What is cryptocurrency & how does it work?
Invented by Satoshi Nakamoto, Cryptocurrency is essentially a decentralized digital cash network that is similar in a lot of ways to a Peer to Peer Network for file sharing. Each transaction is shared with everyone in the network so that it can be confirmed by “Miners”. Once a transaction is confirmed it becomes part of the overall ledger or “Blockchain” and cannot be undone.
What is the Blockchain?
In layman’s terms, a Blockchain is a continuously growing list of records called “blocks”, which are linked and secured using cryptography. Each block contains an encrypted ID which links it to a previous block. This design makes blockchains resistant to modification of the data. In other words, the blockchain is an open, distributed ledger that records transactions between two parties in a verifiable and permanent way. As a distributed ledger, a blockchain is managed by a peer-to-peer network which collectively validates each new block. Once validated and recorded, the data in a given block cannot be altered retroactively without the alteration of all subsequent blocks. This requires an agreement of the network majority. Learn More
What are Miners & why are they important?
Mining is the process by which transactions are verified and added to the public ledger, known as the blockchain. The process of mining involves compiling recent transactions into blocks by solving a computationally difficult puzzle. The individual who first solves the puzzle gets to place the next block on the blockchain and claim a reward. The rewards, which incentivize mining, are usually a transaction fee in the form of the cryptocurrency which they were mining. Anyone with access to the internet and suitable hardware can participate in mining. As a method of making income, however, it has become increasingly difficult as the electrical and processing power required has increased far more rapidly than the rewards for mining have. Learn More
What are the major currencies?
There are literally 1000s of cryptocurrencies in existence today and the list just keeps on growing. Here we will focus on the top 5 currencies which includes the red hot Bitcoin everyone is talking about.
Bitcoin: The first, largest and most well known of the cryptocurrencies. What started trading at less than $.01 is now trading at well over $16,000. Learn more
Ethereum: A runner up to Bitcoin and what many to be the future of the cryptocurrency market. Ethereum is in many ways similar to Bitcoin but has some added flexibility in it’s design. This technology is used to host several different tokens so it can be thought of as a family of cryptocurrencies. Learn more
Litecoin: Labeled as the silver to the digital gold Bitcoin, Litecoin is faster than Bitcoin, with a larger amount of tokens and a new mining algorithm. Learn more
Dash: Dash is often marketed as the most user-friendly and scalable cryptocurrency in the world. In addition to Bitcoins features it adds instant and private transactions. Learn more
Monero: As the most prominent example of the cryptonite algorithm, Monero adds privacy features Bitcoin is missing. For example, if you use Bitcoin, every transaction is documented in the blockchain and the trail of transactions can be followed. Learn more
Why should I invest?
This is truly game changing technology and the returns are potentially astronomical. At the very least it is important to learn about this technology as it could shape the future of commerce. Learn more
What should I look out for?
Digital currencies are volatile and the prices can go up and down. Be careful of the bubble and do your homework before investing any money…in anything. Do not think of this as a get rich quick scheme. Remember, get rich quick schemes only work for the handful of people who start the scheme. In addition, beware of the evolution of futures markets for these currencies. Large Hedge funds and banks like Goldman Sachs have the resources to artificially move these markets in an effort to make money in futures markets. Learn more