The rise of the digital currency Bitcoin has warped and changed the global financial markets forever. Throughout history, certain market “booms” have shaped our daily existences, our physical social construct even. As with the more recent @internet Dot Com boom we are now experiencing a full throttle Cryptocurrency and Bitcoin Boom. The online world has been viewed at times to be very murky and confusing. This new market where digital trading, price movement, confusion and large institutional level investments reside, a market where sadly not many will ever understand and interact with. Bitcoin is essentially Forex. BTC/USD is no different than JPY/USD from a trading perspective, it’s a currency pair. If you can understand the basics of the standard market you will find it very easy indeed to understand Bitcoin and the other available Altcoins. This is your opportunity to take your existing knowledge and experience, to apply it and gain profit in the new but familiar field of online Cryptocurrency trading.
So, let's cover the most basic question of all – What exactly is “Bitcoin” and “Ethereum”?
Starting with Bitcoin the simplest explanation is as follows. Bitcoin is an online digital currency, payment system and wealth storage vehicle. Origins of the creation of Bitcoin are a little clouded however the leading theory is that Bitcoin was created by an unknown person or group under the pseudonym “Satoshi Yakamoto” in 2009. Backed and based with cryptography (the art of writing and solving complex mathematical code), the unique factor with Bitcoin which set it apart from the rest is that there is no leading authority, issuing agency, central bank or even centralised company behind Bitcoin, and, there is no actual physical Bitcoin! Online stores, shops and businesses that accept Bitcoin as a form of payment will normally always calculate the price in US Dollars. The main reason behind this is the market volatility and general volatility of Bitcoin. So, in practical terms of payments, Bitcoin price is constantly affixed to that of US Dollar price (or in the local regional currency such as EUR/JPY etc).
With the rise of Bitcoin and the understanding of Cryptocurrency development came huge waves of creators, developers and online specialists, each one drawn into this new and growing field in the hope of changing history and the standardised construct of financial world management. With more understanding and interest into Bitcoin other digital currencies were born, such as Ethereum. These new coins and platforms exploit the original Blockchain technology of Bitcoin to create what are known as “Smart contracts”, essentially systems based on the same cryptography that keeps Bitcoin and all other Alt Cryptocurrency coins secure, but also enable entities such as companies, governments and even healthcare to create and run smart, safe and secure instant contracts for a whole manner of different services. A simple example is buying a car with and without smart contracts in play. Without smart contracts, you buy the car from the dealer, travel to the license office and issue a license for the vehicle, then call the insurance provider and buy insurance coverage, then we must get the road tax/license sorted for the vehicle and so on and so on – A lengthy and slow process.
With smart contracts in play, the moment you purchase the vehicle through the running of a smart contract cryptography based system/Alt crypto currency system from the moment you purchase the vehicle at the dealer, the insurance, tax and all other needed authorities are already notified in the same instance, allowing you to carry on faster and smarter than before. Smart contracts = Humanity 2.0.
Certain Cryptocurrencies such as Etheruem, NEO and Bancor allow the development of new smart contracts and the launching of new Alternative coins via ICO’s, essentially the physically fuel that drives this new market forwards. With more coins created and more uses for them, the level of interest in the community at large increases, and so does the overall market cap in value. The higher the market cap (money inside the market) the higher the prices of the coins and Cryptocurrencies inside it.
The word "Cryptocurrency" means: an encrypted decentralized digital currency. This is a new concept for the clear majority, and therefore takes a bit of time to fully comprehend this new concept which opens a full window of possibilities for the individual investor, as well as for the financial markets in general. The most striking example of a Cryptocurrency is undoubtedly Bitcoin, which almost every investor (old and new alike), have at least heard of.
The way cryptocurrencies work is as follows: they are based on cryptography to create the coins themselves and to facilitate transactions. What is special and ground-breaking in addition is that cryptocurrencies are based on public ledgers (the very definition of "open source"), which means the public has access to this ledger at any time with no limitation or concealment. All cryptocurrency transactions are open source for any individual to view and follow with no centralised authority controlling or having the ability to manipulate it. This has massive repercussions on finance as we know it today, and is very different from the conventional banking that we all have come to be used to.
There is a growing number of cryptocurrencies traded in the markets, and the rapidly growing popularity means that despite volatile prices, market caps are growing month on month, year on year with currently over 1000 different Alternative crypto currency coins on offer to trade. Prominent cryptocurrencies include Bitcoin of course, Ether, Litecoin, Ripple and Dash; among many others.
Since cryptocurrencies are a new player on the market opening a new era for all of us, there is much profit that potentially could be made. However, it must be remembered that it is a new concept and the historical volatility must be kept in mind always. Like every investment; there is no reward without risk. What is especially appealing about Bitcoin and other cryptocurrencies, is that the potential rewards seem to vastly overcome the risks at this moment, due to the truly astonishing growing popularity which does not seem to be reaching a plateau any time soon.