market cap: $73 billion
Proposed in June 2017 by the Bitcoin Unlimited group, implemented as a “fork” in the Bitcoin blockchain in August 2017
Market share: 5.1%
A Crypto Exchange is:
The market to buy, sell, and trade cryptocurrencies, similar to a stock market like Dow Jones and NASDAQ.
Popular Crypto Exchanges
From Anonymous Beginnings to Massive Support
Bitcoin was the first decentralized digital currency to be mined and made public. A wave of new cryptocurrencies soon followed the introduction of Bitcoin using the same or similar crypto algorithms.
April 2011: Namecoin created by developer Vincent Durham under pseudonym “vinced”
October 2011: Litecoin launched by Charles Lee software engineer
Cryptocurrency has seen support and investment from everyone from tech pioneers to venture capitalists to teenagers.
Famous for their association with the founding of Facebook, these twins have taken to the crypto game in a major way. They invested $11 million in Bitcoin in 2013 (Now worth more than $1 Billion). In 2015, they created the Gemini crypto exchange.
Major venture capitalist and cofounder of PayPal has made serious crypto investments. Since 2012, Peter Thiel’s Founders Fund has invested upwards of?$20 million into Bitcoin.
Ohio teen invested his life savings into an altcoin at the age of 15 and has since made a career out of cryptocurrencies. In 2015, he invested $12,000 into currencies like Ethereum which turned into a $350,000 portfolio within a year and founded his investment advice company, Cryptocurrency Financial.
Cryptocurrency is driven by an interesting array of technology and is being created by innovative fundraising strategies
Terms to Know in the World of Crypto:
Owned cryptocurrency can be traded immediately or stored in a secure “wallet” for later use. Choose the right wallet for your security and accessibility needs:
Desktop wallet: Single computer has access to wallet through keys saved to the hard drive
Security: High, but susceptible to viruses and hacks
Online and mobile wallet: Stored on a cloud system controlled by a third party, like an exchange
Security: Can be more susceptible to theft and hacks
Hardware wallet: Wallet is stored offline in a USB or dedicated crypto device that can be accessed on a computer
Security: Highly secure access
Paper wallet: Access keys are written down or printed out after generation
Security: High, until accessed online for deposit or withdrawal
Blockchain computing is the technologic backbone of cryptocurrency that allows it to be a secure and public platform.
Features of a blockchain network
- A network of computers (nodes) that validate and verify transactions simultaneously
- Decentralization prevents single user alterations and prevents single point security breaches
- Data is inherently public by being embedded across the entire network
Blockchain has the potential to rewrite data management practice standards across many industries:
MedRec is a project aiming to manage medical record access using the backbone of the Ethereum blockchain to allow patients and doctors access to medical records, share medical records across multiple providers and authenticate user information for secure medical records.
Digital Asset provides financial institutions a distributed ledger using blockchain technology to serve clients like Australian Securities Exchange (ASX) and Depository Trust & Clearing Company (DTCC).
Dubai has started an initiative to implement a blockchain strategy with the aim to increase government efficiency by digitizing an estimated 100 million documents per year. It will create and energize business using the technology and improve the international Dubai experience with faster and more secure travel documentation like visas and licenses.
Some want blockchain technology to reduce regulation and increase anonymity.
Monero is a cryptocurrency that operates on the basis of absolute privacy of transactions and users. No personal identification required. Transactions and sending/receiving addresses are untraceable. Fungibility prevents blacklisting by vendors and exchanges.
Initial Coin Offering (ICO)
Sell percentages of a new cryptocurrency in exchange for funding through fiat currency or other cryptocurrency. Less restrictive than traditional bank and venture-capital funding.
There has been a staggering amount of capital raised through ICOs
So far in 2018 nearly $5 billion has already been raised by ICOs
Leading ICOs by investment through April 2018
- Telegram raised $850 Million with a goal of $2 billion for the year
- Dragon raised $320 million
- Huobi raised $232 million
Be cautious to avoid potential scams or phishing attempts guised as legitimate ventures. Ten percent, or roughly $400 million of $3.7 billion, of ICO funds have been lost or stolen. ICOs have been under scrutiny from governmental and financial agencies for abuse potential and lack of regulatory standards. U.S. SEC Chairman Jay Clayton claims ICOs are securities that should be regulated under stricter scrutiny. China banned ICOs in September 2017 as an unlawful method of public financing
There is a lot of uncertainty surrounding cryptocurrencies, both as a concept amongst laymen and as a stable market for would be investors.
Mistrust in the Cryptocurrency Market
Many Americans over the age of 18 are misinformed about cryptocurrency
Have you heard of Bitcoin?
Have you ever, or do you now, own Bitcoin?
1% Unsure/Prefer not to say
Is owning Bitcoin in the United States illegal? (“No, it’s not illegal to own Bitcoin in the U.S.” is the right answer)
There is legitimate concern for online security as evidenced by past hacks of cryptocurrency exchanges.
Hacked January 2018
Lost around $530 million of the cryptocurrency NEM
Largest crypto exchange hack to date
Hacked June 2017
Lost around $7 million of the cryptocurrencies Bitcoin and Ethereum
up to 30,000 users’ information compromised
Hacked August 2016
Lost around $65 million of the cryptocurrency Bitcoin
Hacked 2011 – 2014
Lost around $460 million of the cryptocurrency Bitcoin – Over 650,000 Bitcoins
Long Term Financial Viability of Crypto
Cryptocurrencies have been called a major bubble.
A bubble occurs when investors drive the demand of an asset to a price far beyond its realistic or rational value. A crash, or bubble pop, occurs when a majority of asset investors try to leave the market at the same time which then causes major losses.
Cryptocurrencies have been shown to be incredibly volatile.
Bitcoin started in January 2017 just under $1,000 per coin, rising to a peak of over $19,000 peak in mid-December 2017 – A 1,900% increase.
Following the peak in December 2017, Bitcoin crashed to just over $6,000 in early February 2018, a 68% decrease.
Part of this value decrease can be attributed to a fear of a regulation crackdown. The exchange Bitfinex and cryptocurrency Tether were subpoenaed by U.S. Commodity Future Trading Commission for failing to verify the $2.3 billion of tether listed on the market. Investors and believers in cryptocurrency claim prices will stabilize and climb back up. Mechanisms to enter the crypto market will increase investment.
Whether you consider it a way to make easy money, a financial fad, or a vehicle for revolution, it is a great time to learn about the explosively popular world of cryptocurrency!