What are cryptocurrencies?

Cryptocurrencies are the newest form of digital currency. Imagine a peer to peer transfer without the interaction from any 3^rd party. This means you can go to any store, purchase anything and no one will know what you purchased. It is not anonymous so the amount will be shown. The seller and the buyer are pseudonymous so they’re not completely unknown. Just like foreign exchanges, digital currency can be traded too and many people are day trading cryptocurrencies. It’s definitely a volatile market so being able to swing trade and doing it quick is a very big factor. The entire cryptocurrency market cap is just over $200 billion currently. One common mistake I see is that people mix up virtual and digital currency. Digital currency is money in the digital form whereas virtual currencies are usually tokens purchased with real money that can only be spent inside a virtual world. For example, NBA 2k17, a very popular basketball game that is available on PlayStation and XBOX uses its own virtual currency that people purchase with real money. You can use these tokens inside the game to purchase different shoes, apparels or skills for your players.

Top 3 Cryptocurrencies

Bitcoin – Bitcoin is no doubt the biggest and baddest of all cryptos and this is mainly because it was the first of its kind. It came out in 2008 and has been making crazy gains since then. At one point when it came out, it was hovering around .6 cents USD. It jumped up to $1,000 per Bitcoin at the beginning of 2017 and has since risen to around $7400 at the time of writing this article with a $122million market cap.

Ethereum – Ethereum is the next one up with the second biggest market cap at $30 billion and current price of one eth at $313. Ethereum is a platform to help companies getting on the blockchain so it has huge potential.

Litecoin – Litecoin does not have the third biggest market cap but it definitely is one of the longest standing along with an impressive record. It has jumped up 2000% this year and it has a $3.4billion dollar market cap at $62.74 per Litecoin. It is known as more of a stable coin so there isn’t many chances to make good money swing trading.

Mining or Staking

Mining is a great way to make money off cryptocurrencies while helping with the blockchain. In order for transactions to be recorded on the ledger and have everything go smooth, miners are the ones making sure that happens. When someone makes a transaction with cryptocurrencies, that needs to be recorded and placed into a list called a block. Every block goes into the blockchain and connects together, hence the name blockchain. Everyone has access to the blockchain so everyone knows what’s going on.

In order to mine, you can go two routes. One is the more expensive but a better return on investment while the other is the slower and more decentralized route. To mine Bitcoin and Litecoin, you need to go with a more expensive hardware called an Asic miner. Asics are really strong small computers that are specifically made to mine and nothing else. They are coded to contain a specific algorithm.

The other way to mine is using your computers Graphics Processing Unit (GPU). Using specific programs, you can pick which coin you want to mine. GPU mining takes a bit longer but electricity expenses are much less. This is still a great way to make money while supporting your favorite coins network to make sure

Staking

Staking is a different form of mining but you do not need any hardware to do this. You simply have your tokens in your cryptocurrency wallet and you will continue to get a percentage of tokens, almost like dividends. The point of having tokens in your wallet is to keep the network more secure and keep from mass selling. The confirmations are done with already owned coins. It is also a hedge against inflation.

Stocks and Companies Related to Blockchain

MGT Capital Investment Inc. (MGTI) – One of the most prominent figures in cryptocurrency is John Mcafee and he created a company called MGT Capital Investment Inc. They buy mining equipment to mine and give back a portion of the profits back to investors. With mining becoming bigger and more useful than ever, it is a great time to invest in them. If you believe in cryptocurrencies in general, they are a good way to double down.

Riot Blockchain (BIOP) – Investing in the stock market is a much different game but if you don’t want to be directly involved in purchasing and selling Bitcoin. You can invest in hedge funds that purchase different cryptos for you. BIOP is investing mainly in ethereum and Bitcoin with a few other coins.