cryptocurrency: ultimate beginners guide to making money with cryptocurrency like bitcoin, ethereum...

Cryptocurrency:UltimateBeginnersGuide

Thisbookscontains3Manuscripts:

BitcoinBeginnersBible

CryptocurrencyBeginnersBible

BlockchainBeginnersBible

ByStephenSatoshi

TableofContents

Introduction

Bitcoin-ABriefHistory

BasicsofBlockchainTechnology

HowdoesBitcoinWork?

BitcoinasaStoreofWealth

8CommonBitcoinMythsDebunked

LatestBitcoinInnovations:SegWit,LightningNetwork

SowhatisBitcoinCashthen?

HowtoBuyBitcoin

HowToSafelyStoreYourBitcoin

PaperWallets

StepbyStepGuideonHowtoCreatea100%SecurePaperWallet

HardwareWallets

HowtoTradeBitcoin

WhatDeterminesthePriceofBitcoin?

BitcoinforBusiness:HowYourBusinesscanBenefitfromAcceptingBitcoinPayments

CanIStillMakeMoneywithBitcoinin2017?

TheBitcoinInvestingMindsetandHowtoMinimizeYourRisk

DollarCostAveraging

FOMO&FUD

InvestingyourBitcoin-ICOs

WhyIDon’tRecommendYouMineBitcoin

IsthereaBitcoinETForMutualFundIcaninvestin?

TheTenCommandmentsofBitcoin

Conclusion

Cryptocurrency:BeginnersBible

WhatisCryptocurrency?

AnExtremelyBriefHistoryofCryptocurrency

Cryptocurrencyvs.TraditionalCurrency

UnderstandingBlockchainTechnology

BitcoinandCryptocurrencyDrawbacks

HowtoBuyCryptocurrency

CryptocurrencyGuide

Bitcoin(BTC)

BitcoinCash(BCH/BCC)

Ethereum

Ripple(XRP)

Dash(DASH)

Monero(XMR)

Litecoin(LTC)

Factom(FCT)

Neo(NEO)

Golem(GNT)

STEEM(STEEM)

IOTA(MIOTA)

Dogecoin(DOGE)

Wheretostoreyourcryptocurrency-Wallets&ColdStorage

PaperWallets:

HardwareWallets

CryptocurrencyInvestingMindset

FOMO&FUD-2TermstobeCautiousof

Shorttermgainvs.Longterminvestment

Paperprofitsvs.Actualprofits

TheChaincoinPumpandDumpScheme-WhyYouShouldAlwaysResearchaCoinBeforeBuying

Conclusion

BlockchainBeginnersBible:

Chapter1:WhatisBlockchainTechnology?

Historylesson

Chapter2:PracticalApplicationofBlockchainTechnology

Businessuses

DaytoDayLife

BeyondCryptocurrency

Governmentandlawmakers

Thefutureofblockchain

Chapter3:CryptocurrencyandBlockchainInteractions

Tradingcryptocurrency

Findingyourexchange

Well-knownexchanges

Initialcoinofferings(ICOs)

Tipsforinvestingsuccessfully

Conclusion

ThefollowingeBookisreproducedbelowwiththegoalofprovidinginformationthatisasaccurateandreliableaspossible.Regardless,purchasingthiseBookcanbeseenasconsenttothefactthatboththepublisherandtheauthorofthisbookareinnowayexpertsonthetopicsdiscussedwithinandthatanyrecommendationsorsuggestionsthataremadehereinareforentertainmentpurposesonly.Professionalsshouldbeconsultedasneededpriortoundertakinganyoftheactionendorsedherein.

ThisdeclarationisdeemedfairandvalidbyboththeAmericanBarAssociationandtheCommitteeofPublishersAssociationandislegallybindingthroughouttheUnitedStates.

Furthermore,thetransmission,duplicationorreproductionofanyofthefollowingworkincludingspecificinformationwillbeconsideredanillegalactirrespectiveofifitisdoneelectronicallyorinprint.ThisextendstocreatingasecondaryortertiarycopyoftheworkorarecordedcopyandisonlyallowedwithexpresswrittenconsentfromthePublisher.Alladditionalrightreserved.

Theinformationinthefollowingpagesisbroadlyconsideredtobeatruthfulandaccurateaccountoffactsandassuchanyinattention,useormisuseoftheinformationinquestionbythereaderwillrenderanyresultingactionssolelyundertheirpurview.Therearenoscenariosinwhichthepublisherortheoriginalauthorofthisworkcanbeinanyfashiondeemedliableforanyhardshipordamagesthatmaybefallthemafterundertakinginformationdescribedherein.

Additionally,theinformationinthefollowingpagesisintendedonlyforinformationalpurposesandshouldthusbethoughtofasuniversal.Asbefittingitsnature,itispresentedwithoutassuranceregardingitsprolongedvalidityorinterimquality.Trademarksthatarementionedaredonewithoutwrittenconsentandcaninnowaybeconsideredanendorsementfromthetrademarkholder.

FinancialDisclaimer:

Iamnotafinancialadvisor,thisisnotfinancialadvice.Thisisnotaninvestmentguidenorinvestmentadvice.Iamnotrecommendingyoubuyanyofthecoinslistedhere.Anyformofinvestmentortradingisliabletoloseyoumoney.

Thereisnosingle“best”investmenttobemade,incryptocurrenciesorotherwise.Anyonetellingyousoisdeceivingyou.

Thereisno“surefirecoin”-oneagain,anyonetellingyousoisdeceivingyou.

Withmanycoins,especiallythesmallerones,themarketisliabletothespreadofmisinformation.

Neverinvestmorethanyouarewillingtolose.Cryptocurrencyisnotagetrichquickscheme.

HowYouCanProfitfromTradingandInvestinginBitcoin

ByStephenSatoshi

IntroductionThisisnormallythepartwiththedrierthantheSaharaDesertexplanationof“youaregoingtolearnblahblah…”thatsendsyoustraighttosleep.

Instead,IthoughtI’ddosomethingabitdifferentandgiveyouaquickoverviewofmyownexperiencewithBitcoin.IfirstheardofBitcoinin2011,duringthefirstveryfirstbubble,whenIreadanewsreportaboutthis“internetmoney”thingthatwasworth$30apiece.DidIinvestthen?Iwish-Iwasn’tnearlyinformedenough.Ihonestlydidn’tunderstandhowthetechnologyworkedorifBitcoinwasworthanythingatall.Afterall,ifacurrencyisn’tbackedbyagovernment,howcanitbeworthanything?Ohtobethatnaiveonceagain.

BythetimeIfinallyunderstoodBitcoinenoughtobeconfidentinbuyingsome,thepricehadrisenahellofalotmore.But,nowIbelieveinitasmorethanjustacommoditytobetradedorinvestedin.Ibelieveinthetechnologyatitscore,andthepotentiallygamechangingramificationsforsocietyatlarge.InthatliesthetruevalueofBitcoin.IwishIhadaresourcelikethiswhenIstartedout,somethingthatexplainedthecoreconceptsofBitcoinandblockchaintechnologywithoutreadinglikeanastrophysicsphDthesis.That’spreciselywhyIwrotethisbook.

Happyreading,andIhopeyounotonlymakealotofmoneywithBitcoin-Ihopeithasatrulyprofoundandpositiveeffectonyourlife.Finally,ifyouenjoyedthisbook-I’dappreciateyoutakingjust2minutesofyourbusydaytoleavethebookareviewonAmazon.

Thanks,

Stephen

Bitcoin-ABriefHistoryBitcoinisthefirstcryptocurrencythathaslastedformorethan7yearsandreceivedanysortofmassadoption,butittooksometimetogettothispoint.BeforeBitcoin,therewereanumberofcryptocurrenciesthatreachedsomelevelofpopularity.Itallstartedbackin1980whencryptographerDavidChaumfirstdevelopedtheideaofacurrencybackedbyaproof-of-workcomputeralgorithmasopposedtoacentralbank.ChaumlaterwentontofoundDigiCashwhichhadabrieflysuccessfulyetultimatelyfailedrunatbecomingtheworld’sfirstmassadoptedcryptocurrency.USbasede-goldwaspossiblythemostnotableofthePre-Bitcoincryptocurrencies,althoughtechnologicallyitwassignificantlydifferentfromBitcoinduetoacentralizedownerandnon-fixedsupply.

InAugust2008,NealKin,VladimirOksmanandCharlesBryfiledapatentapplicationforanencryptiontechnology.ThedomainnameBitcoin.orgwasalsoregisteredinthesamemonthusinganonymousspeech.comwhichallowedforanonymousdomainnameregistrations.

ThebigdaycameonOctober31st2008,SatoshiNakamoto(apseudonymwiththetrueidentitystillunconfirmed)publishedawhitepapernamed“Bitcoin:APeer-to-PeerElectronicCashSystem”.Thepaperoutlinedvarioususesforthecoininadditiontoprovidinginformationaboutblockchaintechnologyandhowthecoinwouldbeminedusingcomputeralgorithms.TheoriginalwhitepaperusedBitcoinasanexampleofadeflationarycurrencyandonethatgovernmentsorothercentrallenderscouldnotartificiallyincreasethemoneysupplyof,thereforedevaluingacertaincurrency.Thewhitepaperalsooutlinedissueswithbanksastrustedlenders,andhowtheblockchain’sirreversibletransactiondesigncouldreduceriskoffraudformerchants.

FromJanuary2009onwards,activistsbeganminingthecoinandthefirstBitcoinblockswerecreated.NakamotoandothercryptographyenthusiastsbeganexchangingthecoinforserviceswithoneanotherandinOctober2009,thefirstofficialexchangeratewasestablishedforthecoinofUS$1=1,309.03BTC.Theoriginalexchangeratewasbasedonhowmuchelectricityitwouldcosttomine1Bitcoin.

ThefirstrealworldtransactiontookplaceinMay2010whenenthusiastLaszloHanyeczboughttwopizzasinJacksonville,Floridafor10,000BTC.Today10,000BTCisworthover$40million.AfewmonthslaterinAugust,thefirstmajorBitcoinhackingincidentoccured,thehackerexploitedavulnerabilityintheBitcoinverificationsystemandgenerated184billionBitcoins.ThisledtothefirstmajordipinthevalueofBitcoinasacurrency.ThisthenledtogovernmentinvestigationsofpotentialmoneylaunderingusingBitcoin.Theearlyscaresdidn’tlastlongthoughandInNovember2010,Bitcoinreachedamarketcapitalizationof$1millionforthefirsttime.

InJanuary2011,Bitcoinreceivedareasonableamountofmainstreamcoverageforthefirsttime.SilkRoad,anundergrounddarknetwebsitedealinginillicitgoodssuchasillegaldrugsandstolencreditcardswaslaunchedonthebackofsendingandreceivingpaymentsinBitcoin.Atitspeak,itwasestimatedthatupto50%ofBitcointransactionswereonesthatoccuredonSilkRoad.TheperceivedanonymityofBitcoin

madeitafavoriteamongSilkRoadusers.InFebruary,Bitcoinreachesamarketpriceof$1forthefirsttimeandbyJulythecoinhadjumpedtoavalueof$31.

2012wassomewhatofanuneventfulyear,althoughrealworldadoptioncontinuedwithhostingplatformWordpressacceptingthecoininNovemberofthatyear.ByMarch2013,themarketcapitalizationhadreached$1billionandBitcoinexchangeCoinbasereportedover$1millionofBitcointransactionsinasinglemonth.InJune,theDEAreported11.02Bitcoinsasanassetduringadrugseizure,thefirsttimeagovernmentagencyrecognizedBitcoinashavinginherentvalue.DrugscontinuedtomakeheadlinesasSilkRoadownerRossWilliamAlbrichtwasarrestedinOctober,theFBIseized26,000BitcoinsfromSilkRoadserversduringthearrest.Brighternewscamethenextmonthwhentheworld’sfirstBitcoinATMopenedinVancouverandChinaarrivedonthescenewhenChinesemarketactivityovertooktheUSforthefirsttime.ByNovemberof2013,thepriceof1Bitcoinreached$1,000forthefirsttime.

Decemberof2013camewithChina’scentralbankrulingthatBitcoinwasnotacurrencyandbarredfinancialinstitutionfromacceptingBitcoinsasaformofpayment.InFebruary2014,JapanesebasedexchangeMt.GoxsuspendedBitcoinwithdrawals,citingtechnicalissues.Withinjustafewweeks,theexchangehadfiledforbankruptcyamidclaimsofpoormanagementandlackofsecurityprotocols.Roughly$740millionworthofBitcoin,or7%oftheoverallamountincirculationwaslostintheincident.ThisissueledtothevalueofBitcoindropping36%overthecourseofthemonth.

InJune,TeraExchangeLLCreceivedapprovalfromtheU.S.CommodityFuturesTradingCommission.ThismarkedthefirsttimethataU.S.agencyapprovedaBitcoinexchange.ComputermanufacturerDellbeganacceptingBitcoinasameansofpaymentatthistime,thelargestcompanytodosouptothatpoint.AirBalticalsobecametheworld’sfirstairlinetoacceptBitcoinpayments.InDecember,techgiantMicrosoftbeganacceptingpaymentsinBitcoin.

Coinbase,nowoneofthelargestcryptocurrencyexchangeplatformsreceived$75millioninafundinground,withtheNewYorkStockExchangebeingaminorinvestor.FurtherrealworldscalingcontinuedandbyAugust2015,over160,000companieswereacceptingBitcoinasameansofpayment.DecemberbroughtnewsofthepotentialidentityofthenotoriousSatoshiNakamotofigure.WiredmagazineclaimedtheAustralianCraigWrightwasindeedNakamoto.ThisledtoaseriesofeventsthateventuallyresultedinaconfirmationthatWrightwasindeedNOTNakamoto.

July2016markedthesecond“halvingday”inBitcoin’shistory,wheretherewardformining1blockwashalvedto12.5Bitcoinsperblock.ThiswaspartofBitcoin’soriginaldesigntograduallydecreasethesupplyofnewcoinsavailable.Thenexthalvingisduetooccurin2020,withthetotalsupplyavailabletothemarketaroundtheyear2140.

Atthetimeofwriting,Bitcointradesforaround$4,000percoinonexchanges.

BasicsofBlockchainTechnology

Whilewecouldspendanentirebookonblockchainandthetechnologybehinditalone,itisimportanttounderstandthefundamentalsifyou’replanningtoinvestinBitcoin,oranyothercryptocurrency.

Blockchainisadecentralizedledger,meaningitisarecordthatispubliclyaccessibleandcanbeverifiedbyanyone.Thisisimportantforanynon-tangiblegoodastheunliketangiblegoodslikesocksorcandy,weneedarecordofatransactionhappeningincasesomethinggoeswrong.Forexample,weneedproofthatStevepaidJohnforthepairofsocksthatJohnsoldhim.TheblockchainwillhavearecordofatransactionfromSteve’saccounttoJohn’saccount,andnooneelse’s.

Previously,wewouldhavetheuseathirdparty,likeabank,toverifythetransactiondidindeedtakeplace.Thebankwouldthentaketheir%ofthetotaltransaction.Asthebankinformationisnotpubliclyaccessible,wewouldalsohavetotrustthatthebankdidtheirjob.Byusingblockchaintechnology,wehavea100%infalliblerecordofthetransactiontakingplace,andanyonecanseethis.There’salsononeedtopayalargeadditionalfeetoamiddleman.Theonlyfeeinvolvedisthecostofrunningtheblockchainitself.

Ifweonlyuseblockchainforfinancialpurposes,thisisextremelyusefulincountriesthatdonothaveatrustworthybankingsector.Eachtransactionisrecordedasablock,withadateandtimestamp.Theseblockscannotbealteredwithouteveryoneseeing.Theproblemthissolvesisknownasthe“double-spendingproblem”,wheredigitalassets(likecryptocurrency)havethepotentialtobespentmorethanonce.WhattheblockchainallowsustodoisseethatStevehasalreadyusedhismoneytopayJohn,sohecan’tthenusethatsamemoneytotryandpaySally.Theblockchaincreatestrustamongallparties,andtrustisparamountwhendealingwithmonetarytransactions.

Blockchain’susesarenotstrictlyfinancial.Wecanalsousethetechnologytostoreotherinformationthatwewouldneedinapubliclyavailable,transparentform.Thisrangesfromanythinglikevotingrecordsinanelection,toaself-executingcontractbetweentwopartiesthatfulfillswhenbothpartieshavecompletedtheirobligations.Blockchaineliminatestheneedforamiddleman,orindependentauditorinthesesituation,asthetechnologyitselfactsbothasanauditor,andasanindependent.Intheory,thetechnologyhasthepowertoreplaceaccountants,lawyersandmuchofthefinancialservicesindustry.Beforewegetaheadofourselvesthough,muchofthenon-financialusesofblockchaintechnologyarestillstrictly,intheory.

HowdoesBitcoinWork?

Bitcoinfunctionsasadigitalcurrency,byfollowingthesamethreerulesthattraditional,orfiatcurrenciesfollow.

1. Theyneedtobedifficulttoproduce(cash)orfind(goldorotherpreciousmetals)

2. Theyneedhavealimitedsupply3. Theyneedtoberecognizedbyotherhumansashavingvalue

WhenweexamineBitcoin,ittickstheboxesofallthreeofthesecharacteristics:

1. Bitcoinusescomplexcomputeralgorithmsinitsproductionwhichtakealotofcomputationalpowerandproof-of-work,soitcannotbereplicatedeasilyoratadiscount

2. ThereareafinitesupplyofBitcoins-21Milliontobeexact.Asof2015,roughly2/3ofthisnumberhadbeenmined

3. TherearehundredsofBitcoinexchangesandBitcoinisacceptedaspaymenteverywherefromSubwaytoOKCupid

BitcoinminershaveincentivetomineastheyreceiveBitcoinasarewardfortheircomputer’sendeavors.Bitcoinwasdesignedtobeadeflationarycurrency,sounlikefiatcurrencies,thesupplyofmoneyisfixed.This,combinedwiththedecentralizationprincipleensurethatnosinglepersonorgovernmentcansimplycreateadditionalcoinsoncethesupplyismined.Onceallthecoinsaremined,thevalueofthecurrencywillintheory,continuetorise.

Bitcointransactionsarerecordedonadigitalledger(orrecord)knownastheblockchain.ThecoreconceptthatupholdsBitcoin’susefulnessisdecentralization.Withdecentralization,theblockchainisnotownedbyonesinglepersonorentity.Infact,everyonehasaccesstoit.Thereforetransactionsarepubliclybroadcastedacrossthenetwork,whichensuresthatbothparties

haveupheldtheirendoftheagreement.Thecodeisopensource(likeLinuxorAndroidOperatingSystems)soanyonecanviewit,thisensurestransparencyamongallparties.

Decentralizationallowstheblockchaintobesecuredbymultiplepointsofentryandbackedupbymultiplepointsoffailure.Thisisturnpreventsincidentslikehackingortheft.Forexample,ifsomeoneoffersyou1Bitcoin,youcanchecktheblockchainrecordstomakesurethatBitcoinisvalidandhasn’talreadybeenspent.Thissystemmeanswedonotneedthirdpartiestovalidatethetransactions.Theonlytransactionscostscomefromtheelectricityorminingpowerneededtoruntheblockchainitself.

Thishastremendousrealworldapplication,fromallowingcheaperinternationalpayments(sinceBitcoinhasnonationality)toloweringtheoverallpriceofcertaingoods.

BitcoinasaStoreofWealthBitcoin’sstatusasadeflationarycurrencymakesitincrediblyusefulintimeswherefiatcurrencyisundergoinggrosslevelsofinflation.Likegoldhasbeentraditionallyusedintimesofeconomichardship,Bitcoinhasthepotentialtodothesame.Tobeusedasastoreofvalueorwealth,Bitcoinhasafulfillafewcriteria.

1. Ithastonotbeperishable2. Ithastonotdepreciateovertime

Thesecondcriteriaissomewhatdebatable,ascriticsarguethatBitcoincoulddepreciateduetobettertechnologysurpassingit.However,Bitcoinhasnowreachedacertainmarketpointwheretheideaitselfhasanintrinsicvalue,likesayemailorFacebook.Emailisn’tparticularlyusefulifyou’retheonlyonewithanaddresstosendmailto,butthemorepeopleusethetechnology,theeasier,andmorevaluableitis.Venezuelaiscurrentlyundergoingtheworstcashcrisisofthedecade.Inflationhasreachedalevelwherepeople’smoneyisnigh-onworthlessagainsttheUSdollar,andmuchofthecountrycannotaffordbasicnecessities.Thatis,exceptforthosewhoholdBitcoins,whosevalueagainsttheUSdollarcontinuestoincrease.

Chinaisdoingthesamething,albeitfordifferentreasons.TraditionalinvestmentsinChineseassetshavereturnedlessthanpreviousyearsduetothegovernment’sdevaluationoftheYuan.Convertingmoneytogoldandsilverisheavilyregulatedandoftenincurslargetransactioncosts.Bitcoindoesnotsufferfromanyoftheseissues,andoftenistheonlyalternativeforthosewhoarelookingtosecuretheirwealthinboththeshortandlongterm.Goldhaslongbeenthetraditionalbackupplan,or“hedge”againstuncertainfinancialmarkets.Intimesofwar,orfinancialcrisis,goldpricestendtorise

whenfinancialmarketsarefalling.However,inrecenttimesthishasnotbeenthecase.Atthetimeofwriting,gold’s12monthperformanceisstagnant,whereasBitcoinhasrisenbynearly1000%.GrowingtensionsinNorthKoreaarejustonefactorthathasspurnedBitcoin’sgrowthintimesofuncertainty.TensionsintheregionhaveledtoincreasedbuysfromtheChinese,JapaneseandSouthKoreanmarkets.

8CommonBitcoinMythsDebunked

Likealltechnologicalinnovations,thereareanumberofpointsthatuninformedplayersdonotunderstand.Assuch,misinformationspreadswhichcausesfear,uncertaintyanddoubt-whichonlyhurtsthetechnologygoingforward.

1. BitcoinisillegalLet’sdealwiththebigoneoffthebatshallwe?Justbecauseacurrencyisnotbackedbyagovernment,doesnotmakeitillegal.Foryou,theuser,byoperatingasavirtualcurrency,Bitcoinislegal,solongasyouareusingitforlegalmeans.

2. MinersordeveloperscanchangetheamountofBitcoinsavailabletobenefit

themselves

ThewaytheBitcoinalgorithmworksensurestherearenoshortcutsinobtainingone.IfacounterfeitBitcoindoesnotsatisfyalltheconditionsrequired,anytransactionsmadeusingitwillberejected.Thisissimilartohowbanksrejectcounterfeitbanknotes.3. Bitcoinisn’tworthanythingbecauseitisn’tbackedbyacentralgovernment

Withallcurrencies,theyareonlyworthwhatsomeoneiswillingtoexchangeforthem.InthesamewaythatgoldorUSdollarshavenoinherentvalue,Bitcoinisjustameansofexchange.4. Bitcoin’smainuseisforcriminalsandthegovernmentwillshutitdown

Yes,atonetimeasignificant%ofBitcoinusagewasusedforillegalactivity.MuchofthisactivitywasfacilitatedontheundergroundblackmarketwebsiteSilkRoad.However,thisisnolongerthecase.Bitcoinisnowacceptedbyover

160,000merchantsworldwideandadoptioncontinuestogrow.Thetechnologicaluseslikeminimizedtransactionsfeeshavefarmoreuseforlargefinancialinstitutionsthantheydoforsomebasementdwelling20yeartryingtobuyLSDfromaguyinanothercountry.It’sworthnotingthatfiatcurrenciesarealsousedforcriminalactivity.

ThisonealsoreliesonthemyththatBitcoiniscompletelyanonymous.Yes,therearenonamedBitcoinaccounts,buteachBitcoinaddressisuniqueandeverytransactionisrecordedonapublicledger(theblockchain).Thereforewithalittlelegwork,itispossibletodeterminewhoisbehindaBitcointransaction.

Asfarasapotentialgovernmentshutdowndoes,that’salittletrickier.GovernmentsdohavethepowertomakelifedifficultforcitizensdealingstrictlyinBitcoin,butthisdifficultyonlygoesasfarastaxationonBitcoin.

5. 21MillionBitcoinsistoosmallofatotalnumberforeffectivedailyuseWherethisonefallsshortisthatitfailstocomputethatBitcoinisdivisibletoeightdecimalplaces.0.00000001BTCisactuallythesmallestunitavailable,thisisalsoknownas1Satoshi.Therearereally2,099,999,997,690,000(justover2quadrillion)maximumpossibleunitsorSatoshiintheBitcoinsystem.When1Bitcoinbecomestoolargeforday-to-daytransactions,wewillsimplymoveontosmallerunitsforconvenience,similartohowweusepenniesnowforsmalltransactions.

6. HackerscansimplystealalltheBitcoins

It’simportanttodifferentiatebetweenexchangesorwebsitesbeinghacked,andtheblockchainitselfbeinghacked.Exchangehacksexploitsecurityweaknessesofprivatecompanies,whereastheblockchainisnotcentralizedsothereisnosingleweaknessforhackerstoexploit.ThesameargumentcanbeappliedtotheUSdollar,justbecauseastoreisrobbeddoesnotmeantheUSdollarasacurrencyhasbeenstolenfromthesource.Thatsaid,youshouldtakeappropriatesecurityprecautionswhenstoringyourBitcoinsuchascreatingasafe,offlinewallet.7. Bitcoinisapyramidscheme/Ponzischeme

Mypersonalfavorite.Pyramidschemesareazerosumgame.Thefoundersandearlyadoptersprofitfromthemoneyputintotheschemebylateadopters.WithBitcoineveryonecanprofit,nomatterwhentheyfirstmadetheirinitialinvestment.TheotherillusionhereisthatthereisonecentralfounderofBitcoin.Bitcoinisdecentralizedandthereisno“CEO”orpersonatthetopofthe

pyramid.

8. Bitcoinisdead/ThereisnopointinvestinginBitcoinnowIhavewitnessedatleast20“Bitcoindeaths”inthepast5yearsalone.FromhackingincidentstoSilkRoadFounderRossWilliamAlbricht’sarrest,detractorshaveusedtheseasfuelforBitcoin’sobtituary.Thenumbersdon’tliethough,andBitcoinisinastrongerpositionthaneverbothintermsofmarketcapitalizationandrealworldadoption.

Asearlyas2012,youcanfindcommentatorssayingitwas“toolate”toinvestinBitcoin.Yet,realworldadoptioncontinuestogrow,andthepricekeepsonrising.Isthattosaytherewon’tbeissuesinthefuture?I’msuretherewillbe.However,ifBitcointransactionskeepincreasing,thecurrencyshowsnosignsofslowingdownanytimesoon.

LatestBitcoinInnovations:SegWit,LightningNetworkThenumberonetechnicalissueBitcoinfacesinitslifetimeistheissueofscalability.Orinrealworldterms,Bitcoin’sabilitytohandleagrowingnumberoftransactions.Currently,eachBlockontheBitcoinnetworkis1MB,representing10minutespertransaction,whichincreasesduringperiodsofheavyuse.Thisisbeneficialforbanksandlargefinancialinstitutionsas10minutesisafarquickerprocessingtimethanthatofsaySWIFTorotherpaymentnetworks.However,intermsofsmallerbusinesses,likesayacoffeeshop,10minutesisanincrediblylongandnon-practicalpaymenttime.

Foryears,therehasbeenaconstantdisagreementaboutthebestwaytoupgradeBitcoin’sblocksizes.Thelongertheseargumentscontinue,thesloweranyproposedsolutionsaredeveloped.Therearetwomaincamps,thosewhofavorahardfork,whichloosensuptherulesoftheprotocolandthosewhofavorasoftfork,whichtightenstherulesofthecurrentprotocol.Withoutgoingintoadvancedtechnicaldetails,userswhofavorasoftforkarecurrentlyproposingasolutionknownasSegregatedWitnessorSegWit.ThecruxofSegWitisthatthesignature(orwitness)ofatransactioncanbekeptonaseparateblockfromthetransactionitself,thisfreesupblockspaceforadditionaltransactions.Thewitnessdataisencryptedandcannotbemodified,sothereisnoabilitytochangetheinformationofthepaymentsender.Thishasgreatrealworldusageintermsofloweringtheabilitytohackatransaction.

Aswithanypotentialchange,thereisacertainamountofunpredictabilityinvolved.Inpracticalterms,SegWitactivationwillaffectthepriceofBitcoinonewayoranotherintheshortterm,howeveratthetimeofwriting,SegWithasonlybeenactivatedforlessthan72hours,andthepricehasheldstablethusfar.

TheactivationofSegWitcouldwellpavewayforthelightningnetwork,atechnologythatwillenableinstantBitcointransactions.Instanttransactionsas

previouslystated,willhelpmicroandnanotransactionsimmensely,andallowsmallbusinessestoutilizethebenefitsofacceptingpaymentsinBitcoinatpointofsaleterminals.Thiswillbeespeciallyusefulincountrieswithlow-valuefiatcurrencies.OnecurrentexampleofthisisVenezuela,wheretheVenezuelanBolivarhaslostaround90%ofitsvalueagainsttheUSdollarinunderayear.Bitcointransactionsarehelpingasmall,butsignificantportionofVenezuelanpublicholdvalueinthemoneytheydohave.

SowhatisBitcoinCashthen?BitcoinCash(BCHorBCConexchanges)isaspin-offcryptocurrencythatwastheresultoftheAugust1sthardforkbyasmall,yetsignificantproportionoftheBitcoinminingcommunity.Theforkinvolvesincreasedblocksizesandfastertransactiontimeswhichinturnwillleadtolowertransactionfees.Theblocksizehasincreasedto8MB,fromtheoriginal1MBthatBitcoinuses.ThisforkwasdesignedtosolvethescalabilityproblemsthatBitcoincurrentlyfaces.

SoifBitcoinCashistechnologicallysuperiortoBitcoin,whydon’tIinvestinthatinstead?It’satoughquestiontoanswerbecausequitefrankly,thesearestillveryearlydays.Atthetimeofwritingtheforkisonly1montholdandBitcoinCashhashadhighpricefluctuations.LiquidityismuchlowerthanBitcoin(meaningitisdifficulttoselllargeamounts)andrealworldadoptioneffectsremaintobedetermined.Ifyou’reanewinvestor,BitcoinCashiscertainlysomethingtobemonitored.However,thenetworkeffectsofBitcoinarestilltoostrongtoignore,anditisstillverymuchthenumberonecryptocurrency.

Intermsofmarketprice,theBitcoinCashsplitonAugust1stinitiallyledtoafallinthepriceofBitcoin,beforeitonceagainrosetoanall-time-highinlateAugust.BitcoinCashvalueinitiallyplummetedbeforeaboomandthenaresettoitscurrentpriceofaround$550.IfyoupurchasedBitcoinafterAugust1st,BitcoinCashshouldbetreatedasacompletelyseparatecurrency.AnyBitcointransactionwillnotbereplicatedinBitcoinCashorviceversa.IfyouwishtopurchaseBitcoin,lookforthesymbolBTConexchanges.IfyoupurchasedBitcoinbeforeAugust1styoumaywellbeabletoreceivethesameamountinBitcoinCash-providingyouhelditinawalletthatwasnotlinkedtoanyexchange.

Forminers,orthoseinterestedinmining,atthetimeofwritingBitcoinCash

offersgreaterminingrewardswhencomparedtoBitcoin,duetoadecreaseddifficultyinitsproof-of-workalgorithm.

HowtoBuyBitcoin

GonearethedayswhenbuyingBitcoinwasatimeconsumingandsomewhatuncomfortableendeavor.NowadaysbuyingBitcoinisasimilarprocesstoexchangingcurrencywhenyougoonvacation.

TherearetwowaystobuyBitcoin,thefirstistousefiatcurrency(USD,EUR,GBPetc.)topurchasecryptocurrencyviaanexchange.Theseexchangesfunctionthesamewayasregularforeigncurrencyexchangesdo.Thepricesfluctuateonadailybasis,andlikeregularcurrencyexchangemarkets-theyareopen24/7.Theseexchangesmaketheirmoneyfromchargingasmallfeeforeachtransaction.Somechargebothbuyersandsellers,someonlychargeafeeforbuying.Forsecurityreasons,mostoftheseexchangeswillrequireyoutoverifyyourIDbeforeallowingyoutopurchasecryptocurrency.

Itisalsoimportanttonotethetypeofpaymentseachexchangesupports.Someallowfordebit/creditcardpaymentswhereasotheronlyacceptPayPalorbankwiretransfers.BelowarethethreebiggestandreputablecurrencyexchangesforpurchasingBitcoin,EthereumandotheraltcoinswithfiatcurrencylikeUSdollars,EurosorBritishPounds.

CoinbaseCurrentlylargestcurrencyexchangeintheworld,Coinbaseallowsuserstobuy,sellandstorecryptocurrency.Coinbaseisundoubtedlythemostbeginnerfriendlyexchangeforanyonelookingtogetinvolvedinthecryptocurrencymarket.TheycurrentlyallowtradingofBitcoin,aswellas,EthereumandLiteCoinusingfiatcurrencyasabase.Knownfortheirstellarsecurityproceduresandinsurancepoliciesregardingstoredcurrency.TheexchangealsohasafullyfunctioningiPhoneandAndroidappforbuyingandsellingonthego,veryusefulifyouarelookingtotrade.

OnceyouaresignedupandcompletetheidentityverificationproceduresyoucanbuyBitcoinwithyourcreditordebitcardinstantly.

IfyousignupforCoinbaseusingthislink,youwillreceive$10worthoffreeBitcoinafteryourfirstpurchaseofmorethan$100worthofcryptocurrency.http://bit.ly/10dollarbtc

Kraken

BasedinCanada,andcurrentlythelargestexchangeintermsofvolumeofbuysinEuros,Krakenhastheadvantageofmorecoinsupport(theyalsoallowthepurchaseofMonero,EthereumClassicandDogecoin)thanCoinbase.Itallowsmargintrading,whichwhilebeyondthescopeofabeginner,willbeofinteresttomoreexperiencedtradersForotheraltcoins,youwillneedaccesstoanexchangethatfacilitatescryptocurrencytocryptocurrencytrading.ThebestoneoftheseisPoloniex.

Poloniex

Withmorethan100differentcryptocurrenciesavailableanddataanalysisforadvancedtraders,Poloniexisthemostcomprehensiveexchangeonthemarket.Lowtradingfeesareanotherplus,thisisagreatplacetotradeyourBitcoinintoothercryptocurrencies.IfyouhaveneverpurchasedBitcoinbefore,youwillnobeabletodosoasPoloniexdoesnotallowfiatcurrencydeposits.Therefore,youwillhavetomakeyourinitialBitcoinpurchasesonCoinbaseorKraken.BuyingLocally

ThesecondwaytobuyBitcoinsinexchangeforfiatcurrencyistolocallypurchasetheminperson.Theadvantageofthisisthatyoumaybeabletogetamarginallybetterpricethanbyusinganexchange.Theotheradvantageisthatuserslivingincountriesthatdon’thaveeasyaccesstoonlineexchangescanstillbuycoinsinperson.AlltransactionsareprotectedbyEscrowtopreventeitherpartybeingscammed.Websitehttp://localbitcoins.comisthecurrentmarketleaderforlocalbitcointransactionswithsellersinover15,000citiesaroundtheworld.

HowToSafelyStoreYourBitcoinCongratulationsonpurchasingyourfirstBitcoins!Nowthatyou’veboughtyourBitcoin,you’llneedtokeepitsecure.YoucandothisbytransferringitofftheexchangeandintowhatisknownasaBitcoinwallet.Thenamewalletimpliesthatyoucandoallthesamethingsyoucanwitharegularwallet.YoucanseehowmuchBitcoinyouhave,anduseittospendyourBitcoin.AnimportantdistinctiontomakeisthatbecauseBitcoinisdecentralizedandstoredontheBlockchain,thesewalletsdonot“store”yourBitcoinpersay.

WhileexchangeslikeCoinbasedoprovideyouwithyourownwallet,unlessyouareday-trading,it’sadvisabletoremoveyourcoinsfromtheexchangeinordertopreventagainstissueslikehacking-whichunfortunatelydoeshappenIn2011,TokyobasedBitcoinexchangeMt.Goxsufferedlossesofover$27.2millionand80,000userslostatotalofover$460millionworthofBitcoinaftertheexchangewashacked.Mt.Goxwasn’tsomeflybynightoperationeither,infactatthetimeitwasthelargestcryptocurrencyexchangeonEarth.Yetpoorsecurityprotocolsandmismanagementallowedtheattackstooccur.Thecompanyeventuallyfiledforbankruptcyamidallegationsoffraud,andmuchoftheuserbase’sstolencoinshavenotbeenrecoveredtothisday.Thisiswhyit’sparamountthatifyouwanttoholdyourcoinsforthelong-term,youstorethemsafely.

Theunderstandwallets,wemustfirstunderstandjusthowtheywork.Bitcointransactionsneedbothaprivatekey(fromthesender)andapublickey(fromthereceiver)inordertoprocesscorrectlyontheblockchain.Apublickeyisaseriesofbetween26and35alphanumericcharacterse.g.1Co5CmEZNz35Am59EcFhKGRdNfLrzppGkJ

Ifyoucanthisaddresstosomeone,theycansendfundstoyourwallet.Itisperfectlysafeforyoutogiveyourpublickey,alsoknownasyourwalletaddress,toanyone,astheycanonlydepositintoyouraccountwiththisinformation.In2013,acollegestudentreceived22Bitcoins(thenwortharound$24,000)byholdingupasignwithhispublickeyintheformofaQRcodeonaneditionofESPN’sCollegeGameday.

Yourprivatekeyontheotherhandshouldbeheldbyyou,andyoualone.Nevergiveyourprivatekeytoanyone.

Therearenumeroustypesofwalletsyoucanuse,hereisabreakdownofeachone.

DesktopWalletsAdesktopwalletareaconvenientmediumbetweenmovingyourBitcoinsoffanexchange,whilenothavingtocarryaroundadditionalinformationlikewithapaperorhardwarewallet.YoucanthinkoftheselikeaBitcoinbankaccountonyourcomputer.Mostdesktopwalletswillencryptyourprivatekeysforyoutoaddanextralayerofsecurity.Hereisarun-downofsomeofthemorepopulardesktopBitcoinwallets.Allthewalletslistedbelowarefree,youshouldneverpayforadesktopwallet.

Electrum-https://electrum.org

Whileit’sdesignmaynotwinanyawards,Electrumdoesthejobit’ssupposedto.Thecodeisopensource,whichmeansthere’samuchlowerpossibilityofthedevelopmentteamslippinginsomethingmalicious.ElectrumallowsyoutostoreandspendyourBitcoinswithrelativeease.Ithastheadvantageofstoringyourprivatekeysoffline,andtogoonlinein“watchingonly”mode,soifyourcomputergetshackedduringtheprocess,hackerswon’tbeabletospendanycoins.Italsohassupportforvarioushardwarewallets.Exodus-https://www.exodus.io/

UnlikeElectrum,Exodusisnotopensource.However,ExodusdoeshavetheadvantageofbeingcapableofstoringothercoinslikeEthereum,LitecoinandDogecoininadditiontoBitcoin.Theinterfaceisalsomoreuser-friendlythanElectrum.Itshouldbenoted,thatasdesktopwalletsrequireyourcomputertobeconnectedtotheinternet,theycanneverbe100%secure.

CoPay-https://copay.io

CoPayoperatesonbothdesktopandmobileplatforms,soit’sgreatifyou’relookingtospendorreceiveBitcoinsonthego.Itrequiresmultiplesignatures(waysofaccountverification)tospendcoins,whichisanaddedsecurityfeature.There’samultipleuseroptionaswell,whichisusefulforgroupsandfamilies.Thesoftware’scodebeingopensourceisalwaysaplus.

PaperWallets

Paperwalletsaresimplynotesofyourprivatekeythatarewrittendownonpaper.TheywilloftenfeatureQRcodessothesendercanquicklyscanthemtosendcryptocurrency.

●Cheap●Yourprivatekeysarenotstoreddigitally,andarethereforenotsubjecttocyber-attacksorhardwarefailures.

●Lossofpaperduetohumanerror

●Paperisfragileandcandegradequicklyincertainenvironments●Noteasytospendcryptocurrencyquicklyifnecessary-notusefulforeverydaytransactions

Youcanusesiteslikebitaddress.orgtocreatenon-securepaperwalletsonline.Theseareknownasnon-secureasyouhavetobeconnectedtotheinternetinordertousethem.Ifthesiteishacked,thenhackerscanaccessinformationregardingallprivatekeysthathaveeverbeencreated.

StepbyStepGuideonHowtoCreatea100%SecurePaperWalletRequiredMaterial:

●Offlinedownloadofbitaddress-http://bit.ly/offlinebitaddress●LiliLiveUSB-http://www.linuxliveusb.com/en/download●UbuntuOperatingSystem-http://www.ubuntu.com/download/desktop●USBFlashDrive-eitherabrandneworoneyouarewillingtoformattheexistingdatafrom

●AprinterInstallingUbuntuonyourflashdrive

1. Downloadtheaboveprograms2. OpenLiLiandinsertyourUSBflashdriveintoyourcomputer3. InLilichooseasource-select“ISO/IMG/Zip”option

4. InLiliOptions-select“FormatthekeyinFAT32”5. Unziptheofflinebitaddressfileandcopyitintoyourflashdrive

Thendisconnectyourcomputerfromtheinternet-thisissothereisnowayanyonecanaccessyourcomputerwhileyouarecreatingaprivatekey.

BootingUbuntufromyourflashdrive

Rebootyourcomputer,andpressF12beforewindowsorOSXloads.SelectUSBHDDfromthebootmenu.ThenruntheUbuntuoperatingsystemfromyourflashdrive.Afterithasloaded,clickon“TryUbuntu”OnceUbuntuhasloaded,clickonsystemsettingsthenprintersandaddyourprinter.Printout1pagetotestithasconnected.

Creatingyourwallet

6. ClickontheFirefoxicononUbuntuandopentheprivatebrowsingwindow7. Typeinthefollowingintheaddressbar:file:///cdrom/bitaddress.org-master/

8. Clickon“BitAddress.org.html”

9. Moveyourcursorarounduntilthetimerreaches0(thisistoensurethatyouarearealperson)

10. ChoosePaperWallet11. Followthestepstoprintoutyourpaperwallet12. DepositBTCusingthepublicaddressonthelefthandsideofthewallet

(representedbyaQRcode)

AdditionalRecommendationsItisrecommendedyoustoreyourpaperwalletinasealedplasticbagtoprotectagainstwaterordampconditions.Makemultiplecopiesforextrasecurityandifyouareholdingcryptocurrencyforthelong-term,storethepaperinsideasafe.

HardwareWallets

Hardwarewalletsrefertophysicalstorageitemsthatcontainyourprivatekey.ThemostcommonformoftheseareencryptedUSBsticks.Thesearesimilartoonesyoucanmakeyourself,exceptsomeoneelsehasalreadysetupthesecurityprotocolsforyou.Thisisidealforthosewhoarenon-techsavvy.Manyofthemalsohavebuilt-inbackupsoftwareincaseyouloseyourkeys.

Thesewalletsusetwofactorauthenticationor2FAtoensurethatonlythewalletownercanaccessthedata.Forexample,onefactoristhephysicalUSBstickpluggedintoyourcomputer,andtheotherwouldbea4digitpincode-muchlikehowyouuseadebitcardtowithdrawmoneyfromanATM.Pros:

●Nearimpossibletohack-asofthetimeofwriting,therehavebeenZEROinstancesofhackedhardwarewallets●Evenifyourcomputerisinfectedwithavirusormalware,thewalletcannotbeaccesseddueto2FA●Theprivatekeyneverleavesyourdeviceortransferstoacomputer,soonceagain,malwareorinfectedcomputersarenotanissue

●Canbecarriedwithyoueasilyifyouneedtospendyourcryptocurrency●Transactionsareeasierthanwithpaperwallets●Canstoremultipleaddressesononedevice-goodifyouplanonhavingmultipleBitcoinaccounts●Forthegadgetloversamongyou-theylookalotcoolerthanafoldedpieceofpaper

●Moreexpensivethanpaperwallets-startingataround$60

●Susceptibletohardwaredamage,degradationandchangesin

technology●Differentwalletssupportdifferentcryptocurrencies

●Trustingtheprovidertodeliveranunusedwallet.Usingasecondhandwalletisabigsecuritybreach.Onlypurchasehardwarewalletsfromofficialsources.

ThemostpopularofthesearetheTrezorandLedgerwallets.BothoftheseprovideaneasytouseexperienceinadditiontobeingaportableandsecurewaytostoreyourBitcoin.

HowtoTradeBitcoinWhileyoumaywanttoholdBitcoinforthelongterm,youmayalsowishtotradethemforothercryptocurrenciesorfiatcurrency.ThisisthefastestwaytomakemoneywithBitcoin,butalsotheriskiest.Totradeforfiatcurrency,youcansimplysellthematthecurrentexchangerateonthesameexchangeyouboughtthemat,likeCoinbaseorKraken.

Ifyouwanttotradethemforothercryptocurrencieshowever,it’sbesttomovethemtoPoloniexoranotherlargeexchangelikeBittrex.OnceonhereyouwillseetheexchangeratebetweenBitcoinandothercurrencies.Itshouldbenotedthatthismaydifferfromtheexchangerateforthecryptocurrencytofiatpairing.Forexample,theexchangerateforBTCtoLitecoin(LTC)maydifferfromtherateforBTC/USDandLTC/USD.Feesareusuallylowforcrypto-to-cryptotrades,themaximumfeeonPoloniexforexampleis0.25%.Anotherelementyoushouldexamineistheliquidityforcertainpairings.Forexample,youdon’twantatradetobedelayedbecausesomeoneontheexchangeisnotsellingthevolumeofthecoinyouarebuying.Tocheckliquidityofcertaincoinpairingsgotohttp://coinmarketcap.com

Theseexchangesalsoalongyoutoviewthehistoricalpricechartsforthevariouspairingsaswellastheliquidity(easeofmakingatrade)foreachmarket.

Aswithanyspeculativemarket,tradingBitcoinisriskyandyouareliabletolosemoney.Thisisespeciallytrueifyoutradeonemotion,andnotrationality.Itisadvisabletoproceedwithcautionanddoyourhomeworkbeforeyoudoanytradingforreal.Youcanpracticewithvirtualmoney(knownaspapertrading)onsiteslikehttps://www.whaleclub.co/Needlesstosaythough,youwillmakemistakesatfirst.You’lllearnfromthesemistakes,butit’simportantthatyoumakethemwithmoneyyoucanaffordtolose.

Ifyouaregoingtotrade,takeintermediateprofitsforyourself.Thiswayanygainsyouhavemadeareinyourbankaccount,andnotjustonpaper.Dollarcostaveragingalsoappliestotradinginadditiontoinvesting.

WhatDeterminesthePriceofBitcoin?Ifyou’regoingtoinvestinBitcoin,oranycryptocurrencyforthatmatter,it’simportanttounderstandthemarketfactorsthatdrivethepriceonewayoranother.Thereareanumberofthese,whichofteninteractwithoneanother,butforsimplicitypurposes,wewillexaminethemonebyone.

ChinaNocountryhasmoreofaneffectonthepriceofBitcointhanChina.MorefiattoBitcointradesfromChinathananyothercountry,andsomeofthelargestexchangesintheworldarebasedthere.Approximately70%oftheworld’sBitcointradesoccurintheChinesemarket.

GoodnewsfromChinaequalsgoodnewsforthemarketingeneral.ADecember2013announcementfromthePeople’sBankofChinadecreeingthatBitcoinwasnotacurrencytankedthemarketby35%inunderanhour.Conversely,newsofBitcoinbeingadoptedbyChinesebusinessoftenleadstotheBitcoinpricerising.

OnemajorfactorthatmakesChinasuchadrivingforceintheBitcoinmarketistheChinesegovernment’sstrictfinancialregulationofassetsheldinChineseYuan.BothwealthyandmiddleclassChinesecitizensarelookingforawaytosecuretheirfinancialfuturewithouttyingittothevalueoftheYuan,whichhasbeendevaluedinrecentyears.Bitcoinrepresentstheperfectwayforthemtodothis.FurtherYuandevaluationwillonlyleadtoincreasedBitcoingrowthinthefuture.Russia

LikeChina,Russiaisalsosufferingfromissueswithitsfiatcurrency,theruble.TherublehascontinuedtofallagainsttheUSdollaryear-on-yearforthepast3

years.Asitdoesso,RussiansliketoprotecttheirwealthbymovingtheirrublesintoBitcoin.

AdoptionisRussiaisalsoamajorplayerinBitcoinshort-termpricemovements.AnannouncementinMay2017thatUlmart,thelargestonlineretailerinRussia,wouldbeginacceptingBitcoinpayments,tookthemarkettoathenalltimehighof$1800.GovernmentRegulation

GovernmentsupportforBitcoinwillalsoplayapartinthepriceofitasacommodity.AlthoughBitcoinisnottiedtoanyonenation,formassadoptiontooccur-itneedsthesupportofgovernment.ThemaincontentionforgovernmentsrightnowisBitcoin’sperceived“completeanonymity”andhowitrelatestocrime,especiallytaxevasion.Oncemeasuresareinplacetoeliminatetheanonymityelement(regardlessofyourmoralstandpointonthis),governmentsupportwillrise,andsowillthepriceofBitcoin.Conversely,anytimethereisnewsofagovernmentcrackdownonBitcoineitherasadigitalcurrency,oronatechnologylevel-thepricedecreases

TechnologicalInnovationAdvancesintheBitcoinnetworkarevitalifitistocontinueincreasinginvalue.Aspreviouslymentioned,newdevelopmentslikeSegWitandthelightingnetwork,whichwilleasescalabilityissues,areimportantinthedevelopmentofthecoinonatechnologicalfront.

Thecoin’sabilitytohandlemicropayments(transactionsofsmallmonetaryvalue)isonekeyareathatwashaveabigeffectonthefuturevalue.Currentlytheeffectivenessofthesystemformicropaymentsislimitedbythe1MBblocksize,whichleadstominimumtransactionamountsanddelaysinpaymentprocessingifyousendtoomanytransactionstooquickly.Withthe

implementationoflightningnetwork,theteamhopestoeasetheseissuesandfurtherincreaseBitcoin’srealworldviability.

MassMediaDespitewhatwe’dliketobelieve,thevastmajorityofsocietystillgettheirnewsfromjust1or2sources.Toputitbluntly,themainstreammediadoesn’tunderstandBitcoinoneiota.Duetothelackofpropercryptocurrencyorcryptoassetjournalistsworkingformajoroutlets,theywouldrathergiveairtimetogoodsoundbiteslike“Bitcoincouldreach$100,000within5years”orinversely“Bitcoinisthebiggestbubblesincethedotcomcraze”thanexamineitatatechnologicallevel,orfocusonanyinnovationsthathavebeenmade.PositivenewsforBitcoininthemedialeadstonewinvestors,andnegativenewsleadstoadecreaseinprice.

TheothersideofthisisthatsomeBitcoincommentatorshavealreadymadeuptheirmindwithoutevenexaminingthetechnology.Ifyouseeanarticlein2017talkingaboutBitcoinasafrontfor“drugdealing”or“moneylaundering”,thenyoucansafelydisregardit.Foryourownpersonalnewssource,Irecommenddedicatedsiteslikehttp://coindesk.comforlegitimate,non-biasedoroverhypednewsregardingBitcoinandcryptocurrency.

FundingforBlockchainCompanies

Asblockchaincompaniescontinuetoreceivemorefundingandinvestment,thecurrencyreceivesmorelegitimization.ManyblockchainrelatedstartupsnowacceptinvestmentsinBitcoinandothercryptocurrencieslikeEthereum.TheMiddleClassInvestor

Anoftenoverlookedfactor.WhileBitcoinmaybeincreasinginpopularityamongyoungerinvestorsandsomelargerinstitutions,itisstillverymuchofftheradaroftheAmericanmiddleclass.InotherwordsthinkaboutTom,aged55,fromMaryland.He’smarriedandhasalow6figureincomefromhisuppermanagementjob.Hisportfoliocurrentlyconsistsmainlyofbluechipstocksandlow-costindexfunds.He’snottryingtohitanyhomeruns,he’sjusttryingtoshoreuphisretirementassets.OnceBitcoincementsitsreputationasaformof“digitalgold”andmoreofasolidlong-terminvestmentratherthanthespeculativeplaythingitisseenasbysomemajorinstitutions,it’svaluewillcontinuetorise.Inotherwords,weneedmorepeoplelikeTomasourtargetBitcoinbuyerforthevaluetocontinueincreasing.

TechnicalAnalysisItshouldbenotedthattraditionaltechnicalanalysisorchartanalysislikeonewoulddoonstocksistough,asthecryptocurrencymarketisa)only8yearsoldsolackscomprehensivedataandb)unlikeanythingwe’veeverseenbefore.However,chartingdoeshaveitsplaceintheBitcoinuniverseandIwouldrecommendyoustudystocktechnicalanalysisbooksifyouareplanningtotradeBitcoinonaseriouslevel,withcandlestickchartingbeingthemostusefulforthecryptocurrencymarket.

MassAdoption

AsmoremerchantsacceptBitcoinasameansofpayment,themoreitlegitimizesthecurrency.Bitcoin’sscalabilityissueswillbethemaindeterminantofthis.Adoptionshowsnosignofslowingdownandthetotalnumberofbusinessesacceptingthecurrencycontinuestogrow.IfcorporategiantssuchasAmazonandApplebegantoacceptBitcoinpayments,thenthepriceislikelytoincreaseonceagain.

BitcoinforBusiness:HowYourBusinesscanBenefitfromAcceptingBitcoinPaymentsIfyou’renotasmallbusinessowner,youcanskipthissection,butifyouare,Iadviseyoutopaycloseattention.

Firstandforemost,acceptingBitcoinpaymentscansaveyoumoney.Whiletraditionalcreditcardpaymentprocessingarearound2-3%.UsingBitcoinpaymentplatformssuchasBitPaycanreducethesefeestoaround1%.Evenasmallpercentagechangelikethiscanrepresentbigsavingsinthelongrun.Ifyou’reaninternetsellertiredofbank’schargingyouextortionatefeesforcurrencyconversions,orsimplywanttomakeyourproductorserviceaccessibleworldwide-Bitcoinmaybeyoursolution.Bitcoindoesn’tdiscriminateacrossborders,andpaymentsfromanycountriesaresubjecttothesametransactioncosts.

TherearemillionsofBitcoinuserslookingforplacestospendtheircoins,addingyourbusinesstotheequationcanonlybegoodforthenetworkasawhole.Bitcoinusersarealsoanenthusiasticbunch,andenjoysupportingbusinessesthatacceptit.Cryptocurrencyasawholeisagrowingmarket,andmakingyourbusinessanearlyadopterisachancetobecomeaplayerinyourindustryviaincreasedbrandawareness.

There’salsoprotectionagainstchargebackfraud.AsBitcoinpaymentsareirreversible,you,themerchantisnolongerresponsibleforthecostsoffraud.Fornon-profits,Bitcoindonationshavesoaredyear-on-yearsinceitsinception.

TheJamaicanBobsledteamfundedtheirtriptothe2014WinterOlympicsentirelyfromcryptocurrencydonations.There’salsothebenefitsofcustomersseeingthetotaldonationamountandwhereitisspentinasectorwheretransparencyisking.

Ifyou’reworriedaboutthefluctuationofBitcoin’svalue,thenserviceslikeBitPayhaveyoucoveredwithdailybanktransfersinyourlocalcurrency.

CanIStillMakeMoneywithBitcoinin2017?Shortanswer:Yes

Longanswer:Bitcoincontinuestogrow,bothasadigitalassetandasacurrencywithrealworldapplications.IncreasedglobalizationandtheneedtotransfermoneyacrossborderswillonlyleadtoariseinadoptionofBitcoin.Theamountofcrossbordermoneytransferscontinuestogrowyear-on-yearandnowrepresentalmost1%oftheworld’sGDP.Bitcoin’stotalmarketcapnowstandsat$71billion,morethantheGDPofcountrieslikeCostaRicaandBulgaria.Thenear(butnottotal)anonymouselementofBitcoinisanotherfactorthatcontinuestodrivegrowth.Thisisparticularlyimportantincountrieswheregovernment’sheavilyregulatethefiatcurrencylikeChina.

Bitcoinhasnowbecomeabrandinandofitself.Thecurrencyissynonymouswithadigitalstoreofvalue.Thisissomethingthatnoothercryptocurrencycantouch.Thinkofitlikebuyingaproperty.Wouldyouratherbuyoneina“namebrand”citylikeLondonorNewYork,wherethedemandforpropertieslikeyourswillalwaysbehigh,regardlessofthegeneralstateofthemarket.OroneforthesamepriceinsayOklahomaCitywhereyoumaybeabletobuyabiggerhouse-butwillyoubeabletosellduringamarketdownturn?

WhetheryouwanttouseBitcoinasatoolfortrading,exchangingforothercryptocurrenciesorasalongtermstoreofvalue,therehasneverbeenabettertimetoinvestincryptocurrencythan2017.It’salsoneverbeeneasiertoinvestwithsiteslikeCoinbaseandKraken.Justrememberthough,everyonefeelslikeageniusoraheadofthecurvewhenthemarketisgoingup.Therewillbedownperiods,andit’simportanttomanageyourriskcorrectlysothatyoucanrideoutthebadtimesandcontinuetoprofit

duringthegoodones.Rememberthis-eventhebestinthebusinessgetitwrongsometimes

TheBitcoinInvestingMindsetandHowtoMinimizeYourRiskInamarketasvolatileascryptocurrency,it’simportanttominimizeyourriskasmuchaspossible.Withpotentialmarketchangesof10%onadailybasis,it’simportantforyourportfolio,aswellas,yourpeaceofmind.

Firstoff,neverinvestmorethanyoucanaffordtolose.Itmaybetemptingtotryandhitahomerun,butindoingsoyouwillcauseyourselfsleeplessnightsandanxietyriddendays.Secondly,unlessyouaredaytrading,don’tcheckcryptopricechartseveryfewhours.Doingsowillonlygiveadditionalanxiety.Thepriceisliableisswingbylargepercentagemarginsonadailybasis,that’sjustthewayoftheBitcoinmarket,justrememberthatsofar,overthelongrun,thepricehascontinuedtoincrease.

DollarCostAveragingOneofthebestwaystominimizeyourriskinavolatilemarketistousewhatisknownas‘dollarcostaveraging’.ThissimplymeansdividingupyourtotalplannedinvestmentandbuyingBitcoinatregularintervalsinsteadofallatonce.

Withdollarcostaveraging,youaresimplybuyinglessofanasset(inthiscase,Bitcoin)whenthepriceishigh,andmorewhenthepriceislow.Yourtotalexposureislessbecauseyouareonlyexposedtopartofanydeclineinthemarket,asopposedtoallofitwithalumpsuminvestment.Youraveragecostpercoinisthereforelikelytobelower.

Let’suseanexample,bothAlanandJohnhave$1200toinvestinBitcoinatthestartof2015.Alandecidestoinvestall$1200onJanuary1st,Johnontheotherhandisgoingtousedollarcostaveraging.Hewillinvest$100onthe1stofeachmonth,foratotalof$1200.ThepricesusedinthisexamplearetheactualBitcointradingpricesasofthosedates.

January1st2015-$305.32February1st2015-$237.18March1st2015-$263.57

April1st2015-$255.23May1st2015-$226.45June1st2015-$233.44

July1st2015-$260.73August1st2015-$283.04September1st2015-$229.00October1st2015-$240.10

November1st2015-$325.28December1st2015-$375.95

Alan’stotalinvestmentinBTC=3.93(1200/305.32)John’stotalinvestmentinBTC=4.55(1200/269.60)PriceonJanuary1st2016-$433.57

Alan’sPortfolioValue=3.93*433.57=$1704.02John’sPortfolioValue=4.55*433.57=$1974.37

Alan’sROI=42%

John’sROI=64.5%

Sobyusingdollarcostaveraging,John’saverageBTCpurchasepricewas$269.60,whereasAlanboughtalumpsumat$305.32.Byhavingaloweraveragepurchaseprice,John’sROIishigherovertime.Alanboughthercoinsatthepeakofthemarketbeforeaprolongeddownturn,whereasJohnutilizedthisdownturntohisadvantage.Remember,timeinthemarketbeatstimingthemarket.Generallyspeaking,thelongeryouareinvestedinsomething,thebetter.

FOMO&FUDThesearetwotermsyoushouldbecomefamiliarwithifyouaregoingtobeinvestingandtradinginBitcoin,oranycryptocurrencyforthatmatter.

FOMO-FearOfMissingOutThisismostcommonlymanifestedwhenyouseenewsreportsof<inserthotshinynewaltcoinhere>increasingbyridiculousnumberslike100+%inaday.Itmaybetemptingtotradeaproportionorevenall(terribleidea)yourBitcoininforthelatestcoolcryptocurrencyobject,butit’sincrediblyrisky.Manysmalleraltcoinsarebackedupbypurelytheoreticaltechnology,andhavenorealworldadoptionforwhateverproductorservicetheyarebacking.Remembertodoyourduediligenceregardingcoinnews.Justbecausetheheadlinemightread“AmazingAltcoinlinkedtoAmazondeal”,doesn’tnecessarilymeanthedealisanywhereclose,orifthereevenisadealinthefirstplace.Checkyourfactsbeforeinvesting.

ItisimportanttounderstandthatBitcoinhasnowreachedapointwheretherearerealworlduses,anditisbyfarthemostadoptedoutofanycryptocurrency.Therefore,Bitcoinhasgreatermarketsaturationandthusisunlikelytoskyrocketinvaluelikesmallercoins.Theoppositeisalsotruethoughandwithgreatrewardscomesgreatrisk.Manysmallercoinscan,anddoloseupto80%oftheirvalueinjustafewdays(forfurtherreadingcheckouttheChaincoinpumpanddumpschemeofJuly2017),whereasBitcoincontinuestoholdstrong.Ifyouareplanningtobuyandholdasinglecoinforthelongterm,Bitcoinshouldbeyouronlyplay.

FUD-Fear,Uncertainty&DoubtFUDisthespreadingofmisinformationbyuninformedsources.Manyofthesesourceshavetheirownnefariousreasonsfordoingso.Itmaybetopromotean

alternativecoin,ortheymayhaveshorted(betonthepricedecreasing)Bitcoin.Ofcourse,legitimatecriticismofBitcoinasatechnologyisfine,andshouldbeencouragedifthetechnologyistoadvance.FUDhoweverismostlyslanderandbaselessaccusationsaboutBitcoinasatechnology,thepeoplebehinditorthepeopleinvestedinit.

HowcanyouavoidFUD?SimplybyobtainingyourBitcoinandothercryptocurrencynewsfromreliablesources,whodon’thaveavestedinterestonewayoranother.Itisimportanttousemultiplesourcestogetawellroundedviewofthesituation.

InvestingyourBitcoin-ICOsAnICOorInitialCoinOffering,isanalternativeformofcrowdfundingthatmanyblockchainstartupshavebeenutilizingasoflate.InsteadofdonatinginUSDollarsinreturnforsharesofthecompany,patronscandonateinBitcoinorothercryptocurrenciesinexchangefornewtokensofthecompany.

ThemostfamousICOthusfarwastheEthereumICOofJuly2014.Ethereumisanewblockchainbasedplatformthatallowsapplicationsandautomaticallyexecutedcontracts,knownas“smartcontracts”tobebuiltonit.Duringthefundingphase,Ethereumreceivedroughly31,500Bitcoin,equivalentto$18.4millionatthetime.Inreturn,atotalof60millionEthereumtokensweredistributedtothosewhowerepartofthefunding.Theprojecthasbeenextremelysuccessfulintheshorttermandtoday,60millionEthereumisworthapproximately$24billion.ICOsrepresentawayforcompaniestofundtheirblockchainprojects,inadditiontoprovidingreturnsforinvestors.Usuallytheofferingslastforaperiodofafewweeks,andthecompanyissuingthenewtokenswillhaveagoalamountthattheyaimtoraise.ICOshaverapidlyincreasedinpopularityinthepast18months,and2017isontracktobethefirstyearthatblockchaincompaniesraisemoremoneyfromICOsthantheydofromtraditionalventurecapitalists.Foraninvestmentpurpose,ICOsrepresentawayforsavvyinvestorstogetinonthegroundfloorofanexcitingnewproject.

Thedownsideofthisofcourse,isthatwithsomanynewICOspoppingup,someofthemhavefarlesslegitimacythanothers.IfyouareplanningtoinvestinanICO,dosobasedontheunderliningusefulnessoftheproject,andnotanyfancymarketingbuzzwordsthatthecompanyusesintheirsalescopy.Justbecausesomethingisbasedonablockchainplatform,doesnotalwaysmeanthereisarealworlddemandfortheproductorservice.Anotherareatoexamineistheteamofdevelopersbehindtheproject,andtheirtrackrecordofsuccessfullydevelopingblockchainapplications.

Likeanytraditionalstartupventure,moreICOswillfailthansucceed,andraisingmoneyisonlypartofasuccessfulproject.OnesuchexampleofanICOwithproblemsisBancor,anICObasedoftheideaofcreatingamarket-making(generatinganautomaticbuyandsellprice)productthatprovidedliquidityfordigitalassets.Theprojectraisedastaggering$153minjust3hours,over50%higherthantheinitialtarget.

Howevertheprojecthadproblemswithinvestor’stransactionsbeingacceptedinadditiontotheBancorteamissuingextratokenafterthefundingperiodwascomplete.Thisultimatelymeansalowerreturnsforinvestors.Likeanyinvestment,isimportanttodoyourduediligencebeforebecominginvolved,andneverinvestmorethanyoucanaffordtolose.Onefinalword,likeanythingintheBitcoinorcryptocurrencyspace,ICOsarenotagetrichquickscheme.LatelytheICObuzzhasbeensointensethatthereareevenICOsutilizingFacebookAdsandcelebrityendorsementsinanattempttogaininvestment.It’sworthaskingyourselfifyouwouldinvestinanon-blockchaincompanybasedonaFacebookadvertisement,andIthinkyoualreadyknowtheanswer.Ifacompany’smainsellingpointis“amazingreturns”,ratherthantechnologicalinnovation,thenit’slikelytobeasub-parinvestmentratherthanasolidone.

Theotherareathatisvitaltounderstand,isthatyouARENOTbuyingstockinthesecompaniesduringtheICOphase.Youdon’townanyofthecompany,yousimplyownwhatevertokentheydenominizewhichwillfluctuateinvalueduetoexternalfactorsthatgobehindthecompany’sownperformance.

WhyIDon ’ tRecommendYouMineBitcoin

WheneverBitcoin’spriceisrising(andthat’smostofthetime!),theminingquestionalwayspopsup.Usuallyfromthosewhoareinexperiencedorwanta“free”waytogetapieceofthepie.

Itallstartswithavariantofthisquestion“WhybuyBitcoinat$100/$1,000/$4,000whenyoucanjustuseyourcomputertominesomeforfree?”

Unfortunately,likeeverythingelse-thereisnosuchthingasfreeBitcoin.

Aspreviouslydiscussed,thewayBitcoinsarecreatedor“mined”isbyusingacomputertosolveanofincreasinglycomplexseriesofalgorithms.UsersarethenrewardedforsolvingthesealgorithmsbyreceivingBitcoin.Thereisnomanpowerinvolved,youyourselfdon’thavetosolvethealgorithm,youjusthavetolinkyourcomputeruptotheBitcoinnetworkandthecomputerdoestherest.Therearealsonoshortcutsorbreakthroughmoments,theonlywayBitcoincanbeobtainedquickeriswithmorecomputerpower.Howmuchcomputationalpoweryousupplydeterminesthesizeofyourreward.Themorepoweryousupply,themoreBitcoinsyoureceive.NowhereiswhyminingisgenerallyaterribleinvestmentfortheaverageJoe.

1. ElectricityCosts-Theelectricitycostsinvolvedwithrunningyourcomputer24/7(whichisnecessaryformining)byfaroutweightheamountofBitcoinsyoureceiveforcompletingthetask.Yourequireaccesstoindustrialelectricityratesofaround$0.02perkWhinorderfortheventuretobeprofitableonasmallscale.

2. RequiringSpecialistHardware-Nowadays,themostefficientmining

processesrequirespecialhardwareknownasApplication-specificintegratedcircuits(ASIC).ASICscanbedescribedasasupercomputerthatcanonlyeverperformonetask.SpecialistBitcoinASICminersavailableforconsumerpurchasestillstartataround$1000andoftenrunaround$2000-$2500.

3. Equipmentmaintenance-Tomaintainallthiscomputingpowerisan

additionalcost.Thecostofcoolingaloneisalargecostthathastobefactoredintolongtermprofits.Hardwarerunning24/7burnsoutfasterandreplacementminingequipmentwillbeneededinduecourse.

4. TheincreasingsizeoftheBitcoinnetwork-Thenetworkpaysoutafixed

amountofBitcoin,regardlessofhowmanyminersareusingthenetwork.Thecurrentrateisaround1800BTCperday,whichsoundslikeahugenumber,untilyourealisejusthowmanyminersthereareonthenetwork.Thecurrentminingpowerisequivalentto17.6BILLIONdesktopcomputers.Thereforetheaveragepayoutfortheenduserrunning1desktopcomputerfulltimeisaroundapproximately$0.000107perday.Orroughly2centsayear’sworthofBTC.Toputitlightly,youhavemorechanceofwinningthelotterythanyoudomakingaprofitfromminingBitcoinyourstandardhomecomputer.

Miningin2017isamuchdifferentpropositionfromminingin2010oreven2012.TherearesomeopportunitieswhichinvolvedinvestinginBitcoinfarmsorgrouppurchasingprocessingpowerofASICatadiscount.Thisisknownasa“miningpool”.Duetocheaperpowercosts,currentlyaround80%oftheworld’sminingpoolsarebasedinChina,withIcelandpossessingthesecondlargestnumber.JoiningaminingpoolrequiresalowerupfrontinvestmentbutstillrequirescheapelectricityratesandhavedebatableROIpotential.

Itshouldalsobeworthnotingthatmanyofthosewhopromotegroupminingorcloudminingdosounderanaffiliateprogramwithwhatevercompanythatarepromoting,meaningtheygetacommission%everytimesomeonesignsup.

However,fortheaverageJoewithoutahugeamountofmoneytoinvest-Iwouldstronglyrecommendbuyingcoinsinsteadofminingthem.Youaremorelikelytogethigherreturnsinboththeshortandlongrun.

IsthereaBitcoinETForMutualFundIcaninvestin?ExchangeTradedFunds(ETFs)andmutualfundshaverepresentedsomeofthesafestinvestmentsoverthepastfewdecades.Insteadofinvestinginindividualcompanies,youarebuyinganaggregateshareofmanycompanies.Byallowingforthislevelofdiversification,thisrepresentsalowriskuseofyourfunds,andformanyyearsinvestorshavebeenclamoringforaBitcoinorcryptocurrencyfundlikethisduetothepricevolatilityofindividualcryptocurrencies.

UnfortunatelyattemptsforaBitcoinETFhavebeenthwartedbyregulatorybodiesthusfar.In2017,twoBitcoinETFapplicationswererejectedbytheSEC.Thereasoningfromthegovernmentbodywasthelackofregulationandmarketsurveillanceinthecryptocurrencyspace.TheclosestthingtoaBitcoinmutualfundtodayisadiversifiedfundofferedbyhttp://thetoken.iobasedoutofRussia-thefundisacombinationof16differentcryptocurrencytokens,withEthereum(22%)andBitcoin(17%)representingthelargestportionsofthefund.InvestmentscanbemadewithbothBTCandETHandfundsarestoredinEthereumbackedwallets.However,fiatcurrencyinvestmentsarenotcurrentlysupported.ThefundisbackedbyasmartcontractontheEthereumplatformtoensurethelegitimacyofthetokensoffered.

However,themaindrawbackofthesiteisthatitisnotavailabletothosebasedintheUSorSingapore,althoughthismaychangeinthefuturebasedontheregulatorystatusofBitcoinandothercryptocurrencies.Onceagain,likeanyinvestmentsyouareliabletolosemoneyinamarketdownturn,soonlyinvestmoneyyouarecomfortablelosing.

TheTenCommandmentsofBitcoinIfyougetnothingelsefromthisbook,atleastfollowtheserulesandyou’llbeinabetterpositiontomakemoneythanothernewinvestors.

1. ThoushaltbelieveinBitcoinatatechnologicallevel2. Thoushaltnevergivesone’sprivatekeytoanyoneelse3. ThoushaltalwaysstayinformedwithBitcoinnewsfrom

reputablesources4. Thoushaltneverpanicsellduringadownturn5. Thoushaltalwaystakeintermediateprofitsforoneself6. Thoushaltalwaysstorecryptocurrencysafely7. Thoushaltnotspendeveryhourcheckingcryptocurrency

markets8. ThoushaltnevermineBitcoinontheirregulardesktop

computer9. Thoushaltnotinvestmorethanyoucanaffordtolose10. Thoushaltalwayshelpotherswithlessknowledgethan

yourself

ConclusionBitcoinhaschangedthewaywelookatmoneyandfinance.Ourpreviousrelianceonbanksandotherfinancialinstitutionshasbeenputintoquestion.Theselongstandingfinancialinstitutionsnowfaceunprecedenteddisruptionfromthisgroundbreakingtechnology.Forusers,crossborderpaymentsatanear-instanttransactiontimeandfarlowertransactionsfeesaremakingtheglobaleconomysmaller.Formerchants,protectingthemselvesfromfraudhasneverbeeneasierwiththeriseofBitcoin.Evennon-profitscanbenefithugelyfromBitcoinasapaymentmethod.Blockchaintechnologyhasanadditionallaundrylistofbenefitsrangingfromtransparencyinelectionstoeasilyaccessiblemedicalrecordsbetweenparties.

Asacommodity,Bitcoinhasproducedunrivaledreturnsforinvestorsoverthepast7years.Nootherfinancialasset,inthecryptocurrencyspaceorotherwisehasmademorepeoplemoneysinceitsinceptionin2010.ForthosewhobelieveinBitcoin,longmaythesereturnscontinue.Ihopeyou’veenjoyedthisbookandthatyou’renowalittlebitmoreinformedabouthowBitcoinworks,andmoreimportantly,howitcanworkforyou.Whetheryou’replanningoninvestingforthelong-term,orhopingtomakeshort-termgainsbytrading-Iwishyouthebestofluck.

Remember,traderationallyandnotemotionally.Neverinvestmorethanyoucanaffordtolose,andfortheloveofGod-don’tcheckthecharts15timesaday.Ifyou’rereadytomakethenextstepandgetinvolvedinthemarket.Ihaveasmallgiftforyou.

IfyousignupforCoinbaseusingthislink,youwillreceive$10worthoffreeBitcoinafteryourfirstpurchaseofmorethan$100worthofcryptocurrency.http://bit.ly/10dollarbtc

Finally,ifyou’veenjoyedthisbookI’dreallyappreciateitifyouleftareviewonAmazon.

Cryptocurrency:BeginnersBible-HowYouCanMakeMoneyTradingand

InvestinginCryptocurrency

ByStephenSatoshi

ThefollowingeBookisreproducedbelowwiththegoalofprovidinginformationthatisasaccurateandreliableaspossible.Regardless,purchasingthiseBookcanbeseenasconsenttothefactthatboththepublisherandtheauthorofthisbookareinnowayexpertsonthetopicsdiscussedwithinandthatanyrecommendationsorsuggestionsthataremadehereinareforentertainmentpurposesonly.Professionalsshouldbeconsultedasneededpriortoundertakinganyoftheactionendorsedherein.

ThisdeclarationisdeemedfairandvalidbyboththeAmericanBarAssociationandtheCommitteeofPublishersAssociationandislegallybindingthroughouttheUnitedStates.

Furthermore,thetransmission,duplicationorreproductionofanyofthefollowingworkincludingspecificinformationwillbeconsideredanillegalactirrespectiveofifitisdoneelectronicallyorinprint.ThisextendstocreatingasecondaryortertiarycopyoftheworkorarecordedcopyandisonlyallowedwithexpresswrittenconsentfromthePublisher.Alladditionalrightreserved.

Theinformationinthefollowingpagesisbroadlyconsideredtobeatruthfulandaccurateaccountoffactsandassuchanyinattention,useormisuseoftheinformationinquestionbythereaderwillrenderanyresultingactionssolelyundertheirpurview.Therearenoscenariosinwhichthepublisherortheoriginalauthorofthisworkcanbeinanyfashiondeemedliableforanyhardshipordamagesthatmaybefallthemafterundertakinginformationdescribedherein.

Additionally,theinformationinthefollowingpagesisintendedonlyforinformationalpurposesandshouldthusbethoughtofasuniversal.Asbefittingitsnature,itispresentedwithoutassuranceregardingitsprolongedvalidityorinterimquality.Trademarksthatarementionedaredonewithoutwrittenconsentandcaninnowaybeconsideredanendorsementfromthetrademarkholder.

FinancialDisclaimer:

Iamnotafinancialadvisor,thisisnotfinancialadvice.Thisisnotaninvestmentguidenorinvestmentadvice.Iamnotrecommendingyoubuyanyofthecoinslistedhere.Anyformofinvestmentortradingisliabletoloseyoumoney.

Thereisnosingle“best”investmenttobemade,incryptocurrenciesorotherwise.Anyonetellingyousoisdeceivingyou.

Thereisno“surefirecoin”-oneagain,anyonetellingyousoisdeceivingyou.

Withmanycoins,especiallythesmallerones,themarketisliabletothespreadofmisinformation.

Neverinvestmorethanyouarewillingtolose.Cryptocurrencyisnotagetrichquickscheme.

“Theoneswhoarecrazyenoughtothinktheycanchangetheworldaretheoneswhodo”.-SteveJobs

“Thestockmarketisavehicletotransferwealthfromtheimpatienttothepatient"-WarrenBuffett

TotalCryptocurrencyMarketCapitalizationonAugust20th2017

Source:Coinmarketcap.com

Introduction

Injust7shortyears,thevalueofBitcoinhasincreasedfrom$0.08toover$4000[1]

Injustasingleyear,Ethereum’spricerosefrom$11to$395andbackdownto$295atthetimeofwriting.Thecurrentcryptocurrencymarketiswortharound$130billion,morethanthetotalGDPofcountrieslikeHungaryandKuwait.

Theseinvestmentreturnsarecompletelyunprecedentedfromanytraditionalstockorindexfundusingfiatcurrency-whichispreciselywhythecryptocurrencyuniverseisexploding

Wehavedailynewsarticlesperpetrating“Bitcoinvaluecouldreach$5000by2018”andyet2resultsfurtherdownonaGooglesearchwehaveacontraryarticlewiththeheadline“BitcoinvaluehaspeakedsaysBillionaire.”InthemonthofJulyalonewesawpredictionsofEthereumbeingat$1000bytheendof2017,andothercommentatorsspeculatingthatthevaluewouldplummettojust$50inthesametimeperiod.

It’ssafetosay-there’sawholelotofhypeoutthereThisbookisdesignedtoseparatefactfromfiction,wewanttotakeastepbackfromthehypeandlookatthefundamentalsofsomeofthemoreprominentcryptocurrenciestoexaminetheirviabilityasbothastechnologicalentityandasatrading/investingvehicle.Thisistogiveyouawellroundedviewonwhetherthesecoinshavepotentialforyoutomakemoney-whichmanyofthemdo

Forreferencepurposes,IwillrefermostlytoBitcoinwhentalkingaboutgeneralcryptocurrencytechnologyandusingcryptocurrencyasameansofexchange.Further,in-depthexplanationonEthereumandotheraltcoinscanbefoundlaterinthebook.

Finally-ifyouenjoythisbook,I’dreallyappreciateitifyoutookjust2minutesofyourtimetoleaveitareviewonAmazon.

WhatisCryptocurrency?

Dependingonwhoyouask,definingcryptocurrencywillelicitanswersfrom“themoneyofthefuture”allthewaydownto“thebiggestbubblesincetheDOTCOMbubble”.USsenatorThomasCarpersummeditupbestinlaymensterms.

“Virtualcurrencies,perhapsmostnotablyBitcoin,havecapturedtheimaginationofsome,struckfearamongothers,andconfusedtheheckoutoftherestofus.”Foramoreaccuratedefinition,cryptocurrenciesaresimplycurrenciesthatdonothaveacentralizedlenderlikeacountry’scentralbank.Theyarecreatedusingcomputerencryptiontechniquesthatlimittheamountofmonetaryunits(orcoins)createdandthenverifyanytransferofthefundsaftertheircreation.

Thiscreationtechniqueisknownas“mining”duetoitstheoreticalsimilaritytomininggoldorotherpreciousmetals.Tominecryptocurrency,oneneedstosolveanincreasinglycomplexalgorithmorpuzzle.Solvingthesealgorithmstakealotofcomputerprocessingpower.Inotherwords,itcostsmoneytominethem,sowecan’tjustcreatevalueoutofthinair.Thereforethesecurrenciesandtheirvaluearesecuredbythelawsofmathematicsasopposedtoanycentralgovernmentorbank.

Ascryptocurrencyadoptionincreases,sodoesthenumberofrealworlduses.Everythingfromphysicalgoods,giftcards,ticketstosportsgamesandevenhotelbookingscanbepurchasedusingcryptocurrency.Certainbarsandrestaurantshavenowalsostartedacceptingitasameansofpayment.AnumberofNGOsnowacceptdonationsinBitcoinandothercryptocurrenciesaswell.Therearealsomoreillicituses,withthecasesofundergroundonlinemarketplacesdealinginillegalgoods,suchasSilkRoadandAlphaBay.Thesecurrencieshaveahugenumberofadvantagesversusthecurrenciesthat

weknowandusetoday.Thisiswhatmakesthemsoattractivetobothlongterminvestorsandshorttermspeculators.Ofcourse,likeanyinvestment,cryptocurrenciesdoindeedhavesomedrawbackstothem-andwewillexaminetheselateroninthisbook.

AnExtremelyBriefHistoryofCryptocurrency

Whilethepracticalapplicationsofcryptocurrenciesdatebackamere7years,thetechnicalaspectsactuallydatebackafurther30yearstothe1980s.

CryptographerDavidChaumwasthefirsttotheorizeacryptocurrencywhenheinventedanencryptedcomputeralgorithmthatallowedsecure,unalterableexchangesbetweentwoparties.ChaumlaterfoundedDigiCash,oneofthefirstcompaniestoproduceunitsofcurrencybasedofhisalgorithm.It’simportanttonotethatonlytheDigiCashcompany,couldproducethecurrency,whichisamodelunlikeBitcoinandothercryptocurrencieswhereanyonecanminethecurrency(providingtheyhavethenecessarycomputingpower).AfterrunningintolegalproblemsandrejectingapartnershipwithMicrosoftthatwouldhaveseenDigiCashpairedwitheveryhomeWindowsoperatingsystem,thecompanywentbankruptinthelate1990s.

ChinesesoftwareengineerWeiDaipublishedawhitepaperon“b-money”,whichlaidthefoundationsforthearchitecturebehindthecryptocurrenciesthatweknowtoday.Thepaperincludedinformationoncomplexalgorithms,anonymityforpurchasersanddecentralization.Howeverthecurrencyitselfnevercametofruition.

USbasedE-Goldwasanotherfailedattemptatcreatingacryptocurrencyinthe1990s.TheFloridabasedcompanygavecustomerse-gold“tokens”inexchangefortheirjewelry,oldtrinketsandcoins.ThesetokenscouldthenbeexchangedforUSdollars.Thewebsitewasinitiallysuccessfulandtherewereover1millionactiveaccountsbythemid-2000s.OneofE-Gold’spioneeringstrategieswasthatanyonecouldopenanaccount.However,thisledtoanumberofscamsbeingrunthroughthewebsite.Inaddition,poorsecurityprotocolsledtolargehackingincidentsandthecompanywentoutofbusinessin2009.

ThemoderncryptocurrenciesthatweknowtodaybeganwithBitcoin,whichwasfirstoutlinedbyanonymousentity(theidentityhasneverbeenconfirmedasasinglepersonorgroup)SatoshiNakamoto.Bitcoinwasreleasedtothepublicinearly2009andalargegroupofenthusiastsbeganmining,investingin,andexchangingthecurrency.ThefirstBitcoinmarketwasestablishedinFebruary2010.

Inlate2012HostingandwebsitedevelopmentplatformWordpressbecamethefirstmajorretailertosupportpaymentinBitcoin.Thisstepwaskeyasitgavethecurrencyrealworldcredibilityandshowedthatlargecorporationshadconfidenceinitasacurrency.

Cryptocurrencyvs.TraditionalCurrency

Currency101:Thevalueofanycurrencyisdeterminedbywhatsomeonewillgiveyouinexchangeforsaidcurrency.

Currencies,cryptoorotherwiseneedtofollowthreebasicrules:4. Theyneedtobedifficulttoproduce(cash)orfind(goldorotherprecious

metals)5. Theyneedhavealimitedsupply

6. TheyneedtoberecognizedbyotherhumansashavingvalueUsingonlyBitcoin(BTC)asanexample,ittickstheboxesofallthreeofthesecharacteristics:

4. Bitcoinusescomplexcomputeralgorithmsinitsproductionwhichtakealotofcomputationalpower,soitcannotbereplicatedeasilyoratadiscount

5. ThereareafinitesupplyofBitcoins-21Milliontobeexact[2].Asof2015,roughly2/3ofthisnumberhadbeenmined

6. TherearehundredsofBitcoinexchangesandBitcoinisacceptedeverywherefromSubwaytoOKCupid

Wherecryptocurrenciesdifferfromtraditionalcurrencies(alsoknownasFiatcurrencies)isthattheyarenottiedtoanyonecountry,nationorinstitution(inmostcases).TherearenoUSABitcoins,noJapaneseLitecoinsoranythinglikethat.Theyaredecentralized.Bitcoinwasdesignedasa“deflationarycurrency”-meaningovertimeitsvaluewill,intheory,inherentlyincrease.Unlikefiatcurrencieswhichareinflationaryandwhosevaluewilleventuallydecrease.Afterall,in1917,$1wasworththeequivalentof$20.17today.SotheUSDollarisworth20timesLESSthan100yearsago.Inotherwords,ifyoucontinuetohold$1overthecourseof100

years,youwillbeabletobuyprogressivelyfewerandfeweritemsinexchangeforit,whereaswithBitcoin,theoppositewillhappen.

Asanotherrealworldexample.On22May2010,LaszloHanyeczmadethefirstreal-worldcryptocurrencytransactionbybuyingtwopizzasinJacksonville,Floridafor10,000BTC.Today10,000BTCisworthover$40million.Bitcoinwasdesignedthiswaysothatnosingleperson(orgovernment)couldincreasethesupplyofmoney,loweringthevalueofthemoneyalreadyinthemarket.

Wealsohavetorememberthatfiatcurrenciesthatweknowandlovewerenotalwaysthemainplayersinthecurrencyworld.Forcenturies,Goldandotherpreciousmetalswereseenasthemostdesirablecurrenciesfordaytodayusage.Itwasnotuntilgovernmentscouldstandardizeandverifythemetalliccontentofcoins(andlaterpaperbills)thattheybecamethegotochoiceforcitizens.[3]

LegendaryEconomistJohnMaynardKeyneshadthistosayaboutinflationandinflationarycurrencies.

”Byacontinuingprocessofinflation,governmentscanconfiscate,secretlyandunobserved,animportantpartofthewealthoftheircitizens.Bythismethodtheynotonlyconfiscate,buttheyconfiscatearbitrarily;and,whiletheprocessimpoverishesmany,itactuallyenrichessome.Thesightofthisarbitraryrearrangementofrichesstrikesnotonlyatsecurity,butatconfidenceintheequityoftheexistingdistributionofwealth.“WhileBitcoinhasanairofuncertaintyaboutitbasedonthedecentralizationprinciple-wheretherealpotentialliesisinseeingitfromtheoppositeperspective.Withnosinglebodybeingresponsibleforthesupplyofmoney,itforcesallplayers(government,businessesandconsumers)tobetransparentabouttheirprocesses,loweringtheriskoffraudortampering.Thetransparencyisensuredbyrewardingminersfortheirefforts(intheformofcoin).Thissingledominatingfactoriswhysomanyinvestorsareconfidentaboutthelongtermviabilityofthecurrency.

OnecommonargumentmadebyBitcoindetractorsisthatasthereisnogovernmentbackingthecurrency,itcouldtotallycollapseintheory.However,wehaveseenthesehappennumeroustimeswithfiatcurrencyunderscenariosofhyperinflationwheregovernmentscannolongerensurethevalueoftheirmoneyandassuchhavetocreateanentirelynewcurrency.CommonexamplesincludetheGermanWeimarRepublicinthe1920s,wherethecurrencylostsomuchofitsvalue,banknoteswereusedaswallpaper.Currently,theVenezuelaneconomyisontracktoexperienceover1000%inflationfortheyear,leavingmanycitizensunabletoafforddailynecessitieslikebread.Bitcoinenthusiastsseethecryptocurrencyasrecession-proof.

Thecostofinternationaltransactionsisanotherareawherecryptocurrenciesmaintainahugeadvantageovertraditionalones.Anyonewhohaseverhadtosendmoneyoverseaswillknowthatthecostofprocessingthesetransactioncanreachridiculouslevels.Therearetimeswhenthesefeescantop10%.As

cryptocurrenciesdonotviewinternationaltransactions(asthereareno“nations”involved)anydifferentlyfromlocalones,thereareminimalfeesforsendingmoneytoanypartoftheworld.Thespeedoftransactionsacrossbordersisalsomuchfasterthanregularfiatcurrencies,aBitcointransactiontakesaround10minutestoregisterasopposedtodaysforinternationalbanktransfers,andothercoinsprocesstransactionsevenfaster.

UnderstandingBlockchainTechnology

Sohowisallthismoneyworthanythingatall?Thisanswerisblockchaintechnology.Ifyouplantoinvestanymoneyatallintocryptocurrencies,itisvitalthatyouhaveatleastabasicunderstandingofblockchaintechnologyanditsuses.

Blockchaintechnologyallowsforapermanent,incorruptiblerecordofalltransactionsthathaveevertakenplace,freefromhumanerrorsordataloss.Theimportantthingtorememberisthatthesetransactionsdonotalwayshavetobefinancial,theycanbeintheformoflegalcontracts,auditingconsumergoodsandfilestorage.Blockchainisessentiallyagiantdatabasethatisnotstoredinacentrallocation.Afloatingdatabaseifyouwill.Becauseitisnotstoredinanysinglelocation,transactionsrecordedontheblockchainarepubliclyaccessibleandverifiable.Weagaingobacktotheideaofdecentralization,andnothavingtorelyonasinglepersonorgovernmenttoensureourtransactionswillbesafe.

Inmorepracticalterms,imagineallyourfinancialinformationwasstoredonasinglespreadsheet,notparticularlysaferight?Evenifyouhadonlineandofflinebackups,thesewouldbejust2or3pointsoffailure.Whatblockchainallowsforisthatspreadsheettobesharedacrossthousandsofdatabasesandcontinuouslyrefreshedmeaningthatanychangeswouldberecordedandnohackercouldcorruptitatasinglepointofentry.Asthereisnosinglepointofentry,thereisnownosinglepointoffailureeither.

Blockchaintechnologycouldbeusedtotransfereverythingfromcryptocurrency,totangibleassetssuchaspropertywithouthavingtouseamiddlemansuchasabankorotherfinancialinstitution.Thishaspotentialtosaveconsumersandbusinessesbillionsofdollarsayearthatarespentontransactionfees.WhileBitcoinhasgatheredmoremainstreampresswithregardstoconsumers,blockchaintechnologyreceivesmoreinterestfrombusinesses.

HowdoesBlockchainrelatetoBitcoinandCryptocurrency?

BitcoinisnotblockchainandblockchainisnotBitcoinoranyothercryptocurrency.Bitcoinsorothercryptocurrenciesaretransactedoverapublicnetworkthatrunsonblockchaintechnology.BlockchainistheunderlyingtechnologythatallowsBitcoinandothercryptocurrencytransactions,butaspreviouslymentioned-blockchaintechnologyhasmanymorepotentialuses.Youcanthinkofblockchainasanoperatingsystem,andBitcoinasoneofthehundredsofapplicationsthatrunonthatsystem.

BitcoinandCryptocurrencyDrawbacks

LackofFinancialRegulationandTheAbilitytoFundBlackMarketActivity

Oneofthebiggeststrengthsofcryptocurrenciesisalsoaweaknessinthesystem.Theanonymitytheyprovideallowsthemtobeusedtofacilitatelargescaleblackmarketoperationsandtheirusageforpurposesofmoneylaundering.Forexample,SilkRoad-anundergrounddarknetmarketplaceactedasablackmarketforillegaldrugs.PaymentsweremadeinBitcointoprotecttheanonymityofbuyersandsellers.Thesitewasshutdownin2013afteramassingroughly$1.2billioninrevenue.FounderRossWilliamUlbrichtwasconvictedof8chargesandsentencedtolifeinprison.Anothernefarioususeofcryptocurrencyisinransomware.Ransomwarereferstomalicioussoftwarethathackersinstallonauser’scomputer,thendemandpaymentinBitcointounscramblethesoftwareandallowthevictimtoaccesstheirdataagain.Ransomwareschemesgainedinpopularityasusingcryptocurrencyasameansofpaymentmeansthepeoplebehindtheattackscanseamlesslyreceivetheirransomwithoutrevealingtheiridentity.

Hackers

Theelephantintheroomregardingcryptocurrencies,withanyearlystagetechnology(whichcryptocurrencyverymuchis)thereareboundtobebreachesinsecurity.Hackershavebeenresponsibleforsomeofthelargestdipsinthecryptocurrencymarket.TokyobasedBitcoinexchangeMt.Goxsufferedlossesofover$27.2millionanduserslostover$460millionworthofBitcoinaftertheexchangewashackedin2011.AtthetimeitwasthelargestcryptocurrencyexchangeonEarth.Amidtalkoflazymanagement,andpoorsecurityprotocols,theexchangeendedupgoingbankruptafterthehackingincident.

Bitfinex,aHongKongbasedexchangewashackedin2016anditscustomerslostroughly$72millionworthofBitcoin.

ItisimportanttonotethatanyhackingincidentsregardingBitcoinorothercryptocurrenciesweredoneattheexchangeorwalletlevel-notatthetechnologylevel.Forfurtherinformationonhowtosafelystoreyourcryptocurrency,visitthewalletssectionofthisbook.

DataLossandHumanError

Ifproperlysecured,cryptocurrencieswillfacilitateashiftawayfromphysicalcashwhichcandegenerateanderodeovertime.Asthedataisencryptedandstoredonline,thereisnowayanyone(barhackers)canaccessyourfunds.However,thistheoryassumesperfectaccountabilityfromtheuser.Asyoumayhavefiguredoutbynow,noneofusareperfect.Welosethings.Forexample,wecanloseourprivateencryptionkeysiftheyarestoredonpaper,ordevicescanbecomedamagedorstolenifweareusingphysicalencryptedwallets(likeUSBwallets).

SpeculationandMisinformation

Aspreviouslymentioned,Bitcoin,andcryptocurrenciesingeneralareafrontiertechnology.Assuch,mainstreammediaoutlets,manyofwhomdonotemployexpertsinthefield,areliabletopresentmisinformationregardingthetechnology,andthemarketitself.Blanketstatementssuchas“Bitcoinisbetteratbeinggold,thangold”donothingbutunderminethetechnologyinthelongrun-butdomakegoodsoundbitesformainstreammediaInJune2017,theEthereummarketbrieflycrashedafterunsubstantiatedrumors,perpetratedby4Chan,claimedthatfounderVitalikButerinhaddiedinacarcrash.Thehoaxcausedthemarketvaluetodropbyaround$4billioninunder24hours.Thisdemonstratesthatthevolatilityofthemarketingeneralissubjecttomanipulationbynefariousforces.

Ifyouareplanningontradingcryptocurrencies,youmustbewillingtoexperiencesharpdropsandrisesinthemarket,farlargermovementsthantraditionalstocks.Thisiswherebeingarationaltraderwillhelpyoutremendously.

China’srelationshipwithcryptocurrencyisunlikeanyothercountry.NosinglenationhasdonemoreforthesuccessofcryptocurrencythantheMiddleKingdomitself.CryptocurrenciesarepopularamongChineseinvestorsduetothegovernment’sstrictcontrolsontheirfiatcurrency,theYuan.Thebiggestoneofthesebeingtheircurrencydevaluations,whichhurtitsvaluefortradingandinvestingpurposes.Thishasledtomanyprivateindividuals,bothwealthyandnon-wealthy,lookingforalternativewaystogrowtheirwealth.Cryptocurrenciesareviewedbymanyasamorestableassetwhencomparedtotraditionalinvestments.China’slargequantityofcheapenergyhasalsomadeitahotbedforthecryptocurrencyminingscene,whichisnowfinanciallyoutofreachofmostregularWesternEuropeanorAmericans.Around70%oftheglobalcryptocurrencyminingsceneislocatedinChina.

Chinaisalsoliableformassinformationmanipulation.Mistranslations,rumour-mongeringandcoinpumpsareallmoresusceptibleintheChinesemarketduetothelackofavailabilityofforeignmedia-especiallyinthecryptocurrencyspace.InJune2017,thePeople’sBankofChina(PBoC)issuedastatementaddressingfalsereportsthatthecentralbankwasissuingcryptocurrencyitself.Thereportswerethoughtthebepartofapyramidschemetogaininvestorsunderthefalsepretenseofagovernmentbackedcryptocurrency.SurvivorshipBias&Gambler’sFallacy

Contrarytowhatyoumaybeseeingoninternetforums&socialmedia.Therearepeoplewhohavelostmoneyincryptocurrency.It’ssimplyamatterofbuyingandsellingatthewrongtime.It’sthesamereasoncasinoscontinuetodosowellinpart,thewinnersbragtotheirfriendsandfamily,whiletheloserstaysilent.

Remember:Neverinvestmorethanyoucanaffordtolose

ThiscartoonfromXKCDsumsitupperfectly.

HowtoBuyCryptocurrency

Therearetwowaystobuycryptocurrencies,thefirstistousefiatcurrency(USD,EUR,GBPetc.)topurchasecryptocurrencyviaanexchange.Theseexchangesfunctionthesamewayasregularforeigncurrencyexchangesdo.Thepricesfluctuateonadailybasis,andlikeregularcurrencyexchangemarkets-theyareopen24/7.Theseexchangesmaketheirmoneyfromchargingasmallfeeforeachtransaction.

Somechargebothbuyersandsellers,someonlychargeafeeforbuying.Forsecurityreasons,mostoftheseexchangeswillrequireyoutoverifyyourIDbeforeallowingyoutopurchasecryptocurrency.Itisalsoimportanttonotethetypeofpaymentseachexchangesupports.Someallowfordebit/creditcardpaymentswhereasotheronlyacceptPayPalorbankwiretransfers.BelowarethethreebiggestandreputablecurrencyexchangesforpurchasingBitCoin,EthereumandotheraltcoinswithfiatcurrencylikeUSdollars,EurosorBritishPounds.

Coinbase

Currentlylargestcurrencyexchangeintheworld,Coinbaseallowsuserstobuy,sellandstorecryptocurrency.Coinbaseisundoubtedlythemostbeginnerfriendlyexchangeforanyonelookingtogetinvolvedinthecryptocurrencymarket.Usingtheplatform,onceyourIDisverifiedyoucanbuycryptocurrencywithinminutesusingadebitorcreditcard.TheycurrentlyallowtradingofBitCoin,EthereumandLiteCoinusingfiatcurrencyasabase.Knownfortheirstellarsecurityproceduresandinsurancepoliciesregardingstoredcurrency.TheexchangealsohasafullyfunctioningiPhoneandAndroidappforbuyingandsellingonthego,veryusefulifyouarelookingtotrade.IfyousignupforCoinbaseusingthislink,youwillreceive$10worthoffreeBitcoinafteryourfirstpurchaseofmorethan$100worthof

cryptocurrency.

http://bit.ly/10dollarbtc

Kraken

BasedinCanada,andcurrentlythelargestexchangeintermsofvolumeofbuysinEuros,Krakenhastheadvantageofmorecoinsupport(theyalsoallowthepurchaseofMonero,EthereumClassicandDogecoin)thanCoinbase.Itallowsmargintrading,whichwhilebeyondthescopeofabeginner,willbeofinteresttomoreexperiencedtradersForothercryptocurrenciessuchasDashandGolem,youwillneedaccesstoanexchangethatfacilitatescryptocurrencytocryptocurrencytrading.ThebestoneoftheseisPoloniex.

Poloniex

Withmorethan100differentcryptocurrenciesavailableanddataanalysisforadvancedtraders,Poloniexisthemostcomprehensiveexchangeonthemarket.Lowtradingfeesareanotherplus,thisisagreatplacetotradeyourBitcoinorEthereumintoothercryptocurrencies.ThebigdrawbackofPoloniexisthatitdoesnotallowfiatcurrencydeposits,soyouwillhavetomakeyourinitialBitcoinorEthereumpurchasesonCoinbaseorKraken.

CryptocurrencyGuide

BeyondBitcoin,thereareavastnumberofcurrenciesemerging.SomewithdifferentcharacteristicsandadvantagesoverBitcoinitself.

Inthissectionwewillexaminemanydifferentcryptocurrenciesandthefundamentalsbehindtheminordertogiveyouthebestpossibleconciseinformationregardingeachone.Thepricesofthesecoinsrangefrom<$1toover$300percoinsothere’ssomethingforeveryonehere.Oneadditionalnotetoremember,isthatcryptocurrenciesaredivisible,unlikeregularstocks.Forexample,youcannotbuylessthan1shareofApplestock(currency$159.30).However,youcanbuyfractionofaBitcoinorothercryptocurrencies.Meaningthatevenifyouonlyhaveasmallamountofcashtoinvestinitially,youcanstillpartakeinthemarket,evenifyoucan’taffordanentirecoin.

ItshouldbenotedthatasofAugust12017,BitcoinandBitcoinCashoperateas2separatecoins.Afurtherin-depthdiscussionofBitcoincashcanbefoundlateroninthisbook.

ForeachcoinIhavetriedtolistallmajorexchangesthatlistthecoinasapurchasableasset.However,exchangescontinuetolistadditionalcoinsallthetime.Forafulluptodatelistofexchangesthatcarryyourcoinvisithttp://coinmarketcap.com

ThingstoConsiderBeforeInvestinginCryptocurrency

It’snotessentialtoknowallthetechnicaldetailsbehindacryptocurrencybeforeinvesting.However,answeringsomebasicquestionswillhelpyoudecidewhetheryoushouldinvestinacoinornot.Herearesomeessentialquestionsyoushouldknowtheanswertobeforedelvingintoacurrency.

●Whatproblemdoesthecoinproposetosolve?

●Howwillthecoinsolvethisproblem?

●Whyisthiscoin’ssolutionthebestsolutionoutthere?Isitthebestsolution?

●Whoistheteambehindthecoin?Whatistheirdevelopmenthistory?Howtransparentistheircode?Isitopensource?

●Isthereapublicfigureheadwhowilltakeaccountabilityforanyissueswithdevelopmentoradoption?

●Doesthiscoinhavecompetitorcoins?Ifso,whatiscoinA’sadvantageversuscoinB?

Bitcoin(BTC)Priceattimeofwriting-$4,070.13Availableon:

Fiat:Coinbase,Poloniex,KrakenThecointhatstarteditallisnowoneoftheworld’spremiereassets.Sittingatamarketcapofover$67billion,thecoinisworthmorethanglobalcompaniessuchasPayPal.We’vealreadydiscussedBitcoinindepthpreviously,sothissectionwilldiscussitforinvestingpurposes.

Withthepricenowsittingatastaggering$4,000percoin,manycommentatorshaveclaimedthatowningBitcoinisoutofreachfortheregularinvestor,butthat’sastanceIdisagreewith.Firstofall,wehavetorememberthatcryptocurrenciesarenotlikeregularstocks,inthattheyaredivisible.SoifyouwantedtoinvestinBitcoin,youdon’thavetopurchaseanentirecoin.Youcanbuyfractionsofthecoinsoevenifyouonlyhave$100,youcanstillgetstartedinthecryptocurrencymarket.

Secondly,Bitcoin’sroleasaformof“digitalgold”continuestomakeittheworld’smostvaluablecryptocurrency.ItalsomakesBitcoinidealtoholdaspartofyourportfolioasmanyothercurrenciespricemovementsarelinkedtoit.

AnotherreasonwhyanyportfolioshouldcontainBitcoinisthatifyouwanttopurchasesomeofthelesserknowncryptocurrencies,youwillhavetodosoviaexchangingthemforBitcoinasopposedtobuyingthemoutrightforfiatcurrency.

BitcoinCash(BCH/BCC)

Priceattimeofwriting-$326.77Exchanges:

Fiat:Bitfinex,Kraken,Bithumb(ROK)ViaBTC(CN),Bter(CN),Huobi(CN),BitcoinIndonesia(INR)BTC:Bittrex,Poloniex,Cryptopia(NZ)

Bitcoincashemergedastheresultofasplitor“hardfork”intheBitcointechnologyonAugust1st2017.Theend-goalofBitcoinCashistofunctionasaglobalcurrency.ThesplitoccuredoutofproblemswithBitcoin’sabilitytoprocesstransactionsatahighspeed.Forexample,theVisanetworkprocessesaround1,700transactionspersecondwhereasBitcoinaveragesaround7.Asthenetworkcontinuestogrow,sodowaitingtimesfortransactions.BCCaimstorunmoretransactions,aswellas,providinglowertransactionsfees.

Oneofthemajorsolutionstothisissueisincreasingthesizeofeachblock,sothatmoredatacanbeprocessedatonce.ThisisinlinewithsolvingtheproblemsofscalabilitythatBitcoinwasfacingpreviously.Thetechnologyitselfworkedintheshort-term,withthefirstBitcoinCashblockregistering7,000transactionscomparedwithBitcoin’s2,500.ThesuccessoffailureofBitcoinCashwilllargelydependonBitcoin’sownadoptionoftheSegWittechnologylaterthisyear,andtheabilitytoprocesstransactionsquickertoacttrulyasacurrency-ratherthanaspeculativeasset.DetractorshavealsoraisedsecurityconcernsaboutBitcoinCash.

BitcoinCashhasbeenwidelyadoptedbymanycryptocurrencyexchanges.At

thetimeofwriting,thereareonlyafewweeksworthofdataavailableandthus,noonehasbeenabletoexecuteanylong-termtrendsortechnicalanalysisofBCHasacommodity.Asfurtheradoptioncontinues,thepricemaywellcontinuetorise.EarlypricerisesforBitcoinCashhavebeenlargelydrivenbydemandfromSouthKorea,withover50%ofthetotaltradevolumebeingseenonSouthKoreanexchanges.

MinershavebeenquicktoadoptthecurrencyaswellduetoitshigherminingROIwhencomparedtoBitcoin.Thedecreaseinminingdifficulty(leadingtogreaterrewardsformining)willcontinuetoseeforminersmovetheirresourcesfromBitcoinintoBitcoinCash.Note:Dependingonyourexchange,BitcoinCashmayusethesymbolBCCorBCH-doublecheckbeforeexecutingatrade

Ethereum(ETH)

Priceattimeofwriting($225.07)Availableon:

NearlyeverymajorexchangewillallowbuyingofEthereumforbothfiatcurrencyandexchangewithBTCIfBitcoindominatedthecryptocurrencyspacefrom2008-2016,2017hasundoubtedlybeenEthereum’syear.Thisrelativelynewcryptocurrencyhasmadeanimmediateimpactuponthespacewithsomeincredibletechnologicalinnovationsthathavethepotentialtobegroundbreaking,andgamechanging.

ItisworthnotingthatEthereumitselfisnotacryptocurrency,itisablockchainbasedplatform.Howevertokensdenominatedas“ether”aretradedonvariousexchanges.ThesetokenscanbeusedformakingpaymentsontheEthereumblockchainorexchangedforothercryptocurrenciesorfiatcash.Manyonlinearticleswillusetheterms“Ethereum”and“Ether”Interchangeably.WhereEthereumshinesiswitharevolutionarytechnologyknownas“smartcontracts”.Dubbedbysomeasatechnologythatcouldpotentiallyreplacelawyersandaccountants,thesecontractsareprogrammablecontractsusingblockchaintechnology,thatcanbesettoexecuteautomaticallyonceacertainsetofconditionsaremet.Forexample,anautomaticdepositof10ethercouldbemadeintopersonA’swallet,oncepersonAcompletesataskforpersonB.PersonBhasnowayofbreakingthiscontractoncetheconditionsaremetastheblockchainwillenforcetheconditionsofsaidcontract.

Thepotentialapplicationsforsmartcontractsarevast.Fromgovernment,tomanagement,tobeingabletosetupaself-executingwill,thisistrulyremarkabletechnology.Anumberoflargeinternationalbankshavealreadysetupthinktanksfortechnologylikethis,andadoptionbyanylargeinstitutionhas

thepotentialtosendEthereum’spriceintothestratosphere.TheBlockchainBankingConsortiumprojectinvolves43internationalbanksandaimstocreateablockchainnetworkthatcanenablelargescaleinternationalfundtransfer.

Theplatformisstillinthedevelopmentstage,andtherearetothisday,fewrealworldexamplesoflargescaleEthereumblockchainimplementation.However,manyinvestorshavefaithinthetechnology,whichplaysabigpartinexplainingthepricerisesoverthecourseof2017.Inlessthan1monthbetweenMay18andJune12,thepricesoaredfrom$96.65toapeakof$395.03.Ethereumalsosufferedfroma$4billionsingledaylossinmarketcapafterahoaxrumorregardingthedeathoffounderVitalikButeringainedtractionafteroriginatingoninternetmessageboard4Chan.Letthisexamplebeanotherwarningthatcryptocurrenciesaremoresusceptibletomarketmanipulationthantraditionalassets.

Ripple(XRP)PriceatTimeofWriting-$0.15Availableon:

Fiat:Bitstamp,GateHubBTC:Poloniex,Bittrex,Kraken,Coincheck(JP),Bitso(MEX),Coinone(ROK)

Thethirdlargestcryptocurrencybymarketcapitalizationisonethatfliesundertheradarofmostinvestorsandnewssources.Launchedin2012andactingasapaymentnetworkandprotocol,Rippleaimstoenable“secure,nearinstantandnearlyfreeglobalfinancialtransactions.”Rippletransactionscurrentlyprocessinanaverageofjust4seconds.Theplatform’sultimategoalistomakeoutdatedpaymentplatformswithslowtransactionstimesandhighfeeslikeSWIFTorWesternUnionobsolete.ManyglobalbankinginstitutionsalreadyuseRipple’spaymentinfrastructure,includinggiantslikeBBVA,BankofAmericaandUBS.Forexample,usingRipple’spaymentplatform,bankscouldconvertcurrenciesseamlessly,evenforobscurecountriesandcurrenciessuchasaconversionofAlbanianLektoVietnameseDong.ThiswouldalsonegatetheneedforintermediarycurrenciessuchasUSdollarsorEuros.AccordingtoRipplethemselves,aswitchtotheplatformcansavebanksanaverageof$3.76.

Withadoptionintheglobalbankingsector,Rippleisofftoastrongstart.Especiallyifyoulookatitlikeyouwouldatraditionalstartup.Ripplealsohasthelargestnumberofcointokens(knownasXRP)availableoutofanycoinat100billion(39billionavailabletothepublic),incontrastBitcoinonlyhas16millionandEthereum94million.

Unlikemanyopensourcecryptocurrencies,Ripple’ssourcecodeisprivatelyowned.The100billioncoinsupplywasalso“instamined”,andintheorytheownerscouldgeneratemoreatanygiventime,whichwouldinstantlydevalueanyoneholdingcoins.Thecentralownershipisalsoataclashwiththosewhobelievethatcryptocurrencyshouldbeusedasaforceagainstonesingleowner.ResearchersatPurdueUniversityalsodeterminedthattheplatformhad“securityconcerns”,althoughasofwriting,therehavebeennomajorincidentswiththeplatform.

Dash(DASH)

Priceattimeofwriting:$194.25Availableon:

Fiat:Bitfinex,xBTCe,Bithumb(ROK),BTC:Poloniex,Bittrex,Kraken

Shortfordigitalcash,Dashfocusesonspeedoftransactionandanonymityasits2mainsellingpoints.PreviouslyknownasDarkcoin,itwasrebrandedinordertodistanceitselffromthe“darkweb”ofundergroundillegalcryptocurrencyactivity.Dashfocusesonprivacy,usabilityandtheconsumermarket.Currentlythecoinfluctuatesbetweenthe5thand8thlargestcryptocurrencybymarketcapitalization.ByspeedinguptransactionspeedsfromBitcoinbyusingitsMasternodenetwork,paymentsarenearinstantversusthe10minutewaitingperiodforBitcointransactions.Toobtainamasternode,usersmustdepositatotalof1,000DASH.ThishadledtosomedebateaboutwhetherDASHistrulyadecentralizedcurrencyornot.

DashislessliquidthanBitcoin,meaningyoumayhaveahardertimeexecutinglargeorders.However,thecurrencycontinuestobeadoptedbymoreexchangeseverymonth.Dash’sgrowthpotentialremainsdeterminedbyitslevelofaccessibilityandadoptionbythemassmarket.OncesuchexampleofthisisBitCart,anIrishbaseddiscountgiftcardwebsitewhichofferscustomersupto20%discountsonAmazonpurchasesforpaymentinDash.AnotherinterestingareainwhichDashisutilizedistherecentVenezuelancurrencycrisis.VenezuelanCryptocurrencyexchangeCryptoBuyerbegansellingDashasanalternativetothelocalBolivarcurrencywhichwas,andstill

is,sufferingfromhyperinflation.Venezuelansareseekingtoprotecttheirsavings,andcryptocurrencieslikeDashallowthemtodothisbyholdingvalueagainsttheUSdollar.

Anotherareatonoteisthattherichest10DASHholderscurrentlyhold10.1%ofthetotalcoinvalue,whichisalmostdoublethatofBitcoinandBitcoinCash.Thiscouldhaveanimpactifoneofthesemajorplayerswantedtoinfluencemarketmovements.

Monero(XMR)

Priceattimeofpublication:$43.22Availableon:

Fiat:Kraken,HitBTC,Bter(CN)BTC:Poloniex,Bitfinex,Bittrex,Bitsquare

MoneroallowsuserstosendandreceivefundsWITHOUTapublictransactionrecordavailableontheblockchain.AllMonerotransactionsareprivatebydefault.Ifyoubelieveinprivacyfirstandforemost,thenMoneroticksalltheboxes.Thecurrencyisdesignedtobefullyanonymousanduntraceable.Thisgoesasfarastheirdevelopmentteam,whichunlikeothercoinshasnopublicCEOorfigurehead.Moneroalsouses“ringsignatures”,aspecialtypeofcryptographytoensureuntraceabletransactions.Thisallowsuserstoreceivemoney,withoutbeingabletolinktheaddresstothesender.Thiscouldbelookedatasbothapositiveornegativedependingonyourviewpointregardinganonymity.Theringsignaturesalsoconcealthetransactionamount,inadditiontotheidentityofthebuyerandseller.UnlikeDash,Monerohasbeenopensourcefromitsinception,soanyonecanviewthesoftwarecodefortotaltransparency.

Theanonymityofthecurrencyhasmadeitafavoriteofthedarkweb.Beforeitsshutdown,darknetmarketsiteAlphaBayhadadoptedMoneroaswellasBitCointoprocesstransactions.Everythingfromillegaldrugs,weaponryandstolencreditcardsweretradedontheplatform.ItsanonymityhasalsomadeMoneroafavoriteamongransomwarehackers.ItremainstobeseenifMonerowillbranchouttomorelegitimateuse,suchastoconcealone’struenetworth.Orifitwillcontinuetobethefavoritecoinofmore

illicitindustries,preventingitfrommassadoptionversusothercoins.Thisuncertaintycouldbeusedtospeculator’sadvantageastheyseektoprofitfrommassadoptionpotential.

Litecoin(LTC)

PriceatTimeofWriting-$40.11Fiat:Coinbase,Poloniex

BTC:NearlyallexchangessupportBTCtoLTCtransactionsTheoriginalaltcoin,Litecoinhasrepresentedunglamorousyetsteadygrowthinacryptocurrencyscenefueledbyhypeandlargeboom/bustcycles.Becauseofthis,manyanalystshavedeemeditthe“lowriskcoin”.Announcedin2011withtheintentionofbeing“silvertoBitcoin’sgold”andrectifyingtheshortcomingsthatBitcoinfacedatthetime.Litecoin’scoinlimitis4xtheamountofBitcoin’sat84millioncoinsmakingittoo,adeflationarycurrency,Thetimetocreateablockis2.5minutes,aquarterofBitcoin’s10minutes.LitecoinwasthelongstandingsecondlargestcryptocurrencybymarketcapitalizationbeforetheriseofEthereumin2017.

Litecoin’sabilitytohandleahighervolumeoftransactionsduetoitsspeedofblockgenerationgivesitamajoradvantageoverBitcoin.Thismeansmerchantscansendandreceivepaymentsnearinstantlywithzerotransactioncosts.Bitcoinontheotherhandwouldtakefourtimesaslongtoprocessthesametransactionatahighercost.Litecoinalsopossessesoneofthemostactivedevelopmentteamsinallofcryptocurrency,allowingthecointoundergoregularcuttingedgeupgradessuchasbeingthefirstcointoadoptSegregatedWitness(SegWit)technology.ThisalsogivesthecointheadvantageofhavingthesecondmostsecureblockchainafterBitcoinitself.Anotheradvantageforwouldbeinvestorsistheuptakeonmajorexchanges.NearlyallofthebiggestcryptocurrencyexchangessupportLitecoinpurchasesinfiatcurrencyincludingCoinbaseinMarch2017,whichwasgreatnewsforUSandEUinvestors.Intermsofmarketbehavior,generallyBitcoinandLitecoinfollowasimilarpatternintermsofincreasesanddecreasesinthecurrencyvalue.ManyinvestorschooseLitecoinasasupplementaryoptiontoBitcoinin

ordertodiversifytheirportfolio.

Forthoseinterestinginmining,Litecoin’salgorithmisfarsimplerwhichmakestheminingcostsandbarrierstoentrylower.LitecoinrunsontheScryptalgorithmwhereasBitcoinrunsontheSHA-256.ThemainsignificanceofthisinpracticaltermsisalowerminingcostasScryptislessintensiveonGraphicProcessingUnits(GPUs).In2017,Bitcoinminingisnolongeraviableoptionforthenoviceorhomebasedminer,whereasLitecoinminingcanstillturnaprofit,evenwhenfactoringinelectricitycostsinfirstworldcountries.Litecoin’sdetractorshavecriticizedthecoinforbeing“justanotherBitcoinwithnoinnovation”.ThecoinwasalsothevictimofaChinesepumpanddumpschemein2015wheninvestorsaccumulated22%ofallthecoinsinexistencebeforedumpingthem.

Factom(FCT)Priceattimeofwriting-$19.71Fiat:Coincheck(JP),Yuanbao(CN)

BTC:Poloniex,BittrexLikeEthereum,Factomexpandsonwaystouseblockchaintechnologyoutsideofjustcurrency.WhileEthereumisbasedontwowayverificationandensuringcontractsareunbreakable.Factompromisestodothesamewithlargeblocksofdatabyprovidingarecordsystemthatcannotbetamperedwith.Thiswouldallowbusinesses,governmentstoprovideatrackrecordofdatawithoutalterationorloss.Thepracticalapplicationsforthisincludelegalapplications,companyaccounts,medicalrecordsandevenvotingsystems.Justimagineaworldwhereitwasphysicallyimpossibletoriganelection,orwhereanaccountingscandallikeEnroncouldn’thappenagain.

Likeotherprojectsutilizingblockchain,Factomcannotbealteredbecausenosinglepersonrunsthenetwork.Thenetworkiscollectivelyownedbymillionsofusers,independentlyofeachother.Whiledataownedbyonepersonispronetomalevolence,hacking,usererrorandalteration,thesameisnotpossiblewithdataownedbyanentirenetwork.Withregardstoinvesting,likeEtheristoEthereum,Factoidsarethe“currency”oftheFactomsystem.ThemoreapplicationsthataregeneratedusingFactom,themoretheseFactoidsareworth.

FactomhasalreadysecuredadealwithconsultingfirmiSoftStonetoprovideblockchainbasedadministrationsoftwareprojectsforcitiesinChina.Thedealincludesplansforauditingandverificationservices.

Ofthetechnology,FactomCEOPeterKirbystated“Webelievethatthiswillhelpdeveloperscreateawholenewclassofaccountableandtamper-proofbusinesssystems.Thiscouldbeininsurance,financialservices,medicalrecords,orrealestate–anysystemwhererecordkeepingisessential.”

Likeotherblockchaintechnology,commonquestionssurroundingFactomareonesofscalabilityandwidertechnologyadoption.TheothermaindrawbacktoFactominvestingiswhethertheteamcanrunthesystemataconsistentprofitgoingforward-orwhetherthetechnologywillleadtoaracetothebottomintermsofprice.

Neo(NEO)PriceatTimeofWriting-$7.89Availableon:

Fiat:Yunbi(CN),Jubi(CN)BTC:Bittrex,Binance

OneoftheseearliestChinesebasedblockchainprojects,Neo,formelyknownasAntsharespridesitselfonbeingopensourceandcommunitydriven.ThecoinhasbeencomparedtoEthereuminthesensethatitrunssmartcontractsinsteadofactingasasimpletokenlikeBitcoin.TheprojectisdevelopedbyaShanghaibasedcompanycalledONCHAIN.InaJune2017pressconferenceheldattheMicrosoftChinaHQinBeijing,theAntsharesfounderDaHongfeiannouncedtherebrandingtoNeoaswellassomeprojectsinthepipeline.TheseincludedcollaboratingwithcertificateauthoritiesinChinatomapreal-worldassetsusingsmartcontracts.

Neo’sbaseinChinaallowsituniqueaccesstotheworld’s2ndlargestmarketandthelargestcryptocurrencymarketwhichcouldbeseenasauniquepluswhencomparedtoothercryptocurrencies.Howevercurrentdrawbacksincludealimitednumberofwalletsforthecoinitself.Attheevent-SrikanthRaju,GM,DeveloperExperience&EvangelismandChiefEvangelist,GreaterChinaRegion,Microsoft,saidthatONCHAINis“oneofthetop50startupcompaniesinChina.”SupportandpositivepressfromaglobalpowerhouselikeMicrosoftcanonlybeapositiveforNeogoingforward.

PerhapsthebiggestdeterminingfactorforNEOgoingforwardissupportfrom

theChinesegovernment.Whileothercryptocurrenciessufferfromlegalbattleswithgovernments,Neo’srelationshipwiththeleadershiphasbeenlowkeyifsomewhatpositive,withfounderDaHongfeiattendinggovernmentconferencesandseminarsoncryptocurrencyandblockchaintechnology.

OnethingtobewaryofwithNeoisonceagain,aChinesefactor.Thistimeit’sthelanguagebarrier,asmuchofthenewsaboutthecoinispublishedinChineseoriginally,thereissignificantpotentialformistranslationsintheEnglishspeakingworld.Forexample,“partnerships”withMicrosoftandAlibaba(China’slargesteCommercecompany)havebeenoverstatedduetopoortranslationsfromChinesenewssources.Thatdoesn’tmeancollaborationslikethisaren’tpossibleinthefuturethough.

ThesmartcontractsrunningonAntsharesincludeequities,creditorclaims,billsandcurrencies.UpdateasofAugust2017:NEOiscurrentlytradingat$51.99-injustafewshortweeksthepriceincreasedbyover500%

Golem(GNT)Priceattimeofwriting-$0.26Availableon:

Fiat:Yunbi(CN)BTC:Poloniex,Bittrex,Liqui

Golenisacointoken,basedonEthereumblockchaintechnology.Describedbysomecommentatorsasthe“AirBNBofcomputing”,thevalueofthecoiniscenteredaroundthesoftwarethatcanbedevelopedusingit.ThefoundersoftheGolemProjectrefertoitasa“supercomputer”,withtheabilitytointerconnectwithothercomputersforvariouspurposes.Theseincludescientificresearch,dataanalysisandcryptocurrencymining.Forexample,ifyourcomputerhasunusedpower,usingtheGolemnetwork,youcanrentthatpower(hencetheAirBNBcomparison)tosomeoneelsewhoneedsit.Theuserwhoneedstheextrapower,hastheabilitytoaccesssupercomputerlevelsofprocessingpowerforafractionofthecostofactuallyowningtheprocessingpowerthemselves.

Theabilityforuserstoearnmoneyfortheirunusedcomputingpoweris,intheory,ano-brainer,howeverwhatremainstobeseenisthepracticalapplicationofthetechnology.TheGolemteam’slackofmarketingvisibilityalsoappearstohurtthecoinsvalueinrecenttimes.ThelackofabilitytobuyGNTusingfiatcurrency(suchasUSD)isalsoadrawbackforthemassmarket.ItshouldbenotedthatthetechnologyisstillverymuchintheearlydevelopmentstagesandasofAugust2017,theteamarestilllookingforalphatestersfortheproject.TheGolemProjecthasaveryrealpossibilityofpeteringoutintonothing.Ontheflipside-thereistremendouspotentialforlargefuturegains

withthepriceofacoinstillunder$0.30.

STEEM(STEEM)

Priceattimeofwriting-$1.10Availableon:

Fiat:OpenLedgerDEX(Eur)BTC:Poloniex,Bittrex

Steemrepresentsoneofthemoreintriguingcryptocurrenciesavailableonthemarkettoday.ThecurrencyitselfisbasedonthesocialmediaplatformSteemit.Userscanpublishcontentsuchasblogpostsandlongformarticles,andthiscontentisrewardedintheformofdigitalcurrency.SimilartohowRedditusersreceiveupvotes,SteemitusersreceiveSteemtokensknownasSteemDollars.Thefinancialincentiveensuresthatusersstrivetoproducequalitycontent.Theplatformallowspostsonamultitudeoftopicsrangingfromcryptocurrencydiscussion,tosportsnewsandevenpoetry.Steemdollarsareworththeequivalentof$1atthecurrentexchangerate.TheymustbeconvertedtoSteeminordertoexchangetofiatcurrencyorothercryptocurrencies.ThereasoningbehindthisissotheycanbepeggedtothevalueoftheUSdollarinordertodecreasetheriskofinflationdevaluingthem.Steemitgoesfurtherandactuallygivesusersa10%interestrateonanySteemdollarsheldintheiraccountformorethanayear.

Themaindrawbackisthatthesuccessofthecoinitselfisbasedonthesuccessoftheplatform.Ifthewebsitereachesaplateauintraffic,sowillthecoin’svalue.Othershavequestionedthevalidityofthesiteitself,andwhetheritmaybealargescalepumpanddumporevenapyramidscheme.ThecriticismcomesfromthefactthatmanyofthemostupvotedpostswereonesthatpromotedtheSteemitplatformitself.Concernshavealsobeenraisedwithautomaticpostingbotsstealingcontentinordertogainextravoters.

CreatorsofthesiterespondedtothecriticismbysayingthattherearecertainsafeguardsinplacedesignedtokeepcontentfreshandgiveusersanextraincentivetoholdontotheirSteemcoins.TheirwayofdoingthisiswithsomethingknownasSteemPower.SteemPowerisawayforuserstolockuptheircoinsinthelongrunbydirectlyinvestingthemintotheplatformitself.ByconvertingSteemtoSteemPower,usershaveagreaterweightingofupvotesontheplatformandessentiallybecome“powerusers”forlackofabetterterm.

OneadvantageSteempossessesversusothercryptocurrenciesisthatbydesignitistheeasiestcurrencytoaccesswithzeroinvestment.Insteadofsimplybuyingcoinsonanexchange,orspendingmoneyoncomputerhardwareneededtominecoins,userscansimplysignuponthewebsiteforfreeandbeginpostingcontentinordertogaincoins.Itrepresentsthelowestbarriertoentryforanyassetinthecryptocurrencymarket.Althoughmakingsignificantgainsmaybetoughinitially,certainusershavemadethousandsofdollarsworthofSteemfromjustasinglepost.

IOTA(MIOTA)TimeatPriceofWriting-$0.92Availableon:

Fiat:BitfinexBTC:Bitfinex

IOTA,ortheratheruninspiringlynamedInternetofThings(IOT)Coin,isanothercoinbasedonblockchaintechnology,butwithatwist.TheteambehindIOTAisbasingtheirhopesonaprojectknownasTangle,whichisatechnologycurrentlyindevelopmentthatcanbedescribedasablockchainwithoutblocks.Intheory,ifTangledoessucceed,anentirenetworkcanbedecentralized.ThiswouldleadtoZEROscalabilityproblemsthateveryothercoinfaces.Tobefrank,ifthetechnologydoesindeedwork-itcouldbeacompletegamechangerforthecryptocurrencyscene.Imagineaworldwithoutunnecessarymiddlemen,andthinkofthesheercost-savingthatthiswouldachieve.

Theunderlyingtheorybehindthecoinisnear-zerotransactioncosts,evenfortransfersofminuteamountsofmoney-somethingthatnoothercoinortechnologypromisesrightnow-notevengiantslikeBitcoinorEthereum.Byfocusingonthesemicro,ornanopayments,therearecountlessusesforbothconsumerandbusinessbasedfinancialtechnology.Thetechnologyisopensource,soanyonecanseethecodebehindit,andfollowalongwiththecoin’sdevelopment-ifyouaresoinclined.Thereasonforthelowpriceofthecoinasitcurrentlystands,isthatthetechnologyisrightnowstillfirmlytheoretical.Issuesthatplagueallcryptocurrencytechnologieslikemassadoptionandsecuritywillhavetobe

resolvedbeforethecoincantakethenextstep.Thedevelopmentteamhavemanyissuestoovercomeinjusttheconstructionofthetechnology,letalonethemarketing.

Dogecoin(DOGE)Priceattimeofpublication-$0.0019Availableon:

Fiat:YoBit,BTC38(CN)BTC:HitBTC,Poloniex,Bittrex

Amemethatendedupwithactualmonetaryvalue.FavoredbyShibaInusworldwide,dogecoinwasinventedbyJacksonPalmerin2013andbecamesomethingofafadinthecryptocurrencyworld.Dogecoin’svaluelargelycomesfromaninternetformof“tipping”.ThemostprominentexampleofthisisholdersdonatingDogecointoRedditusersforpoststheyenjoyed.Dogecoineventuallybecamethesecondmost“tipped”cryptocurrencyafterBitcoinandthemarketforDogecoinexplodedtoapeakof$60millionmarketcapinearly2014.AcampaigntosendtheJamaicanbobsledteamtotheWinterOlympicswasfundedinpartbythecoinand$25,000worthwasdonatedtoaUKservicedogcharity.

ThecoinflamedoutalmostasquicklyasitroseafterDogecoinbackedexchangeMoolahfiledforbankruptcyandCEORyanKennedyakaAlexGreen/RyanGentlewassentencedto11yearsinprisononsexualassaultcharges.Kennedywasestimatedtohavecaused$2-4milliondollarsworthoflossesforthosewhofundedtheproject.Thecoin’spresentdaystatusremainsthatofalighthearted,funcommunitybasedprojectthatrewardsforumposts.Dogecoinstillpossessoneofthemostactivecommunitiesofanycryptocurrencyandsupportershopethatonedaythecoinwillreturntoitspositionasoneoftheinternet’smosttippedcoins.

Wheretostoreyourcryptocurrency-Wallets&ColdStorage

Onceyou’vesuccessfullyboughtsomecryptocurrency,beitBitcoin,Ethereumoranotheraltcoin,you’llneedsomewheretosafelystoreit.

Yourcryptocurrencywalletisakintoaregularfiatcurrencywalletinthesensethatyoucanuseittospendmoney,inadditiontoseeingexactlyhowmuchmoneyyouhave.Howevercryptocurrencywalletsdifferfromfiatcurrencywalletsbecauseofthetechnologybehindhowthecoinsaregenerated.Asareminder,thewaythetechnologyworksmeansyourcryptocurrencyisn’tstoredinonecentrallocation.Itisstoredwithintheblockchain.Thismeansthereisapublicrecordofownershipforeachcoin,andwhenatransactionoccurs,therecordisupdated.YoucanstoreyourcryptocurrencyontheexchangewhereyouboughtitlikeCoinbaseorPoloniex,itisadvisablenottodothisforanumberofreasons.

1. Likeanyonlineentity-theseexchangesarevulnerabletohacking,nomatter

howsecuretheyare-orwhatsecuritymeasurestheytake.ThishappenedwiththeMt.GoxexchangeinJune2011

2. Yourpasswordstotheseexchangesarevulnerabletokeyloggers,trojanhorsesandothercomputervirustypeprograms

3. Youcouldaccidentallyauthorizealoginfromamaliciousservicelikecoinbose.com(example)insteadofcoinbase.com

Coldstoragereferstoanysystemthattakesyourcryptocurrencyoffline.Theseincludeofflinepaperwallets,physicalbeareritemslikephysicalbitcoinoraUSBdrive.Wewillexaminetheprosandconsofeachone.

Cryptocurrencywalletshavetwokeys.Apublicone,andaprivateone.Thesearerepresentedbylongcharacterstrings.Forexample,apublickeycouldbe02a1633cafcc01ebfb6d78e39f687a1f0995c62fc95f51ead10a02ee0be551b5dc-oritcouldbeshownasaQRcode.Yourpublickeyistheaddressyouusetoreceivecryptocurrencyfromothers.Itisperfectlysafetogiveyourpublickeytoanyone.Thosewhohaveaccesstoyoupublickeycanonlydepositmoneyinyouraccount.

Ontheotherhand,yourprivatekeyiswhatenablesyoutosendcryptocurrencytoothers.Foreverytransaction,therecipient’spublickey,andthesender’sprivatekeyareused.Itisadvisabletohaveanofflinebackupofyourprivatekeyincaseofhardwarefailure,ordatatheft.Ifanyonehasaccesstoyourprivatekey,theycanwithdrawfundsfromyouraccount,whichleadsustothenumberoneruleofcryptocurrencystorage.

ThenumberoneruleofCryptocurrencystorage:Nevergiveanyoneyourprivatekey.Ever.

PaperWallets:

Paperwalletsaresimplynotesofyourprivatekeythatarewrittendownonpaper.TheywilloftenfeatureQRcodessothesendercanquicklyscanthemtosendcryptocurrency.

●Cheap●Yourprivatekeysarenotstoreddigitally,andarethereforenotsubjecttocyber-attacksorhardwarefailures.

●Lossofpaperduetohumanerror

●Paperisfragileandcandegradequicklyincertainenvironments●Noteasytospendcryptocurrencyquicklyifnecessary-notusefulforeverydaytransactions

Recommendations:

Itisrecommendedyoustoreyourpaperwalletinasealedplasticbagtoprotectagainstwaterordampconditions.Ifyouareholdingcryptocurrencyforthelong-term,storethepaperinsideasafe.Ensureyoureadandunderstandthestep-by-stepinstructionsbeforeprintinganypaperwallets.

Bitcoin:http://bitaddress.orghttp://bitcoinpaperwallet.com

Ethereum:http://myetherwallet.com/

Litecoin:https://liteaddress.org/

Forallothercurrencies-consultareputablecryptocurrencyforumforthelatestrecommendationsonpaperandofflinestoragewallets.

HardwareWallets

Hardwarewalletrefertophysicalstorageitemsthatcontainyourprivatekey.ThemostcommonformoftheseareencryptedUSBsticks.

Thesewalletsusetwofactorauthenticationor2FAtoensurethatonlythewalletownercanaccessthedata.Forexample,onefactoristhephysicalUSBstickpluggedintoyourcomputer,andtheotherwouldbea4digitpincode-muchlikehowyouuseadebitcardtowithdrawmoneyfromanATM.Pros:

●Nearimpossibletohack-asofthetimeofwriting,therehavebeenZEROinstancesofhackedhardwarewallets●Evenifyourcomputerisinfectedwithavirusormalware,thewalletcannotbeaccesseddueto2FA●Theprivatekeyneverleavesyourdeviceortransferstoacomputer,soonceagain,malwareorinfectedcomputersarenotanissue

●Canbecarriedwithyoueasilyifyouneedtospendyourcryptocurrency●Transactionsareeasierthanwithpaperwallets●Canstoremultipleaddressesononedevice●Forthegadgetloversamongyou-theylookalotcoolerthanafoldedpieceofpaper

●Moreexpensivethanpaperwallets-startingataround$60

●Susceptibletohardwaredamage,degradationandchangesintechnology●Differentwalletssupportdifferentcryptocurrencies●Trustingtheprovidertodeliveranunusedwallet.Usingasecondhand

walletisabigsecuritybreach.Onlypurchasehardwarewalletsfromofficialsources.

ThemostpopularofthesearetheTrezorandLedgerwallets.Foraltcoinsthatarenotsupportedbythesewallet,youcancreateyourownencryptedUSBwalletbyfollowingonlinetutorials.

CryptocurrencyInvestingMindset

FOMO&FUD-2TermstobeCautiousofIncryptocurrencyterms,FOMOandFUDaretwoofthemostpotentiallydangerouswordsinaninvestor’slexicon.No,theyaren’tthelatesthotshotcoinscomingoutofChina,theyareacronymsthathavecostnaivetradersandinvestorsmoney.

FOMO-FearOfMissingOut

Fearofmissingoutcausespeopletooverinvestandthrowmoneyatcoinswithoutproperresearchorduediligence.Ifyouspendanytimeoncryptocurrencyforums,youwillseehundredsofpostsfromthosenewtothemarketaskingfortipsonwhichcoinstobuy.Itseemslikeeverydaythereisanewshinyobjectthatpeoplearehypingup,causinglessexperiencedinvestorstoblindlythrowtheirmoneyatit.Thisleadstopeoplebuyingcoinsattheirpeak,andthenpanicsellingthemwhenthecoinpullsbackafewdayslater.

Theimportantthingtorememberisthis,youwon’tbeabletowinoneveryinvestmentyoumake.Youwon’tbeabletobuyeverysinglecoinattherighttime,andpeoplewillmakemoneywhereyoucannot.Theimportantthingistoonlymeasureyourselfagainstyourself,andtakestockofyourownprofit/losssheet.Beforeyouinvestinacoin,takeasecondtoaskyourselfwhyyouarechoosingtodoso,andre-examinethefundamentalsofthecoinitself.

Anxietycausedbypotentiallymissingoutonhugereturnsisonlynatural,andsomethingthatnearlyallofussufferfrom.Thebestwaytocombatthisistounderstandblockchaintechnology,andtoresearcheachcoinindividuallybeforedecidingtoinvest.Bymakingsmart,reasonedinvestments,youhaveamuchbetterchanceoflongtermprofits.

FUD-Fear,UncertaintyandDoubt

Fear,uncertaintyanddoubtisanythingtodissuadesinvestorsfrombelievingincryptocurrenciesandtheirapplications.Thiscanbeanythingfromspreadingofmisinformation(suchasthefakeVitalikButerindeathrumors),tonewsreportsdiscountingrealworldusageofcryptocurrencytechnology.CertainnefariouscryptocurrencyfigureshaveusedFUDtopushtheirownagendawhileattemptingtoharmthegrowthofothercoins.Thisiswhereitisimportanttodifferentiatefromreasonablecriticismandanalysisofacoinvs.FUD.Themoreinformedyouare,theeasieritisforyoutoseethedifference.

Whereyouaregettingyournewsfromisanotherfactor.SocialmediaisthekingofFUD,gotoanycryptogrouponFacebookorwatchaYouTubevideofromoneofthelargerchannelsandyouwillseecommentorsspreadingFUDoneveryvideo.Instead,focusonlargercryptonewswebsiteswhereFUDislessprevalent,andremembertoconsumeyournewsfrommorethanonesource.

Shorttermgainvs.Longterminvestment

BillionairehedgefundmanagerandcryptocurrencyinvestorMichaelNovogratzmadeaverygoodanalogywhenhecomparedthecurrentstateofthemarkettothethirdinningofabaseballgame.Themarketisstillverymuchdeveloping,andthereareanumberofshortandlongtermeventsthatcaneffectthepriceofcurrencies.

Unlikeregularstockmarket,thecryptocurrencymarketisrunning24/7365-therearenodelaysbetweeninformationcomingtolightandthemarketreacting,thereisnodeadtime.Ifyoubelieveinthetechnologybehindthecurrencies,thenthesecoinsabsolutelymakesenseasalongterminvestment.Withmanycoins,timeinthemarketbeatstimingthemarket,whichiswhereournextacronymcomesfrom.

HODL:HoldOn(For)DearLife

Abackronymthatisaplayon“hold”-itfocusesonholdingontoyourcoinsevenwhenthemarketisdropping.AmorelightheartedexplanationcomesfromBitcointalkforumposter“GameKyuubi”whoinadvertentlyinventedthetermin2013whileinebriated(author’snote:Donottradeorpurchasecryptocurrencyundertheinfluence)“ WHYAMIHOLDING?I'LLTELLYOUWHY.It'sbecauseI'mabadtraderandIKNOWI'MABADTRADER.ISHOULDHAVESOLDMOMENTSBEFOREEVERYSELLANDBOUGHTMOMENTSBEFOREEVERYBUYBUTYOUKNOWWHATNOTEVERYBODYISASCOOLASYOU. ”

Withanylongterminvestment,youaregoingtoseemarketdownturns-that’ssimplyhowcapitalismworks.Ifyoupanicandselleverytimeyouseeaslightdip(andwithcryptocurrencies,that’sgoingtohappenALOT),thenyou’vegot

asurefirewaytolosemoneyinthelongrun.

HODL’ingofcoursehasitspotentialdownsidesaswell,withmoreandmorecoinscomingtomarket-it’sobviousthatnotallofthemwillcontinuetogoupinprice.Youcancompareittotheregularstockmarketwithbluechipstocksandpennystocks.Justbecauseapennystockorsmallmarketcapcryptocurrencyiscurrentlytradingfor$0.08,doesnotmeanithastherighttoriseindefinitely.Ifthecompanyorpeoplebehindthecryptocurrencydon’tfulfilltheirpromisestothemarket,thenthecoin’svaluewillcrashanditwilleventuallybecomeobsolete.Remember-hindsightiseasy.Timingmarketmovementsinamarketasvolatileascryptocurrenciesontheotherhand,isnot.Approacheachinvestmentwithcaution,andproperresearch.

Paperprofitsvs.Actualprofits

Remember,untilyouhavesoldyourcoins,anyprofityouhavemadeisstrictlyonpaper.Withthecryptocurrencymarketbeingasvolatileasitis,profitmarginsdrasticallyshiftandcandosoonadaily,orevenanhourlybasis.ThatiswhyIrecommendtakingintermediateprofitsforyourselfwheninvesting,youdothisbysellaproportionofyourholdingsataprofit.

Forexample,youbuy1coinat$100,1monthlaterthecoin’svaluehasrisento$150.Ifyoutradeout$75worthofthecoinat$150,thenyoustillhave0.5coinsworth$75onpaperandanextra$75incold,hardcash.Takingmoneyforyourselfisasmartplay,andsomethingyoushouldabsolutelydoifyouarelookingtomakeconsistentprofitsovertime.Theinverseruleofthisistonotsellonthedip.Ifyoufollowedrulenumberoneofinvestingwhichwastonotinvestmorethanyoucouldaffordtolose,youhavezeroreasontosellataloss.Yes,youmayseescaryheadlineswith“Ethereumdrops40%”or“Litecoiniscrashing”,butinthelong-run,themajorityofthesecoinsreturntotheirprevious,andevenhigherlevels.Ifyousellataloss,thenyourmoneyisgoneforever.

TheChaincoinPumpandDumpScheme-WhyYouShouldAlwaysResearchaCoinBeforeBuying

Thefollowingisalessoninsmartinvesting,andwhoyougetyourinformationfrom.

Chaincoin(CHC)wasacryptocurrencythatunderwentameteoricpricerisefrom$0.05toover$6inunderaweek.Priortothis,thecoinwasonlyavailableontwosmallcryptocurrencyexchangesandhadverylittletotaltradingvolume.TheofficialGithub(programmingcommunity)andTwitteraccountshadbeendeadformonthspriortothis,andveryfewtechnicalmilestoneshadbeenaccomplished.Despitethis,aYouTubechannelknownasHighOnCoinsstartedheavilypromotingthecoin.Videostitled“BuyChainCoin$CHC”appearedonthechannel.Thechannelalsoencourageduserstosetupmasternodes(whichrequired1000CHC).Thechannelencouragedpeopletobuyandholdindefinitelyratherthantradingoutforaprofit.Theunderlyingtheorybehindthiswasthatifeveryoneinvestedandheldthecoin,thenthepricewouldcontinuetoincreaseandgrow.

HoweverChaincoinsufferedfrommanyfundamentalflawsincluding:

●Lackofdifferentiationfromothercoins

●Lackofinnovationfromdevelopers●Zerorealworldapplicationsversusothercoins

Theinitialsurgeininvestingcausedastirinthecryptocurrencycommunity.Mixedreactionsrangingfromconfusionfrominvestorsfocusedoncoinfundamentals,toexcitementfromuninformedplayerswhobelievedtheywerepartofagetrichquickscheme.

Thecoinreachedanalltimehighof$6.81onJuly14th2017,afewdayslater,

developersreturnedtothecoin’sGitHubpageandmadeacoupleofsuperficialchanges.Afewdayslaterthepriceofthecoincrashedbackto$1.HighOnCoinsclaimedthiswasasaresultofhackers,althoughexchangeactivityshowedalargedumpingofcoinsfromafewtraders.Chaincoincurrentlytradesat$0.32.

GitHubblogStoreofValuesummarizedtheincidentwiththefollowingstatement“Thiswasablatanttransferofwealthfromthefoolishtothenefarious.”Letthisbealesson,neverinvestinacoinbasedonhype.Instead,dosoonfundamentalsandbeliefinthetechnology.

ConclusionIhopeyouhavelearnedmanythingsaboutcryptocurrencyandhowyoucanprofitfrominvestingortradinginthesecoins.Therearevariousfactorstoconsiderwheninvestingincoinsandyoucanusethesetodecideonaninvestingortradingstrategy.Youmaywanttoreadthismaterialoneortwomoretimes,andmakesomechoicesastowhatyourgoalsareforyourrelationshipwiththecryptocurrencymarket.

Next,decidehowyouwillgoaboutreachingthosegoals.DecideonacryptocurrencyexchangeandhowyouwillstoreyourassetsBEFOREinvestinginanyoneormorecoins.

Thenplanouthowmuchyouwillinvestineachcoin.Remember,diversityisimportantandyoushouldneverhaveallofyourlong-termholdingsinasinglecoin.Ifyouaregoingtobuycryptocurrencies,dosousingDollarcostaveraging–thismeansthatyoudon’tbuyallofyourcoinsinonetradebutinsteadbuyafixedamounteverymonth,weekorevendaythroughouttheyear.Thisallowsyoutonotbetiedtoasinglepriceandinsteadaverageoutyourinvestmentssotheyarelessexposedtovolatilepricemovements.

Traderationally,notemotionally.Ifyouplanonholdingcoinsforthelong-term,donotcheckchartseveryfewhours,oryouwilldriveyourselfcrazy.Thingschangequicklyinthismarketsostayinformedoncryptocurrencynewsandhappenings,youcandothisinlessthan30minutesperday.Ensureyouconsumeinformationfromavarietyofnon-biasedsources.

Andneverinvestinacoinbecause“someguyontheinternet”toldyouto.

Finally,ifyoufoundthisbookuseful,IwouldgreatlyappreciateitifyouwouldreviewthisbookonAmazon.Thankyouforreading,IhopeyoumakeALOTofmoneyinthecryptocurrencymarket.

BlockchainBeginnersBible:

DiscoverHowBlockchainCouldEnrichYourLife,YourBusiness&Your

CryptocurrencyWallet

ByStephenSatoshi

Chapter1:WhatisBlockchain

Technology?

Overthepastfewyears,youhavelikelyheardmoreandmorepeopletalkingaboutcryptocurrencythis,orblockchainthat.Ifyoudon’tunderstandtheseterms,don’tworry,youaren’talone.Itmaybetimetojumponthebandwagon,however,asblockchainuseisrapidlyapproachingconsumerstatuswithIBMestimatingthat15percentofbankswillalreadybeusingblockchaintechnologybytheendof2017.

Simplyput,blockchainisthefoundationthatmakestechnologieslikecryptocurrencypossible.Onafundamentallevel,ablockchaintakesdata,primarilyoffinancialnaturefornow,andreplicatesthatdataacrossavastnumberofdecentralizednodesthatcouldconceivablybespreadaroundtheentireworld.Thisprocessisrunnotbyacentralizednetworkorbody,butbyapeer-to-peerapproachthatusescryptographyanddigitalsignaturestokeepthingsrunningsmoothly.

Eachnewblockinachaincontainsinformationregardingvarioustransactions,andpossiblywhatareknownassmartcontracts,aswellasinformationthatlinksittotheblocksaroundit.Eachblockisalsotimestampedwhichhelpsthechaindetermineitsplaceinthewholething.Thetransactionsinindividualblocksareverifiedbyblockminers,thirdpartieswhoarepaidfortheirwork,andareonlythenaddedtothechainasawhole.

Whatminersareactuallydoingissolvingwhatareknownasproof-of-worksystemswhichmeanstheyaresolvingcomplicatedmathematicalequationsusingspecializedequipmentdesignedfordoingso.Theequationspreventsecuritybreachesthroughdenialofserviceattacksandkeepthingsrunningsmoothly.Theamountofrewardforthistypeofworkvariesbasedonthecryptocurrencythatisbeingmined,aswellasthenumberofpeopleworkingtocompletetheblocktheywerechosentomine.Mostcryptocurrenciesalsochargeasmalltransactionfee,andapartofthatfeegoestotheminersaswell.

Despitethefactthatthedatabaseinformationisspreadaroundtheworldwithnocentralauthority,andthefactthatsectionsofitareinspectedbythirdpartiesonaregularbasis,thedatathatisstoredinablockchainremainsincrediblysecure.Thislevelofsecuritydoesn’tcomefromanactiveoffenseagainstfraud,itcomesfromthedefensivecapabilitiesofthewayinwhichtheblockchainisconstructed.

Ifaspecifictransactionthatisbeingtransferredfromanodedoesn’tmatchupwithwhattheothernodesaresayingthenthatblockisdiscardedinfavorofamoreaccurateone.Essentially,forafalseblocktomakeitpasttheblockchain’sdefenses,itwouldneedtoshowupon51percentofallofthenodesinthesystematthesametime.Thedifficultyofsuchataskmeansthatitcouldbedone,butthecostsinvolvedwouldmorethanoutweighthepotentialrewardfordoingso.

Historylesson

Inordertounderstandthetrueimportanceofblockchaintechnology,itishelpfultounderstandalittlebitaboutitshistory.In2008,apersonoragroupofpersonsusingthealiasSatoshiNakamotoputforthawhitepaperontheideaofadigitalcurrencythatwouldallowindividualstotransfermoneytooneanotherinalargelyanonymousfashion.Thispaper,titled,bitcoin:APeer-toPeerElectronicCashSystem,wassoonfollowedbytheoriginalblockchainandbitcoincodefromthesamealias.Thecodewasreleasedinanopensourcefashion,andtheNakamotonamefadedfromsightasotherdevelopersbeganworkingonthecodeinearnest.

TheNakamotoaliaswasalsothefirstpersontodistributebitcoinsandthenverifythetransaction,receiving50bitcoinsfordoingso.Forthosewhoareconsideringinvestinginacryptocurrencybasedonblockchaintechnology,takenote,asthefirstuseofthosebitcoinswastotrade10,000ofthemforapairoflargepizzaswhichmadeeachworthabout$.002.Ifyouweren’taware,theyaredoingalittlebetterthanthatthesedayswitheachbitcoinbeingworthnearly$5,000asofSeptember2017.

By2014,blockchainusagewasgainingsometractionandanewandimprovedversionoftheoriginalcodenowallowedforentireprogramstobecontainedinblocksalongwithdatathatmakeitpossibleforawidevarietyoftaskstobecarriedoutfromwithintheblockchain.In2016,theRussianFederationstartedworkingonablockchainprogramasameansofcollectingroyaltiesforcopyrightedmaterial,makingRussiathefirstcountrytoofficialannounceablockchainproject,thoughsincethattimeanumberofothercountries,includingChinaandtheUS,haveindicatedtheyareworkingonblockchainprojectsoftheirown.Whentheprojectwasannounced,theRussianEconomicMinisterwasquotedassayingthatblockchaintechnologywaslikelythemostimportantnewtechnologysincetheinventionoftheinternet.

Overthepastfewyears,anotherblockchainbasedcompany,theEthereumplatformhasbeengainingalotofsupportduetoitswidevarietyofenhancedcapabilitieswhencomparedtothebitcoinblockchain.TheEthereumplatformhasitsownofficialcryptocurrency,ether(althoughthetwotermsareusedinterchanablybymanycommentators),andisalsohometoanecosystemofothercryptocurrenciesthatotherprogrammershavemadetoruninitsframework.Itisalsohometoawidevarietyofsmartcontractsandappsthatrunon“gas”,whichisessentiallyatransactionfeetheplatformcollectsforeachtransaction.EtherblocksthataremindtendtobecompletedinashortertimeframethanbitcoinblocksandtheEthereumchaincanhandleagreatmanymoreblocksatatimewhencomparedtothebitcoinchain.

Databasedifferences:Thebiggestdifferencebetweenablockchaindatabaseandatraditionaldatabaseisthelevelofcentralizationthatisrequiredinorderforittoruneffectively.Evenifatraditionalserverisdecentralized,thecorecomponentsaregoingtobearrangedasclosetooneanotheraspossibletofacilitatethetransferofinformation.Instead,blockchainsareformedofnodesthatareseparatedbythousandsofmiles,eachcommunicatingwiththeothersthroughabestusemodelthatmeanstheynaturallyseekoutthenodesthatareclosesttothemandtheinformationspreadsoutfromthere.

Thefactthatmasscollaborationandtheblockchaincoderesultsinareliablemeansbywhichfundscanbetransferredisagamechanger.Blockchainisthefirstinnatelydigitalmediumwherevaluecanbetransferred,inmuchthewaytheinternetallowedforinformationtobetransmitteddigitally.

Hashes:Ahashisamathematicalfunctionthatmakesupacrucialpartoftheblockchainsecuritymatrix.Thisisthefunctionthatensuresthedatathatisaddedtoablockchainremainssecureregardlessofwhomightgettheirhandsonit.Thefunctionencryptsthedatainsuchawaythatitbecomesafixedlengthoutput,whichcanbethoughtofasatypeofdigitalfingerprint.WhenitcomestoblockchainsecuritythemostcommonlyusedhashfunctionisSHA-256.SHA-256isusedbycryptocurrenciessuchasBitcoin,OmniandZetacoin.

Thehashfunctionforeveryblockisgoingtobedifferent,whichmeansthatifthatdataisalteredbyamalevolentthirdpartythentheentirefingerprintwouldberearrangedinunpredictableways.Additionalhashinformationisaddedoncetheblockisaddedtothechainasawhole.Thisprocessisrepeatedthroughouttheblockchaineachtimeanewblockisaddedsothatitisalwayschanging.

Merkletrees:HashesarethenusedbyaprocessknownastheMerkletreewhichisaquickandeasywayfortheblockchaintoverifyallofitsdataonceanewblockhasbeenadded.EachhashisuniqueandcreatedbasedonthedataitcontainswhichmeanstheMerkletreethenessentiallyneedstoscanthehash,compareittotheroothasheswhichistheultimatecollectionofallthehashes,andthendetermineifeverythinglinesupasitshould.Eachtimeitdoesthis,itcreatesapairofroots,onewherethedataiscorrectandonewhereitisnot,thiswayitkeepsthecoredetailsoftheblockchainintactagainstmaliciouschanges.

Chapter2:PracticalApplicationof

BlockchainTechnology

Asblockchaintechnologycontinuestogrowinpopularity,thewaysinwhichitcanbeputtousearegrowingaswell.Whatfollowsareanumberofdifferentwaysblockchaintechnologyissuretochangehowbusinessisconducted,daytodaylife,outsidetherealmofcryptocurrencyandhowgovernmentsandlawmakersinteractwiththepublic.

Businessuses

Moneytransfersandpayments:Whileblockchaintechnologyisalreadysynonymouswithcryptocurrencypayments,thefactofthematteristhatmorecanbedoneinthatspacetofacilitatetheneedsofbusinesseswhenitcomestoutilizingblockchaintoitsfullestpotential.TheEthereumEnterpriseAllianceisagroupofmajorcorporationssuchasMicrosoft,JPMorganandSamsungthatareworkingtogethertobuildablockchainthatisbasedonEthereumtechnologybutalsocontainsthelevelofcontrolthatbusinesseswouldneedinordertousethetechnologyonaregularbasis.

Thistypeofservice,whileextremelycommoninsomepartsoftheworld,areextremelyhardtocomebyinothers.Assuch,morepeopleinKenyacurrentlyhaveabitcoinwalletthanhaveindoorplumbing.Connectingallthesenewindividualstotheinternetisgoingtohaveseriouspositiveramificationsforretailersworldwide.

Notaryservices:Blockchaintechnologyisconstructedinsuchawaythatitcouldconceivablybeusedtoreplacetraditionalnotaryservices.Therearealreadynumerousdifferentappsavailablethatallowfornotarizationofavarietyofdifferenttypesofcontent.

Cloudstorage:BlockchaintechnologyisalreadybeingusedasameansofconnectinguserswithcloudstoragespaceinanAirbnblikesetup.Usingthissystemthosewithsparestoragespaceontheirharddrivescanrentouttheextraspacetothosewhoareinneedofextrastorage.Theestimateisthatworldwidespendinghasreachedmorethan$20billionforcloudstoragesothiscouldbeaprofitableopportunityifthiscatcheson.

Fraud:Blockchaintechnologyhasthepotentialtoincreasetheefficacyoftrackingidentitiesonlineinawaythatisbothefficientandsecure.Blockchainisuniquelysituatedtosolvethisproblembecauseitsresultsaresuretobeproperly

authenticated,immutable,secureandirrefutable.Thisimprovedsystemwilldoawaywithcomplicatedpasswordordualfactorauthenticationsystemsinfavorofasystemthatwillultimatelyusedigitalsignaturesandcryptographytokeepeveryonesafeandefficientlycatalogued.

Usingthistypeofsystem,thetransactionwillbeprocessedasnormal,andtheonlycheckthatwillberequiredisiftheaccountfromwhichthefundsaredrawn,matchestheaccountofthepersonwhoauthorizedthetransaction.Avariationofthissameusageofthetechnologycanalsobeusedwhenitcomestobirthcertificates,passports,residencyforms,accountloginsandphysicalidentification.Therearealreadyappsavailablethatutilizeablockchaintoverifytheidentityofusersfromamobiledevice.

Supplychaincommunication:Ifitisonethingthatcompanieshaveahardtimedealingwith,itistheextremelevelofcommunicationthatisrequiredinordertoensurethattheyhavealltherequirementsatthereadytoensuretheyarereadytodowhateveritistheydo.Blockchaintechnologyallowsforcompaniestoeasilytrackproductsfromdoortodoor,withtheinternetofthings(theabilityforeverydayobjectstosendandreceivedata)connectingshippingcontainerstoaccountsthatgetasteadystreamofdetailsabouttheproductinquestionasitcrossesvariousthresholdsandultimatelyautomaticallypaysforthegoodsoncetheyhavereachedtheirfinallocation.SkuChainandProvenancearetwocompaniesthatareworkingtocreatethesetypesofsystems.

Giftcards:Giftcardsareagoodideaintheorythatultimatelyfallsapartinpracticewhenitcomestimeforthecustomertoactuallyholdontothecardinquestion.Blockchaintechnologyhasthepotentialtochangeallthatbyconnectingcustomerloyaltyproductsdirectlytoablockchainwhichcanthenverifyandupdaterelevantinformationasneeded.GyftBlockisacompanythatalreadyhasadigitalgiftcardupandrunningonthebitcoinblockchainthatcanbetradedjustlikeacryptocurrency.

Internetofthings:SamsungandIBMarecurrentlyworkingtogetheronaconceptreferredtoastheAutonomousDecentralizedPeer-to-PeerTelemetryor

ADEPT,whichusesblockchainasameansofcreatingasystemthatmixesproofofstakeandproofofworksystemstobettersecuretransactions.Essentially,whattheyaretryingtodoistocreateablockchainthatwouldactlikeapublicledgerforawidenumberofdevices.Thispublicledgerwouldthenserveasahubwhichcancreateabridgebetweendevicesforaverylowcost.Thesedevicescouldthencommunicatewithoneanotherinapracticallyautonomousfashion,makingiteasytosaveenergy,sortoutbugsandissueupdates.

Insurancecontracts:Smartcontractshavethepossibilitytoreinventinsuranceinabigway.Ratherthandealwithinsuranceagentswhohavetodetermineliabilityincaseofabusiness-relatedinjury,ablockchainwouldbeabletomakeuseofasmartcontractthatissuespaymentsifaspecificinterconnecteditemregistersafaultysignal.Blockchainwouldthenallowforamorestreamlinedclaimprocessthatwouldimprovethecustomerexperienceandultimatelysavethecompanymoney.

Funding:4GCapitalisacompanythatprovidesaccesstocreditforsmallbusinessesinAfricathroughtheuseofadecentralizedappthatisrunningoffoftheEthereumblockchain.Donorsareabletousetheapptospendtheircryptocurrencyfundsdirectlytotherecipientoftheirchoice.Themoneyisthenconvertedtothecurrencyoftheapplicantanddispersedusingaproprietarytransactionsystem.Inadditiontoproviding100percentunsecuredloanstothosewhooftenwouldnotbeabletogetthemotherwise,italsoprovidesbusinesstrainingandconsultingservices.Whilecurrentlyoperatinginalimitedcapacity,ifitprovessuccessfulmoreoperationsofferingthistypeoffundingaresuretoappear.

Microblogging:Businessesarealwayslookingfornewwaystointeractwiththeirtargetaudienceandblockchainmaybethenextnewfrontier.ProjectslikeEth-TweetofferdecentralizedmicrobloggingservicesthroughtheEthereumblockchain.TheserviceoperatesmuchlikeTwitter,exceptthatasatrulydecentralizedentitythereisnoonewhocanpressureuserstotakecontentdownandnoonecanremovemessagesaftertheyhavebeenaddedtothechain.

DaytoDayLife

Healthcare:Realworldtestsarealreadybeingdonethatlinkindividualstotheirhealthcarestatusastheyaregoingthroughahospital.EarlystudiesfromtheMITMediaLabshowthatthispracticecandecreaseerrorsbyupto30percentinnonemergencysituations.Thisisahugestepforwardforhospitalsthatareoftennotdesignedforthevolumeandrangeofdatathatisbeingcreatedthesedays.Patientdatacanevencontinuetobegatheredonanoutpatientbasisoriftheindividualhasagreedtobepartofatestgroup.Paymentforthesetestscouldthenbeissuedautomaticallyoncetherequireddatahasbeensuccessfullygathered.

Internetdecentralization:WiththeriseofGoogle,theinternetisamuchmorecentralizedplacethanitoncewas.AstartupbythenameofBlockstackisworkingtochangeallofthat.Itisontracktoreleaseprototypesoftwareinthesecondhalfof2017whichwillmakeitpossibleforanyonetoutilizeblockchaintechnologytoaccessaversionoftheinternetwhereyouhavemuchmorecontroloveryourpersonaldata.Thisdecentralizedinternetwillactthesamewaythetraditionalinternetdoes,exceptthatinsteadofcreatingadifferentaccountforeverywebsite,theprocesswillreverseandyouwillcreateaprimaryaccount,thengivecertainsitesaccesstoit.

Ifyouarethenfinishedusingaspecificsiteyoucanthencompletelyrevokeitsaccesstoyourdataatanytime.Whilethismightseemlikeasmallstep,itisactuallyagiantleapforanewandimprovedinternet.Blockstackmakesuseofadigitalledgertotrackusernamesandvariouslevelsofencryption,withtheendresultbeingagreaterdegreeofprivacycontrolfortheindividualuser.Theblockchainwillalsokeeptrackofdomainnamesaswell,potentiallymakingICANN,thewebdomainoversightbody,obsolete.MicrosoftisalreadyintalkswithBlockstacktomakeuseofitstechnology.

Whilethewayithandleswebfunctionsmightseemextreme,itisactuallythelow-levelfeaturesoftheinternetasawholethathaveledtothedominanceofcorporationswhoessentiallyhavefreereigntotreatuserdataastheyseefit.Thenewplatformwillstilloffercompanieswaystomakemoneywhileprovidingservices,thebalanceofpowerisjustgoingtofavortheconsumermorethanitdoesnow.

Improvedpropertyrights:Bothtangibleandintangiblepropertyfromcarsandhousesononehandtocompanysharesandpatentsontheother,canallbeconnectedviasmartcontractandblockchaintechnologytomakedeterminingtherightstotheseitemsmuchlesscomplicatedthanitcurrentlyis.Thesedetailscouldbestoredinatypeofdecentralizedledgeralongwithrelatedcontractualdetailsregardingthetrueownershipofthepropertyinquestion.Thetechnologycouldevenextendtosmartkeyswhichcouldthengivespecificusersaccesstospecificproperty.

Theledgerwouldkeeptrackofthefinerdetailsandactivatespecifickeysasneeded.Inthiscasethedecentralizedledgerisalsoasystemformanagingandrecordingpropertyrightsandalsocreatingduplicatesifsmartkeysarelost.Implementingsmartpropertyprotocolswillhelptodecreasetheaveragepropertyowner’sriskoffraud,questionablebusinessdealsandmediationfees.

Newtypesofmoneylenders:Withblockchaintechnologymakingiteasierandeasiertotransferfundsbetweenindividuals,newtypesofhardmoneylendersarealreadypoppinguptotakeadvantageofthefact.Hardmoneylendersaremorelikelytooffertermstoindividualswhoalreadyhavesubparcredit,unfortunatelythetermsareoftenquitehighandoftenpropertyislistedascollateral.This,inturn,causesmanydebtorstodefaultonloans,andleavestheminaworsepositionthantheywereininitially.Lendingviablockchaintechnologyhasthepotentialtochangeallofthatasthebindingnatureofthetransactionmeansthatlesscollateralwillberequiredandsmartcontractscantakecareofthetransactionsthemselvessocostswillbedecreasedaswell.

Smartersmartphones:Smartphonesalreadyoperateonatypeofcryptographyin

thattheyrequireeitheryourfingerprint,ascanofyourface,orapasswordinordertoactivatethem.Thisisalreadyaformofsmartproperty,justinitsnascentstages.Thisfacetofpersonaltechnologywillbeenhancedviablockchaintechnologyinthat,ratherthanhavingthesedetailstiedtoyourphysicalSIMcard,theywillbestoredintheblockchainwhereyoucaneasilyaccessthemnomatterwhereyouare.Whileissuesconcerningsecuritywouldtypicallyariseinthesesortsofsituations,thefactthateachtransactionneedstobeverifiedinordertoaddittothechainensuressecurityremainstight.

Passports:Blockchainshavebeenhelpingpeoplemanagetheirpassportssinceatleast2014bymakingiteasierforuserstoidentifythemselvesregardlessiftheyareonlineoroffline.Thissystemworksbytakingapictureoftheuserandencodingitwithaprivatekeyaswellasapublicone.Thepassportisthenstoredinapublicledgerwhichcanbeaccessedviaablockchainaddressbythepersonwhohasthekey.

Importantdocuments:Itdoesn’tmatterifitisaweddingcertificate,birthcertificateordeathcertificate,allofthesedocumentsconfervariousrightsorprivileges.Thiswouldbelessofanissueifitweren’tforthefactthatthephysicalsystemsthatkeeptrackofthesedetailsarepronetomistakes.Infact,accordingtoUNICEF,asmanyas30percentofallchildrenwhoarebelowtheageoffivedonothaveabirthcertificate.Implementingapublicblockchaintostreamlinethisprocesswouldnotonlymakekeepingtrackoftheseservicesmoremanageable,itwillmakethesedocumentseasiertoobtainaswell.

Identification:Currentlyyouhavetocarryyourdriver’slicense,yourworkidentificationcard,yoursocialsecuritycard,thelistgoesonandon.Withtherightblockchain,however,allofthiscouldbeathingofthepast.EventuallyeveryoneisgoingtohaveadigitalIDthatgoeswiththemeverywhere.Itwillbeconnectedtoaworldwideprotectedledgeranditwillcontainallthebasicdetailsyounowneedtocarryaroundwithyou.

Improvedigitalinteractions:Withawiderandwidervarietyofinteractionsbeinginitiatedonline,itisoftendifficulttoknowwhomyoucantrust.

Blockchaincanalleviatethatproblembystoringaversionofyouridentityinablockchainthatisavailableforeveryonetosee.Itwouldautomaticallypullinthingslikereviewscoresandrankingsfromawidevarietyofsitessoyoualwayshaveatleastageneralideaofwhatyouareinforbeforetakinganonlineinteractionintotherealworld.Unlikewithmoretraditionaltypesofsocialmedia,userswouldnothavetheabilitytoremovetheirinformationandstartfresh,onceitisintheblockchainitwouldbethereforever.

Changethewayyoufuelyourvehicle:Modernelectricvehicleshavealreadymadegreatstrideswhenitcomestothefuelingprocess.Anotherimportantstrideisonthehorizonandithastodowithblockchain.Soonblockchaintechnologywillbeabletotracktheelectricitythatagivenownerusesandautomaticallydeductthefundsfromtherelevantaccount.Alltheownerwouldneedtodoispulluptothechargingstation,theblockchainwilltakecareoftherest.

BeyondCryptocurrency

FundHIVresearch:TheUBSbankrecentlydonatedaplatformtoFinclusionsystemsthatwilllaunchasmartcontractcalledHealBondwhichwillseekoutefficienttradesonthebondsmarketsothatthefundsthatitmakescanultimatelybeputtouseforHIVresearch.Analystsareconfidentthatwiththerightlevelofpassivestrategyitcouldstartmakingmoneyrightaway.Ifthisprovessuccessfulthenitwillgivethosewiththeresourcestodosoevenmorewaystohelpouttheirfavoritecauses.

Datasecurity:ThecompanyFactomisturningitsfocustoproperlysecuringdata.CurrentlyitisworkingwiththecountryofHondurastomoreaccuratelyregisterlandandalsowithanumberofcitiesinChinaonwhatareknownasSmartCities.Blockchaintechnologyislookingtoanintegraltoolingettingallthevariousdifferentsystemscommunicatingwithoneanotheronthesamelevel.Thisincludesthingslikedatanotarizationservicesaswellasinformationmanagementwithamuchhigherlevelofintegritythanwhatiscurrentlyavailabletothepublic.FactomhasalsoalreadyreceivedfundingfromtheUSDepartmentofHomelandSecurity,specificallytheTechnologyandScienceDirectoratetoworkontheBlockchainSoftwaretoProveIntegrityofCapturedDataproject.

Decentralizethepowergrid:Ratherthanrequiringacentralizedpowerproviderthatisinchargeofsendingenergytoworkplacesandhomes,adecentralizedblockchaincouldbebuilttoallowpeopletogeneratepowerthroughsolarandothermeansandthensellwhattheydon’tneedonanopenmarket.Allofthesetransactionswouldthenbevisibleontheblockchain,keepingfraudtoaminimum.Asmoreandmoreindividualsarepurchasinghigh-capacitybatteriesalongwithsolarpanelsfortheirrooftops,thistypeofscenarioisfastbecomingarealisticpossibility.

Trackthingsthataredifficulttotrack:Thefactthatablockchaincanshowupatanytimeandcannotbealteredmakesituniquelyqualifiedtotrackthetypesofitemsthatalwaysseemtogomissing.Forexample,thecompanyEverledgeriscurrentlyworkingonawaytoidentifyspecificobjectsandthendeterminewhetherornottheyarelegitimate.Sofar,theyhavecreatedadistributedledgerthatfollowsvariousdiamondtransactionverificationsincludinglawenforcementagencies,claimants,insurancecompaniesandownerstoputtogetheraminetostoreviewofeachdiamond.Thesystemisusefulinthatitkeepsthesupplychainhonestandalsomakesiteasierforindividualbuyerstodetermineifagivendiamondisrightforthem.Furthermore,smartcontractsmakeitpossibleforthediamondtransactionstoclearlybepaidforwhilealsotrackingthem,guaranteeingtoconsumersthattheyarenotpurchasingblooddiamonds.

Gettingartistswhattheydeserve:Ratherthanhavingtoworryaboutmakingsuretheirmusicisn’tusedwithoutgeneratingcompensation,withblockchain,musicianswillsoonbeabletodeterminewhousedeachsongandforwhat,witheachindividualtransactionbeingcarriedoutviasmartcontractsthroughablockchainplatform.What’smore,ratherthanhavingtowaitforfundstohitaspecificlevel,orforsomeone,somewhere,tocutacheck,thesefundswouldbedistributedinrelativelyrealtime.Thissameprocesscanbeappliedtomusiclicensingasawholewhichmeansitwilleventuallybepossibletocutoutmiddlemenfromtheequationentirely.This,inturn,meansadecreaseincoststotheconsumerandanincreaseinprofitforthemusiciansasitmeanspeoplearemorelikelytopayforcontentagain.

Improvedcommunication:Currentlyifyourvehiclereceivesasafetyrecallthenthemakerofthevehiclesendsoutanoticetoallofitslicensedsalesoutletsandeachoftheseoutletsthenreachesouttoitscustomerswhohavepurchasedthevehicleinquestion.Thisinformationthenmayormaynotreachyou,allowingyoutothenmakeaninformeddecisionbasedonthedetailsyouhaveavailabletoyou.Therecallcouldbeforsomethingmajor,orsomethinginconsequential,butregardlessyouarecertainlygoingtowanttoknowaboutit.Placingallofthisinformationontoablockchainwoulddramaticallysimplifytheprocessasafterthedefectwasfound,thechaincouldautomaticallynotifytheownersin

question.

Clarifyingassetlifecycles:Itdoesn’tmatterwhoyouareorwhatyoudo,youhavecertaintoolsthatmakeyourlifepossible.Blockchaintechnologyhastheabilitytomakesureyouknowasmuchaboutthemasyouneedtowhencombinedwiththeinternetofthings.Assetlifecycleisimportantforeveryonefromhomebusinessownerstomultinationalcorporations,andtheinformationprovidedbythistypeofblockchaincouldliterallysavelives.Forexample,thinkaboutanairplanewhichislikelytohaveseveraldifferentownersduringitstimeintheair.Thistypeofblockchainwouldmakeitpossibleforeveryownertounderstandeverypartontheirairplanemorecompletelyandtoensurethatpropermaintenancehasbeencompletedthroughoutitslifetime.

Trackingthefoodchain:Anincreaseinthereadyavailabilityofblockchaintechnologymeansthatslowlybutsurelyconcernsaboutthequalityofthefoodthatyouconsumeonaregularbasiswillbeputtorest.Regardlessofthefinalstateoftheproductwhenyoupurchaseit,youshouldbeabletoseetheentirerouteittooktogettoyourtable.Notjustthecompletedproducteither,everythingthatwentintotheconstructionofthecompletedwhole.Thisisparticularlyusefulastheremaybemoretothetraditionalfoodchainthanyoumightfirstrealize.Forexample,afarmcouldproducevegetablesthatheadtoaprocessingfacilitybeforeendingupinadistributioncenterbeforebeingpurchasedandrunthroughanotherprocessingfacility,alltoendupinacanoftomatosoup.

Changethevalueofownership:ThecompanySlock.itisbasedontheEthereumplatformandrunsablockchainforwhatisknownastheUniversalShareNetwork,thisnetworkisanopensourcemarketplacewhereanyonecangotolisttheirunusedasset,regardlessifitismachinery,shippingcontainers,officespaceandmore.ItisasortofautomatedAirBnBthatworksforanythingandeverything,notjusttemporarylivingarrangements.Thefundamentalsofblockchaintechnologyarethenpassedontotangible,realworldassets.

Transportation:Avariationinthetrendtowardsthecrowdsourcingofridesharingapplications,La’Zoozisadecentralizedtransportationplatformthatisownedbyitsuserswhouseblockchaintechnologytoorganizeandoptimizeavarietyofsmarttransportationsolutions.

Governmentandlawmakers

Everywherearoundtheworld,governmentorganizationsarerapidlyexploringthemanypossibilitiesprovidedbyblockchainanddistributedledgertechnology.Theabilitytosuddenlybeabletorecordanddistributeledgerinformationeasilyandsecurelyhascreatedamarketforavarietyofnewgovernmentalapproacheswhenitcomestoestablishingtrust,preventingfraudandimprovingtransparency.

FromarecentsurveyfromtheEconomicIntelligenceUnitaswellasIBM,itisclearthattheinterestinblockchaintechnologyfromvariousworldwidegovernmentsisquitehigh.Infact,asmanyas9outof10governmentagenciesarealreadyplanningoninvestinginblockchainbasedcontractmanagement,assetmanagement,regulatorycomplianceandtransactionmanagementby2018.Meanwhile7ofthe10predictblockchainisgoingtosignificantlychangethewaythatcontractmanagementishandled.Finally,nearly20percentsaythattheyexpecttohaveablockchainplanupandrunningbeforetheendof2017.

Voting:Asrecentlyasthe2016UnitedStatesgeneralelection,bothRepublicansandDemocratscouldbeheardquestioningthesecurityoftheexistingvotingsystem.Likewise,the2000presidentialelectionprovedthatthewaythatvotesaretalliedisremarkablyoutofdate.Whileconcernsabouthackinghavelimitedtheacceptanceofelectronicmeansofvotingsofar,blockchaintechnologycouldeasilyputthosefearstorest.Adecentralizedpublicledgerwouldnaturallybeencryptedbutspecificindividualscouldstillconfirmtheirvoteswerecountedaccurately.Thissystemwouldnotonlybemoreefficient,butitwouldbemorecosteffective,andclearlymoresecureaswell.

Responsive,opendata:Theblockchainledgerwouldalsocreateaplatformforwhatisknownasresponsive,opendata.Studiesshowthatthistypeoffreelyaccessibledataislikelytobringinnearly$3trillionworldwidewithinthefirstyear.Startupswillbeabletoutilizethisdatatohelpgetaheadoffraudulent

activity,parentswouldbeabletoaccessdetailsaboutthemedicationstheirchildrenarereceiving,thelistisliterallyendless.Currently,thistypeofdataisonlyavailablevialimited,governmentapprovedwindowswhicharenotdesignedtoputcitizensfirst.Asablockchainisatypeofpublicledger,citizenswouldbeabletoaccessitsdataatanytimeandplace.

Self-management:Blockchainprovidestheopportunityforgovernmentalagenciestoself-managemoreeasilyastheexchangeofinformationonaglobalscalewouldbegreatlyimprovedoverall.Therewouldbeagreatdealmoretrustaswellbecausetheinformationintheblockchainwouldbepublicforeveryonetosee.

Reducingadministrationcosts:Ifpropertyrecordswererecordedtoablockchainthenprospectivebuyerscouldmoreeasily,quicklyandcosteffectivelyverifyownershipinformation.Thisprocessiscurrentlystilldonemanuallywhichmeansgovernmentagenciesspendhundredsofthousandsofdollarsperyearpayingindividualswhodothistypeofjob.Manuallyverifyingsuchthingscanalsoleadtoanincreasednumberoferrorswhichhelpstofurtherincreasepotentialcosts.

Itwouldalsogreatlydecreasetheamountofmanualeffortwhichwouldberequiredonthebanks’endastheywouldhavetodomuchlessworkwhenitcomestotitleinsurance.Titleinsuranceisrequiredbylendersasameanstoprotecttheirinterests.This,inturn,woulddecreasepricesforhomebuyerswhoarerefinancingorbuyingforthefirsttimebecausetheywouldhavetopaylessthroughouttheentireprocessastheamountoflaborwouldbereducedsignificantly.

Decreasemoneylaundering:Ifidentitydatawasreadilystoreonablockchain,thegovernmentagenciescouldmoreeasilykeeptrackofthosewhoaremovinglargeamountsofmoneyfromoneplacetoanother.Financialorganizationscouldscanthedetailsofeverynewclientandthatinformationcouldthenbepassedalongtoappropriateagenciesifaneedpresenteditself.Furthermore,storingpaymentandaccountinformationinablockchainwouldgoalongway

tostandardizethetypeofinformationrequiredforanaccount.This,inturn,willhelptoimprovethequalityofthedatathatisgatheredandreducethenumberoflegitimatetransactionsthatarefalselylistedasfraudulent.Finally,havingarecordthatwasknowntobetamper-proofwouldmakeiteasierfortheseorganizationstocomplywithAMLregulations.

Ensuringtaxpayersarepayingup:TheFederalGovernmentislikelyalreadyworkingonitsownformofcryptocurrency,sothereisnoreasontoassumetheyarenotalreadyworkingonameansoflinkingablockchaintothecurrentIRSsystem.Thisblockchainwouldnotonlyrecordtheamountofmoneyeachcitizenearnedinayearbutalsoanyincentives,subsidies,grantsandloansthatindividualmighthavebeenprovidedwithaswellasthereoriginalsource.Whilethiswilllikelyleadtomoreindividualshavingtopaymoreintaxesthantheyarecurrently,itwillalsokeepthegovernmentaccountableforeverydimethattheybringin.Itwillbemuchmoredifficultformoneytodisappearintothefoldsofbureaucraticpocketswhenablockchainthatanyonecanseeiskeepingtrackofthetab.

Keepingtrackofincorporatedcompanydetails:ThestateofDelawaremarksthefirststateinthenationofferincorporatedbusinessestheabilitytokeeptrackoftheirshareholderrightsaswellastheirequityviablockchain.AsitiscommonformanycompaniestoincorporateinDelawaretotakeadvantageoffriendlytaxationprivileges,thishasthepotentialtobeachangethathaswide-rangingresults.Thestateisalsomovingitsarchivalrecordsontoadistributedledger,sothatmorepeoplecanviewit,forfree,atlesscosttotaxpayers.

Digitalproofofresidency:InEstonia,longknownforitsforward-thinkingpractices,itisnowpossibletodigitallyapplyforresidencyinthecountrythroughtheuseofagovernmentalblockchain.Newresidentsthenreceiveadigitalkeycardthatcorrespondstoacryptographickeythatcanbeusedtosignsecuredocuments,takingtheplaceofanysignaturesonofficialpaperwork.VirtualresidentsarethenfreetoopenupbankaccountsinEstonia’sonlinebankingsystem,whichalsoutilizesblockchain,aswellasincorporateacompanyoraccessothere-services.Estoniaisproudtobepushingtheboundariesofdigitaltransactionsandseeingavarietyofnewmonetarystreams

intheprocess.

Welfare:IntheUnitedKingdom,blockchainhasalreadybeenturnedintoaservicethatisavailabletopurchasethroughtheDigitalMarketplacerunbythegovernment.Throughthisservice,variousgovernmentalagenciesfreelyexperiment,deployandbuilddigitalservicesbasedonblockchainandtechnologybasedondistributedledgers.LastyeartheyranatrialthroughtheDepartmentforWorkandPensionthatalloweduserstotakeadvantageofamobileappthatletthemaccesstheirmonthlybenefitpaymentsalongwithtransferringdetailstoaseparatedistributedledgerasameansofhelpingthemwithmanagingtheirfinances,withtheirconsentofcourse.

GlobalBlockchainCouncil:TheGlobalBlockchainCouncilhasbeensetupinDubaiandrepresentsmorethan50publicandprivateorganizationsthathavealreadylaunchedproof-of-conceptblockchainprojectsacrosstheshipping,tourism,digitalwills,businessregistration,titletransfer,healthcarerecordsanddiamondtradingsectors.IBMhasalsopartneredwiththeorganizationinhopesofusingitsblockchainforalogisticsandtradesolution.ThegovernmentofDubaihasalsoannouncedplansforaninitiativetotransferalloftheirgovernmentdocumentsontoaninterconnectedblockchainby2020.Theestimatedcostreductionfromthisprogramisanticipatedtobeat25.1million-manhoursperyear.

Thefutureofblockchain

Whileblockchaintechnologyisstillinanascentenoughstagethatvirtuallyanythingcanhappen,thereareanumberofthingsthatarebeingworkedonatagovernmentallevelthatshouldbeconsiderinthecontextofyourfutureusage.

Morecontrol:Aspreviouslymentioned,oneofthebiggestbenefitsofablockchainisitsabilitytofunctioncompletelyautonomously.However,duetothefactthatbitcointhenallowedfornear-anonymoustransactions,itmadeitveryeasyforthosewithaninterestinavoidingthelawtodoso.Ascryptocurrencybecomesmorewell-known,regulatoryandgovernmentalagenciesincludingtheSecuritiesandExchangeCommission,DepartmentofHomelandSecurity,FBI,andtheFinancialCrimesEnforcementNetwork,justintheUS,haveallstartedbecomingmoreinterestedinitspotentialforunlawfulactivities.

Scrutinybegantoincreaseduring2013whentheFinancialCrimesEnforcementNetworkdecidedthatcryptocurrencyexchangesrepresentedaformofanexistingmoneyservicebusiness.Thismeantthattheywouldthenfallundergovernmentregulations.DHSquicklytookadvantageofthisfacttofreezetheaccountsofMt.Gox,thebiggestbitcoinexchangeintheworldatthistimebasedonaccusationsofmoneylaundering.

ThiswasthenfollowedupwithamorerecentSECrulingtodenybitcointheabilitytoopenanofficialcryptocurrencyexchangetradefund.Thismoveledtoadecreaseinthepriceofbitcoin,thoughthatdecreasewasthencounteredbyanevenstrongerincrease.ThedenialofthisapplicationwasstillpendingreviewasofSeptember2017.Thisthenplacescryptocurrenciesintoabitofanoddsituationastheirincreasinglevelsofscrutinymakesitharderforthemtofollowthroughontheirpurpose,despitebeingmorepopularthanever.

Ifcryptocurrencyiseverygoingtoreachatrulymainstreamlevel,andbeabsorbedintoexistingfinancialsystemsthenitneedstofindawaytoremaintruetoitsinitialpurposewhilealsobecomingcomplexenoughtoholdoffthesecuritythreatsitissuretofaceinthefuture.What’smore,itwillalsoneedtobecomesimpleenoughthattheaveragepersoncanuseitwithoutissue.Finally,itwouldneedtoremaindecentralizedenoughtostillberecognizable,whilealsoincludingvariouschecksandbalancestopreventmisusewhenitcomestothingslikemoneylaunderingortaxevasion.Takentogether,thismakesitlikelythatthesuccessfulblockchainofthefutureisgoingtobesomesortofamalgamationofthecurrentformandamoretraditionalcurrency.

UnitedStates:TheUnitedStatesgovernmentiscurrentlyworkinghardtocrackdownonthosewhoareusingblockchainasameanstolaundermoney.Theyaren’tgoingtobecontentwiththatlevelofcontrolforlong,itseems,assignspointtothefactthattheyarecurrentlyworkingontheirownblockchainbasedcryptocurrencyknownasFedcoin.TheideahereisthattheFederalReservecouldgenerateauniquecryptocurrencyquiteeasily.TheonlydifferencebetweentheblockchaintheycreateandanyotheristhefactthatitwouldallowfortheFederalReservetoretainthepowertogoinanremovetransactionsthattheydon’tapproveof.

TherolloutoftheFedcoinwouldoccurafterthegenesisblockwerecreatedandtherateofFedcoinsbeingsetto1to1withthedollar.Overtime,itwouldbecomemoreandmoredifficulttocomeacrossregulardollarsuntiltheywerephasedoutentirely.Thiswouldthenultimatelyleadtoatypeofcryptocurrencythatisbothdecentralizedforitsindividualtransactions,andcentralizedwhenitcomestothingslikelimitingavailablesupplyandkeepinganeyeonalltypesoftransactions.

TheFederalReserveisalreadyonitswaytowardsmakingthisplanareality,somuchsothattheyhostedaclosed-doormeetingwithbitcoinauthoritiesinthefallof2016.TheChairoftheFederalReservesatinonthemeetinginperson,alongwithrepresentativesfromtheBankforInternationalSettlements,WorldBankandtheInternationalMonetaryFund.Duringthismeeting,oneofthetalkswasliterallytitledWhyCentralBanksWillIssueDigitalCurrencies.

Russia:Russiaissuedadramaticshiftinitscryptocurrencypolicesin2017.Priortothispointanyonecaughtusingcryptocurrencycouldfacejailtime,nowhoweverthecountryisembracingdigitalcurrencywholeheartedly.ThereasonforthisisrelatedtotheextremelevelofcorruptionthatRussiahasseeninitsbankingsectoroverthepastseveralyears.Morethanonehundredbankshavebeenclosedinthepastthreeyears,andarashofmoneylaunderingschemesstillcan’tbestopped.

Tobettertrackwhereitsmoneyisgoing,theRussiangovernmentiscurrentlyworkingonseveralblockchainbasedtechnicalapplicationsthatwillmakeiteasierforthemtomonitorrealtimetransactions.Thismakesitappearasthoughtheyarelessinterestedincreatinganewdigitalcurrencyandareinsteadmoreinterestedinthedistributedledgerportionoftheblockchaintechnology.ThereiscurrentlynowordyetonifRussiaplanstocreateanewblockchainorutilizeanexistingblockchainforitsownends.

China:Chinaiscurrentlyamajorsupporterintheblockchainspace.InJuneof2017,thePeople’sBankofChinareleasedandofficialnewsreportregardingthecreationofitsowntypeofdigitalcurrencywiththeabilitytoscaledramaticallydependingonthenumberoftransactionsthatareseenperday.Whileallofthedetailshavenotyetbeenreleased,varioussourcesseemtoindicatethatthebankcouldreleasethecurrencytotheworldalongsideitsrenminbiproject.Whilenofirmreleasedateisforthcoming,thecurrencyisalreadywellunderwayinthedevelopmentprocessandhasalreadyseeingtestingamongstmanyofthecountry’scommercialbanksandthePeople’sBank.Thistestingisahugestepforwardforofficiallysanctionedcryptocurrenciesandblockchainsofalltypes.ItalsoproveshowcommittedChinaistotheideaofthoroughlyexploringthedigitalcurrencyspace.

Thedigitalcurrencytheyarecreatingislikelytocausemajorgainsfortheireconomyoverall.ThisisduetothefactthatitisbackbythePeople’sBankwhichmeansitisfunctionallythesameasabanknotewithfarfewerassociatedfees.ItwouldalsodoagooddealwhenitcomestobringingbankinginChinato

themodernageasmanyofitscitizensdonothaveaccesstotraditionalbankingservices.

Chapter3:Cryptocurrencyand

BlockchainInteractions

Whileblockchainispoisedtodoagreatmanydifferentthingsinthenearfuture,fornowthemostimportantthingyouaregoingtowanttokeepinmindisthatblockchainsmakecryptocurrencypossible,andbitcoinjumpedinpricemorethan$2,000duringthesummerof2017.Whilethispricehaspusheditoutoftheleagueofmanyamateurinvestors,therearemorethan1,000differentcryptocurrenciesonthemarketthesedayssothereareplentyofopportunitiesoutthereforthosewhoareinterestedinapotentiallyprofitableinvestment.Thisisnottosaythatthereisn’triskinvolvedaswell,however,soitisimportanttokeeptherisksofcryptocurrencyinvestmentinmindaswellbeforemakinganyinvestmentsinthespace.

Lowersriskofidentitytheft:Ascryptocurrenciesarepurelydigital,theyarenaturallysusceptibletofarlessriskthantraditionaltypesofcurrency.Theycannotbeforgedorcounterfeitedandthetransactioncannotbemanipulatedsothatitneverhappeneddototheunderlyingblockchain.Additionally,onceyouhaveboughtintoacryptocurrencyyoucanmoveitaboutfreelywithouthavetoworryabouttransactionswithspeciouscompaniesorindividualsputtingyourdetailsinplacestheywouldrathernotbe.Instead,withmostexchangesifyoualreadyowncryptocurrencythereisnotypeofverificationwhatsoever.Withmostexchanges,withoutcryptocurrencyinhand,youneedtogenerateanewdebitorcredittransactionwitheachroundoffunding.

Easyaccess:Thereareroughly3.5billionpeoplewhohavesometypeofinternetaccessandalsodonothaveanyreliableformofbanking.Thisisanichethatthecryptocurrencymarketislookingtotakeadvantageoftothefullest,andisexpectedtocausesignificantgrowthintheindustryasitbecomesmorecommonplace.Assumingthistypeofbankingcatcheson,thenthosewhoinvestincryptocurrencyearlyaregoingtoseemorethanjustaprofit,theycouldpotentiallyseeprofitonasignificantscale.

Lowcost:Whileeverycryptocurrencyinteractioninvolvesatransactionfee,thefeesformakingthistypeofexchangeisstillgenerallylowerthanmakinganexchangeonatraditionalbrokerwebsite.

Newtechnology:Whilebitcoinhasbeenaqualityinvestmentforthepastfewyears,thecryptocurrencymarketasawholeisstillextremelyuntestedoverallwhichmeansthatmanyofitsrisksarestillverypoorlydefined,especiallywhencomparedtomoretraditionalmarkets.Thisnaturallymakesthehighsinthemarketmoredramaticthansimilarmarkets,butitalsomakesthelowersmuchmoredramaticaswell.Therearenoguaranteeswhenoneisgoingtobecometheother,trendscancomeandgoincompletelyunpredictablepatternsthatnoonehasseenbefore.Whatitallcomesdowntoisthattherejustisnotenoughinformationavailabletobeabletoaccuratelypredictwherethemarketisgoingtobeinayear,muchlessfive.Untilthemarketstabilizessomewhat,thereisnowayoftellingifeverydollaryouinvestisgoingtobeworth$2,oneyearfromnoworifitisgoingtobeworth$.02.

Extremevolatility:Bitcoin,themoststableofallofthecryptocurrencies,isstillfivetimemorevolatilethangoldandhasnearlyseventimesmorevolatilitythanifyouweretoinvestthatmoneyintotheS&P500.Whilevolatilitymeansagreaterchanceatprofit,italsomeansthechanceatalossisgoingtobemuchhigherthanitwouldotherwisebe.Itisalsoimportanttounderstandthatmostofthepurchasesofcryptocurrencythataremade,aredoneforspeculativepurposes.Thismeansthatthecurrencyisbeingpurchasedbyinvestors,notpeoplewhoareactuallyplanningtouseitonaday-to-daybasis.This,inturnmeansthatpricesarelikelytorisehigherthanatruesupplyanddemandmarketwouldindicate.Thisearlyadopterphenomenonmeansthosewhobuyinearlyaregoingtoexperienceanicepriceincrease,buttheupwardmovementultimatelywon’tlast.Thisisn’taquestionofif,itisaquestionofwhen.

Lackofphysicality:Whilethefactthatcryptocurrencyisadigitalmeansofpaymentisoneofitsleadingcharacteristics,thefactremainsthatthisconceptdoespresentsomechallenges.Specifically,considerthefactthatiftheserver

holdingyourcryptocurrencygoesdown,andthereisnobackup,thenyourinvestmentisgoneforever.Youcantakeavarietyofmethodstoputthecontrolofyourcryptocurrencyinyourhands,butthefactremainsthatarealcoinisalwaysgoingtobeeasiertoholdontothanadigitalone.

Thevastpotentialforprofitwhenitcomestohackingintoablockchainalsomeansthathackersarenevergoingtostoptryingtodojustthat.Whatthisalsomeans,isthattheyareoccasionallygoingtobesuccessful.Forexample,theEthereumplatformhasseenavarietyofdifferentattacksthroughoutitslifetime,oneofwhichwassosuccessfulthatitnecessitatedahardforkthatsawtheEthereumblockchaindividedintothosethatsawaprofitfromtheattackandthosewholostoutbecauseofit.Asplitinthevalueofthedollarisnevergoingtooccur,nomatterhowmanyarestoleninabankrobberywhichjustproveshowunpredictableinvestinginanewopportunitycanbe.

Tradingcryptocurrency

Regardlessofhowfamiliaryouarewithtradingtraditionalsecurities,tradinginthecryptocurrencymarketcanprovetobeextremelyprofitable,aslongasyouhavecometotermswiththepotentialforrisk.Don’tforget,itisimportanttoneverinvestanymoneythatyoucan’taffordtolose.Thereisverylittlebarriertoentry,aspreviouslymentioned,ifyoualreadyhavecryptocurrencythenyouwon’tevenneedtoworryaboutverifyingyouraccount.

Anotherusefulthingabouttradinginthismarketisthefactthattherearenocentralizedexchangeswhichmeansitiseveryexchangeforitself.Thisthenleadstoamarketthatisveryfragmented,whichmeansitnaturallyproducesspreadsthataremuchwiderthanyouarelikelytoseeanywhereelse.Thislackofregulationalsomeansitisoftenquiteeasytofindaverylargemarginwhichmeansthatsmallinvestmentshavethepotentialtobecomelargereturnsfasterthanwithvirtuallyallothertypesofinvestment,thoughthesamecanbesaidaboutlossesaswell.Finally,dependingonthecryptocurrencyyouaretradingin,youwilllikelybeabletofinditfordifferentratesondifferentexchangeswhichmeansyoumightbeabletomakeaprofitsimplybypurchasingtheminoneplaceandsellingthemsomewhereelse.

Themostcommonwaytotradecryptocurrenciesthroughatradingcompanyiswithacontractfordifferences.Thistypeofcontractbindsthebuyerandsellertogetherforthelengthofthecontract,onceitends,thebuyerwillpaythesellerthedifferencebetweenthepriceoftheassetattheendofthecontractandwhatitwasatthestart.Ifthepricemovestheotherwaythenthesellerhastopaythebuyerthedifference.Whenitcomestosecuringleverage,youwilllikelybeabletofindratesinexcessof20to1,thoughitisnotrecommendedthatyouseekthemoutuntilyouareveryfamiliarwithwhatitisliketotradeinthismarket.

Globalcurrency:Whenitcomestostandardcurrency,thenumberofthingsthatcaninfluencethepriceisnaturallygoingtobefairlylimited.Theoppositeistrue

forcryptocurrencies,however,anditisdifficulttotellwhatisgoingtosetinvestorsoffbeforeithappens.Anycurrencynewsanywherehasthepotentialtosetpricesshiftingdramatically,infact,severalofbitcoin’smostsignificantmoveshavecomeaboutduetotheintroductiontocontrolsforcapitalinGreeceandwhenChinadevaluedtheYuan.

Marketalwaysready:Whiletheforexmarketistraditionallythoughtofasthemostrobustmarketasitisopen120hourseachweek,thecryptocurrencymarketisopen168hourseachweek,andtradesarealwayshappeningregardlessofwhatpartoftheworldiscurrentlyactive.Currentlythereareabout100majorcryptocurrencyexchangesintheworldwhoalloffervariouslevelsoftradingalongwithdifferingratesbasedontheirlevelofservice.Assuch,itshouldnottakemorethanalittleresearchtofindtheonethatisrightforyou.

Thiscanalsobeseenasanegative,dependingonyourtoleranceforriskasthesefactorscanbeenoughtogeneratelargeswingsonadailybasis.Infact,priceshiftsofmorethan5percentarecommononmostdaysforthelargercryptocurrenciesandthesmalleronesaren’tsurprisediftheysee15percentmovementormore.

Findingyourexchange

Whenitcomestocommittingtoaspecificexchange,itisimportanttoalwaysdotherelevantresearchthatyouneedinordertofeelcomfortableaboutyourchoice.Movingforwardwithoutdoingenoughresearchcancauseyoutoendupinasituationwhereyouexchangesuddenlydisappearswithyourmoneyoryoufindoutthatitdoesn’thavethefundstocoverallofitsobligationsandthereisarunonitaseveryonetriestogettheirmoneybackatonce.Ifthissortofthingweretohappen,itisimportanttokeepinmindthatyouaregoingtohaveverylittlerecourse,especiallyifyouchooseanexchangethatisnotbasedinyourcountry.Thisiswhytheinitialchoiceyoumakehasthepotentialtobesoimpactful.

Prioritizetransparentexchanges:Asageneralrule,themoretransparenttheexchangeyouchooseiswillingtobe,themoreonthelevelitisgoingtobe.Thismeansyouaregoingtowanttobeabletotakealookattheirorderbook,whichisjustaversionoftheirdistributedledgerandshowshowmuchofeverythingisbeingboughtorsoldonaregularbasis.Youshouldalsobeabletorequestdetailsregardingwheretheirfundsareheldandtheirsystemforverifyingtheirappropriatelevelofreservecurrency.Ifyouhaveahardtimegettinganswerstotheseverybasicquestionsthentheexchangemightsimplynothavethemeanstomakethatinformationpublic.Ontheotherhand,itcouldmeanthattheyareafractionalexchangeandcan’tcovertheirdebts.Whenitcomestochoosingtherightcryptocurrencyexchangeitisalwaysbettertobesafethansorry.

Availablesecurity:Itisveryimportanttoalwayschooseanexchangewithahealthylevelofsecurity,afterall,aspreviouslymentionedyourcryptocurrencyprofitswon’texistoutsidethisexchangewithoutyourhelpwhichmeanssecurityisoftheupmostimportance.YouwillonlywanttouseexchangesthathaveanHTTPSinfrontoftheirURLasthisindicatestheyareoperatingoffofasecureprotocolwhichmeanstheyareactivelyworkingtokeepyouraccountdetails

frombeingstolen.Youwillalsowanttoensurethattheexchangeisutilizingatypeoftwo-factorauthenticationinadditiontostandardsecureloginpractices.Ifyourexchangeisn’tatleastthiswellprotectedthenyouareflirtingwiththeftofbothyouridentityandyourinvestments.

Feesaddup:Almosteverytypeofcryptocurrencyhasanassociatedfeethatispaid,partofwhichgoestotheblockchainplatformholderandpartgoestotheminerorminerswhoverifyyourtransaction.Whilethesefeesarecertainlyvoluntary,inmostcases,notpayingthemremovesmuchoftheincentiveforyourtransactiontobeverifiedwhichmeanstheentireprocessmightenduptakinglongerthanitotherwisewould.UnlessyouchooseanexchangeinChina,youwillthenalsohavetopayatransactionfeetotheexchangeaswell.Withsomanyfeesflyingaround,theycanaddupquicklywhichmeansyouarealwaysgoingtohaveatradingplaninplacebeforeyoumakeyourfirsttradetopreventyourselffromlosingasizeableportionofyourtradingcapitaltofees.

Tryforsomethinglocal:Despitethefactthattherearecryptocurrencyexchangesworldwide,youshouldaimforonethatoperatesinyourhomecountryifpossible.Thisisadvantageousinmultipleways,thefirstofwhichisthatyouwillnaturallybeabletotakeadvantageofperiodsofhighervolumesimplybecauseyouwillbeonthesamegeneraltimezoneasyourexchange.Choosingalocaloptionwillalsomakeiteasiershouldyoueverneedtocontactsupport,andyourdepositswillgothroughmorequicklyaswell.Evenbetter,dependingonyourcountryanditslaws,theremightevenbesometypeofoversightregardingcryptocurrencyexchangeswhichmeansgettingyourmoneybackaftersomefunnybusinessmightnotbecompletelyoutofthequestion.

Whenchoosingalocalexchange,makesuretoverifytheyofferthecryptocurrencypairsthatyouarelookingfor.Exchangesvarydramaticallyfromonetothenextsotherearenoguaranteesyouwillevenbeabletotradeinyourlocalcurrency,evenifyoupickanexchangethatisclosetohome.

Understandtransactiontimes:Asallcryptocurrencytransactionneedtobeverifiedandaddedtotheblockchainbeforetheycanclear,exchangesoftenwork

onabitofaleadtimetoletthisprocessbreathe.Itisimportantthatyouchooseanexchangewhosetransactiontimeisreasonable,forthebestresults.Likewise,youaregoingtowanttoensurethatthepriceyoubuyatisthepricethatislockedinregardlessofhowlongthetransactiontakes.Ifthisisnotthecasethenyouriskmakingatradethatlookspromising,onlytohavethepricechangeandruineverythingbeforeitactuallygoesthrough.

Well-knownexchanges

Kraken:ThisisaEuropeanexchangethathandlesthehighestvolumeofeurotradeseachday.Theyarealsowithinthetop15whenitcomestoUSDexchangesaswell.

Coinbase:ThisistheelderstatesmanofthecryptocurrencyexchangesintheUSandhasthehonorofbeingtheoldestcontinuouslyactiveUSDexchange.Itisknownforbeingstrictlyregulatedandisstilloneofthetopfivewhenitcomestopurevolumetradedperday.

OKCoin:ThisisprimarilyaUSDexchangethatisbasedinJapanwhichmeansitissubjecttofarfewerregulationsthanmostoftheotherexchangesinthislist.Ifyouarelookingforhighermarginsandfewfees,andarecomfortablewiththeextrarisk,thenthisistheexchangeforyou.

Bitstamp:Thisexchangehasbeenrunningcontinuouslysince2011andthesecondmostcommonlyusedUSDexchangewithavolumegreaterthan10,000unitsaday.

Bitfinex:ThisexchangedoesthegreatestamountofUSDtradingbyvolumeofalltheexchanges,worldwide,clearingmorethan200,000unitsofcryptocurrencyeverysingleweek.Ifyouareinterestedingoingwiththisoption,beawarethatifyoualreadyowncryptocurrencythenyoucangetstartedwithoutsubmittingtoanytypeofverification.

Initialcoinofferings(ICOs)

In2017,ablockchainbasedcompanymanagedtoraisemorethan$150millioninlessthan24hoursandanother,Status.immanagedhalfthatamount.Theseoutpouringsofinvestorgenerosityareknownasinitialcoinofferingsand,likeeverythinghavingtodowithcryptocurrency,theyofferaheavyriskinexchangeforapotentiallylucrativereward.Asofsummer,2017,theprocesshadalreadyraisednearly$500,000,000.

Despitebeingaplayontheterminitialpublicoffering,theinitialcoinofferingisactuallyaverydifferentbeastinalmosteveryway.Aninitialcoinofferingisreallyjustanothercrowdfundingstrategywhereablockchaincompanyoffersitsnewcryptocurrencyataveryinvestor-friendlyrateandtheninvestorsbuyitupinhopesofseeingthepriceriseevenaslittleas50cents.Thecompanythen,intheoryatleast,willhavethemoneytocompleteitsprojectandcometomarket,whereitsproductsorserviceswillbesowidelyadoptedthatthepriceofitscryptocurrencywillrisebasedonincreaseddemand.TheEthereumplatformhasquicklyprovenitselfthemostpopularhomeforcompanieswhoarelookingtoofferaninitialcoinoffering.

AmajorityofthismoneycurrentlycomesfromChina,thoughinvestorsfromaroundtheworldhavebeenknowntoopentheircheckbooksifthepriceisright.Whileinvestingonwhatismoreorlessanunknownquantityalwayscomeswithcertainrisks,initialcoinofferingsareevenriskierstill.ThisisduetothefactthattheyarenotcurrentlyundertheSECregulatoryumbrellawhichmeanstheirbusinessplansarenotputthroughthesametestingthatthosewhoapplyforaninitialpublicofferingare.Thereisalsosomeconcernthatthesuccessthatthefirstfewinitialcoinofferingsgarneredisactuallyduetoanotherbubblewhichmeansitisunlikelytolast.

Whiletheydohaveissues,initialcoinofferingsalsohavethepotentialtogenerateseriousprofitsforinvestorswhomaketherightdecisionsattherighttimes.Nevertheless,ifyouareconsideringthistypeofinvestmentthenyouneedtounderstandthatifyouchoosetoinvestinaninitialcoinoffering,thenyouaremakingoneoftheriskiestinvestmentspossible.

Tocounteractthepotentialdangerasmuchaspossible,youwillneedtoapproachallinitialcoinofferingswithaquizzicalmindsetandthefirstthingyouwillwanttodoislookthroughanyinformationthecompanyhasmadeavailableincluding,hopefully,abusinessplan.Thiswillmakeiteasierforyoutodetermineifaspecificprojectmakessenseonafinanciallevelandtoensurethatisbusinesspropositionchecksoutinthelong-term.Youwillalsoneedtoknowthatthemarketisgoingtoactuallywanttheproductorservicethecompanyishopingtoprovide.Furthermore,youwillwanttodoublecheckandseewhattheroleofthecryptocurrencythatyouarebuyingintowillbewhentheproductorserviceisupandrunning.

Youwillalsoneedtokeepinmindthatbuyingintoaninitialcoinofferingisgoingtobequitedifferentthanbuyingintoaninitialpublicoffering.Whenbuyingintothelatter,youcomeawaywithownershipsharesthatessentiallymeanyouownasmallportionofthecompanyinquestion.Initialcoinofferingsgrantyounosuchrights,justapileofdigitalcurrencythatmayormaynoteventuallybeworthsomething.Additionally,initialpublicofferingshavestricterrequirementsplacedonthemincludingaccreditationobligationsandfiduciaryrequirementsthatthecompanymustmeetbeforeitcanhaveitsoffering,noneofwhichisrequiredforinitialcoinofferings.

Inreality,youarelikelynevergoingtoseemorethanawhitepaper,businessplanandwebsitefromaninitialcoinofferingcompany,andsometimesnotevenallofthese.Theyaremorethanlikelynotgoingtohaveaproductorprototypetoshowoffeitherwhichmeansyouaregoingtobetakingalotofwhatisbeingtoldtoyouonfaith.Youalsoneedtobeawarethatjustbecauseaninitialcoinofferingseesagoodamountofresponseearlyon,doesn’tmeanthisgoodwillwilllastuntilitslaunchday,muchlessbeyondit.Alsonoteworthyisthefactthatmanyanalystsbelievethatgivingnewcompaniestoomuchmoneytoosoon

actuallylimitstheirpotentialastheowner’sfeeltheneedtospendallthemoneyavailabletothemwhilefeelinglessinclinedtoactuallycompleteausableproduct.

WhilethelistofpoorICOsrangesfromthosewithoverlyoptimisticideastodownrightscamswiththesolegoaloftakingyourhardearnedcash.ThereareanincreasingnumberofICOsouttherewithnothingmorethanaflashywebsitefilledwithatonofbuzzwordsandahighvaluationbasedonnothingmorethantheirownopinion.Thesinglebiggestfactoryoushouldexaminebeforeinvestingistherealworldviabilityoftheproject.Whatsolutiontoacurrentproblemdoesthecompanypromisetosolve?Evenmoreso,isthereevenaprobleminthefirstplacethatrequiresblockchaintechnology?It’simportanttoexaminetheteambehindtheproject,andmoreimportantlytheirprevioustrackrecordwithprojectslikeit.Anothermaindeterminantshouldbewhetherthetokentheyareofferinghasactualutilityfortheproject,orareinvestorsjustgoingtodumpitforaquickprofitassoonasithitstheopenmarket?Youshouldalsowatchoutforanyhugebonusesofferedforearlyinvestors.It’snotuncommonforapre-salebonustobeoffered,butifthesebonusestop100%,youcanandshouldquestionwhattheincentiveisfornon-earlyadopters,andiftheteamarejusttryingtogenerateasmuchcashasquicklyaspossible.OneadvantagetheEthereumplatformdoeshaveistheabilityforsmartcontractstobecodedintotheICO,suchasfundsheldinaservicesimilartoescrow,toensuretheyarereturnedtoinvestorsiftheprojectfoundersdonotupholdtheirendoftheagreement.

Lastbutnotleast,itisworthnotingthatamajorityofthecurrentlysuccessfulinitialcoinofferingshavebeenbasedontheEthereumblockchainplatformwhichmeansthebasisofthesecompaniesisstillessentiallyanuntestedtechnology.WhiletheEthereumblockchainplatformhasabetterchanceofmakingitthanmakingitthanmost,thefactofthematteristhatitisstilluntestedtechnologysothereisstilldownsidepotentialaswellasupside.Overall,itmightbethebestchoicetoinsteadwaitandseehowthefirstroundofinitialcoinofferingcompaniespanoutbeforegettingtooinvolvedwiththesetypesofinvestmentsdirectly.

Tipsforinvestingsuccessfully

Whilestartingtoinvestincryptocurrencyisaseasyasfindinganexchangeandputtingsomemoney into thecryptocurrencymachine,doingsoand turninganinvestment profit is something else completely.What’s next is a list of thingsyouwillwanttokeepinmindinordertoinvestsuccessfullyinthelong-term.

It’sacommodity:Thefirst thingyouaregoingtoneedtodo is to thinkaboutcryptocurrencyinthesamewayyouwouldanyothercommodity.Justlikeanyother commodity, cryptocurrency is used for practical as well as investmentpurposes, just as preciousmetals have commercial uses and basemetals haveindustrialones.Additionally, theyareall tradethroughexchangesthatmoreorless all follow the same rules. This means that in order to choose acryptocurrencythatislikelytoincreaseinvalue,youaregoingtowanttopickthe one that is likely to provide themost real-world value or has the greatestnumberofprobableusesbeyondjustP2Ptransactions.

Increasingusage:Whengatheredtogetherasawhole,all thecurrentlyexistingcryptocurrencieshaveamarketcapofabout$160billion.Thisputstheminthesame leagueas companies likeTesla andMicrosoft in termsofpurenumbers.What makes this number particularly interesting is that real world usage andincreasing market cap have gone hand in hand so far, and reports show thatblockchain and cryptocurrency usage is only likely to increase for at least thenextfiveyears.

Thisiswhenmarketsaturationisexpectedtooccurandislikelywhenmanyofthe existingbubblesbreak for the first time.Nevertheless,while themarket isstill extremely volatile in the short-term, cryptocurrency as a long-terminvestmentshouldberelativelyreliable.Whenthisnumberislookedatthroughthe lens of the current market cap then the potential for growth is truly

staggering.Essentiallythepriceofcryptocurrencyacrosstheboardhasnowhereto go but up. Even better, once the number of users eventually stabilizes,investorwon’t have toworry about the bubble effect nearly asmuch becausepriceswilllikelystopdecreasingdramaticallyatthatpointaswell.

Point in thecycle:Themarketcycle isa typeof investmentpattern thateveryinvestment goes through sooner or later. On the positive side, it starts withoptimism beforemoving up to thrill, and then peaking with euphoria. It thendecreases through anxiety, denial, fear, depression and finally, panic. After itbottomsoutitthenrisesbackupthroughdepression,hopeandreliefbeforeonceagainreachingoptimism.

Whilebitcoinhasalreadybeenthroughthecyclemorethanonce,mostrecentlybottoming out during the 2014 crash, the vastmajority of all cryptocurrenciesarestillverymuchintheoptimismstagesothereisstillplentyoftimetogetinwhilethegettingisgood.Aslongasyoudoyourresearchcorrectlyinthefirstplace there is no reason you couldn’t realistically see five reliable years ofgrowthonyourinvestmentbeforeithitstheeuphoriastage.

Whilethisisdecidedlygoodnews,itisalsoimportanttokeepinmindthefactthat the cryptocurrency market today, is very much the same as the dotcomboom of the 90s. What this means, is that roughly 80 percent of all thecryptocurrencies on the market today are going to fail before or during theperiodwhenthemarkethitsitssaturationpoint.Thisisduetothefactthattherewillonlybesomanyoptionsinalimitedmarketplacethatonlyahandfulwillbeabletosurvivethebuildup.Manyinvestorswillendupthrowingtheirmoneyata companywithout having any ideawhat that company actually does and themarketwillcrumblebecauseofit,thoughifyouknowwhat’scomingyouwillbeabletoavoidtheworstofit.

Solving problems is key: It doesn’t matter what the potential for profit on agivencryptocurrencyturnsouttobe,buyingintoitandthensittingbacktowaitforthemagictohappenwillneverbethemosteffectivemoney-makingstrategy.Instead, you will be better served putting time into finding those

cryptocurrencies thatsolveproblemsfor individualmarketsor,evenbetter, theworldatlarge.Thebiggertheproblembeingsolved,themorelikelyitwillturninto something that is worth investing in for the long-term. It is especiallyimportanttoconsidersolutionswhenitcomestothebankingservicesthatsomeparts of the world take for granted. Cryptocurrencies that focus on solutionswhenitcomestomakingpaymentsandwiringmoneyaregoingtobegoodbetsinthenearfuture.

Long-term view:Given the amount ofmovement you can expect to see on aregularbasis, the idealcryptocurrencyportfolio isgoingtobeonethatfocusessolelyonthelong-term.Youarealsogoingtowanttomakeapointofpickingseveraldifferentcryptocurrenciestoinvestin,betweenthreeorfive,sothatyouwillneverbe toonegativelyaffectedbyseriousdrops inoneplaceoranother.More than anything else it is going to be important that you control youremotions as thoroughly as possible and strive to avoid rash decisions wheninvestmentsareontheline.Whenyouarefirstgettingstarteditisagoodideatonotwatchyourinvestmentstooclosely,astheyarelikelygoingtobeallovertheplace.Don’t forget, thegoal to long-term investing is a steadyoverall upwardtrendwhichmeansalittlebackandforthistobeexpected.

It is also important to remember that cryptocurrencies do not come with thelock-inriskthatmanyotherlong-terminvestmentsdo.Ifyoufeelthatacertaincryptocurrency’s time has come, you can quickly and easily exchange it withany other currency you choose, instead of having to go through the hassle oftrading inamore traditional fashionduringadownmarket.Assuch,youmaywant to think about investing in cryptocurrency as just keeping money in asavings account, but one that has a much higher potential for return on yourprimaryinvestment.

Conclusion

Thank you for making it through to the end of Blockchain Beginners Bible:Discover How Blockchain Could Influence Your Business, let’s hope it wasinformative and able to provide youwith all of the tools you need to achieveyour goals,whatever it is that theymay be. Just because you’ve finished thisbook doesn’tmean there is nothing left to learn on the topic, expanding yourhorizonsistheonlywaytofindthemasteryyouseek.

This is especially true for the blockchain market as it is a new enoughtechnology as to literally be always changing. Only by making it a habit tobecomea lifelonglearnerwillyouever trulygetagraspon it thatyouwillbeabletouseforyouradvantage.Whateveryoudo,alwayskeepinmindthatthemarket isheadingtowardsaninevitablesaturationpointwhichmeanshoweveryoudecidetointeractwithblockchaintechnologyyouneedtoensureyouendupontherightsideofit.

Itisextremelylikelythatyouwillnotseeanothertechnologythisdisruptiveinyour lifetime,andwithsomany technologyvariationsandcryptocurrenciesallvyingforthemarketatonce,allyouneedtodoisbeawareofthepossibilityofsuccesstobeabletoseekitoutandreapall therelatedrewards.Italsomeansthatthereareplentyofwaystofail,however,soyouaregoingtoreallyneedtodoyourhomeworkandensurethatyounevermakeamovewithouttakingallofyour options into consideration fist. Remember, investing in blockchaintechnologyisinvestinginthelong-term,slowandsteadywinstherace.

Finally,ifyoufoundthisbookusefulinanyway,areviewonAmazonisalways

appreciated!

[1]Source:Coincap.io-2017priceasof22/08/2017[2]TheactualsupplynumbersaremeasuredinSatoshi(0.00000001BTC).Thereare2,100,000,000,000,000(2.1quadrillion)Satoshi.

[3]UntilrappersstartrhymingaboutBitcoinsandSatoshisratherthanDollarBills,Fiatwillbethedominantformofcurrency

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