Beginners Guide to Bitcoin and other Cryptocurrencies

FNQ Computers offer in depth training in safe use of Bitcoin and other Crypto Currencies so we published a basic introduction for the uninitiated.

What is Bitcoin?

Bitcoin came into existence in 2009 as an open source, peer to peer decentralised payment network or cryptocurrency. It has no central control such as a bank but instead relies on a distributed network of computers to maintain a ledger of all transactions which is called a blockchain. Bitcoin can be used to buy and sell goods and services online and increasingly in the physical world as well.

A user of Bitcoin has a wallet which stores the coin so it is as simple as sending coins or tiny fractions thereof from one wallet to another. Once received in your wallet you can store, trade or convert back to dollars. Although fees for trading bitcoin are small other fees normally apply for converting dollars to bitcoin and vice versa. Maintaining ones own wallet effectively gives the user the power of a bank on the bitcoin network.

The Blockchain.

Regardless of the success or failure of Bitcoin and others the blockchain has proven to be a more secure and efficient means of storing and exchanging stuff on the internet. Many projects around crypto currencies today are not really about currency exchange but are focussed on other forms of storage and exchange such as smart contracts and secure decentralised data storage. Leading global banks have been looking into blockchain technology and how they can integrate it into their systems to enable efficiency and security improvements and  recently conducted tests of interbank trading utilising Ethereum and its blockchain technology.

Popular Crypto Currencies

BTC-LTC-DOGE

Our Top 3 easy to buy, trade and store cryptocurrencies.

1. (Gold) BitCoin the best known and most commonly used digital currency. It currently has a market capitalisation of $6.5Billion.

2. (Silver) LiteCoin has been around since the early days and although overshadowed by Bitcoin it has maintained value, grown in acceptance and does have some enhancements over Bitcoin such as faster transaction times.

3. (Bronze) DogeCoin started as a bit of a joke or a meme coin but built up a popular following and although has failed to take it’s believers ‘to the moon’ as yet it has persisted as one of the more commonly used coins.

Some other popular currencies are focussed on using the blockchain technology as a basis for transferring and storing assets other than currency. Ethereum and MaidSafeCoin have received some recent attention and significant increases in their market capitalisation. Currently it is 320million and 23million USD respectively. Although it is likely this technology will  impact many areas of our lives it is only early days and they are  experiments that could fail.

With that said it is possible to see a big upside potential for these and other projects if industry adoption comes to fruition at some stage. Just as we all  would have loved to fill our wallets up with $3 Bitcoins a similar opportunity may exist today with some of its alternatives.

For a list of coins including price information visit coinmarketcap.com.

Risks of Digital Currencies.

Storing and exchanging value in digital form is risky business. Some of these risks are out of  any individuals control but most can be mitigated against using  secure practices in handling digital assets. Cold storage and paper wallet techniques are the safest methods for storing digital currencies and if trading in these currencies then would recommend only keeping what you need sitting in cloud based trading platforms or wallets at any time.

Computer hard drive failure accounts for many lost coins but this risk can be diminished with good backup procedures and storage of copies of your wallet data. Wallets should always be encrypted so then you can safely store copies of your wallet in cloud storage and other locations. Most of the security scandals that have erupted around Bitcoin over the years have been related to these cloud based platforms and wallets being hacked and thieved of their balances.

Why Invest in Crypto Currencies?

Disclaimer: We are technologists not investment advisors and whereby we are fans of digital currency we do not intend our comments on this matter to be construed as investment advice.

Investing in Bitcoin and other digital currencies is not for the faint hearted. It is risky on many levels and comes with no guarantee that they will retain any value. However in a world where financial markets seem to be spinning out of control with measures such as quantitative easing, negative interest rates and bail-ins now part of our financial landscape it is possible that alternatives to existing currencies could benefit from increased havoc in the traditional markets and economies.

This was evident during the Cyprus banking crisis when Bitcoin skyrocketed to over $1000US per coin and similarly has seen steady gains since late last year as investor panic seemed to set in on world financial markets. With only around 15million Bitcoin available at this time scarcity is assured and if demand increases then the price should reflect this. Bitcoin is currently trading at about $44o USD per coin. As the coin itself is divisible down to 8 decimal places it can be bought in much smaller portions than a full coin.

Today it possible to have a Visa debit card usable at any ATM that is linked to an account of Bitcoin instead of currency in the bank. This could lead to a greater use of Bitcoin in the general population and enables any retailer with eftpos facilities to effectively accept Bitcoin as a form of payment. With many exciting projects around the blockchain that could redefine the way in which we securely trade and store anything of value on the internet we are predicting a big future for cryptocurrencies and related blockchain technology but the reality is that the most successful of these to emerge in the future may not even be developed yet.

If you are considering a position in this market but don’t know where to start you can contact us and we will try to answer any questions you may have. For those that see the benefit of diversifying  a small portion of their investments in this space and are prepared for the risk then the potential rewards could be huge.

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Posted in Crypto Currency

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