Bitcoin is the leading digital currency measured by market capitalization as well as value. At the time of writing, one bitcoin is worth over $15,000 and its market capitalization is over $260 billion. While bitcoin has managed to maintain its leadership position in the digital currency space, there are several bitcoin alternatives, known as altcoins, that are moving in on bitcoin in an attempt to take its place.
In this article, you will discover the ten leading altcoins and find out why they are close competitors for bitcoin as well as why they may turn into potentially highly lucrative investments.
Ether (ETH) is the second largest cryptocurrency after bitcoin and has a market capitalization of over $70 billion. Ether is the native digital currency of the Ethereum network. The Ethereum network is an open-source distributed ledger platform that enables users to create smart contracts and decentralized applications (DApps).
Ether, however, is not a digital currency as such. It is not meant to be used to purchase goods and services online as is the case with bitcoin and litecoin, for example, nor is it meant for international remittances. Instead, ether is the currency that powers the Ethereum blockchain and is meant to be used by businesses and developers who are building applications on the Ethereum network as the network’s currency.
Due to investors recognizing the potential of smart contracts and decentralized applications, the price of ether has rallied from less than one dollar during its ICO in 2014 to currently trade at over $750.
On August 1, 2017, the bitcoin blockchain experienced a hard fork during which the original bitcoin blockchain was upgraded to implement the SegWit scaling solution. At this point, a group of bitcoin miners who disagreed with this update created a fork of the bitcoin blockchain to create bitcoin cash (BCH).
Bitcoin cash differs from bitcoin as its blockchain allows for larger block sizes. This results in faster transaction times and lower transaction fees. As these were two selling points of bitcoin until its scaling challenges become evident, bitcoin cash has risen in value after the fork despite the substantial controversy surrounding the project. At the time of writing, bitcoin cash is trading at $3,000 per coin and has a market capitalization of $50 billion.
Ripple (XRP) is the native digital currency of the RippleNet payment network, which allows financial institutions to make ultra-fast low cost domestic and international payments.
The digital currency Ripple is used to pay for RippleNet transaction fees and needs to be kept as reserves in any wallet used within the network. Since Ripple is the currency used in RippleNet, it is no surprise that its value has increased substantially over the course of the year as Ripple has already managed to attract over 75 financial institutions to its payments network and is well-positioned to become one of the financial industry’s leading blockchain-based payment systems providers in the future.
Since the start of the year, Ripple has rallied from $0.0062 to over $1.00 and now has a market capitalization of over $40 billion.
Litecoin (LTC) was founded in 2011 as one of the first alternatives to bitcoin. The key difference between bitcoin and litecoin is that litecoin has faster transactions times and lower fees than its “older brother” bitcoin.
Due to bitcoin’s scalability challenges, litecoin has managed to attract more users in 2017, which has driven its price up to new highs. The price of litecoin was also boosted when popular bitcoin wallet and exchange provider Coinbase added support for litecoin in April.
Since the beginning of the year, the price of litecoin rallied from $4.50 to exceed $300 in mid-December and now has a market capitalization of over $15 billion.
The IOTA blockchain project is developing a transactional settlement layer for the Internet of Things (IoT) by combining elements of blockchain technology with the Internet of Things.
The IOTA project’s native currency, IOTA (MIOTA) does not use a full blockchain. Instead, it uses what is referred to as a Tangle. This solves the scalability issues faced by other blockchain projects, including bitcoin, as it requires the person who sends the funds to conduct verification of the transactions at the same time as funds are sent. This decentralizes the entire IOTA ledger and creates a zero-fee transaction system since no blockchain participants need to be paid to process transactions.
Bitcoin still reigns supreme, but these altcoins show promise.
Since IOTA hit exchanges in June, the price of this digital currency has rallied from $0.63 to over $5.30 in early December. Currently, IOTA has a market capitalization of over $10 billion.
ADA is the digital currency of the Cardano blockchain project, which was launched in September 2017 by blockchain development company IOHK. The Cardano project held an initial coin offering that lasted from September 2015 to January 2017 and raised around $62 million but was solely targeted at investors in Asia. The ICO funds are being used to develop an entirely new blockchain that allows for the creation of smart contracts and is thus considered a competitor to the popular Ethereum network.
Since ADA tokens become tradable in October 2017, their value increased from $0.021 to over $0.58 in early December and its market capitalization grew to over $10 billion by Christmas.
Dash (DASH), which stands for digital cash, in a popular digital currency due to its instant transaction and private transaction features. In other words, using Dash, digital currency users can send money instantly and obfuscate the transaction so that it cannot be traced back to the identity of the users. Additionally, transaction fees are much lower when using Dash compared to bitcoin.
Dash has emerged as one of the most popular and most valuable altcoins and is considered a real competitor for bitcoin as the leading digital currency in the future. The value of Dash has increased from $11 to over $1,200 since the start of the year. Currently, Dash has a market capitalization of over $9 billion.
XEM is the native digital currency of the NEM blockchain, which was launched in 2015. NEM is an open-source distributed ledger project that has developed a peer-to-peer network that provides services such as asset creation, a naming system, and encrypted messaging as well as a peer-to-peer payment system.
XEM has managed to move into the top 10 largest cryptocurrencies in terms of market cap in spring and has managed to maintain its top 10 spot since then. Year-to-date, the price of XEM has rallied from $0.0034 to over $1.00 and its market capitalization grew to over $9 billion.
Monero (XMR) is widely considered as the most advanced privacy-centric digital currency. It allows users to send and receive financial translations completely anonymously.
As bitcoin’s lack of anonymity has become more apparent in the past twelve months, privacy-focused digital currency users have started to switch their funds into anonymous digital currencies, which has pushed up the price of Monero from $15 to over $350.
EOS is the digital currency of the EOS blockchain project which managed to raise over $185 million during its ICO in June 2017. The EOS project is considered by some to the “Ethereum of China” and has thus attracted a substantial amount of investment to develop its scalable smart contracts platform.
Due to its focus on scalability, it is well-positioned to potentially overtake Ethereum, which has suffered from scalability issues throughout the year, and due to EOS’ position in China as the People’s Republic is considered a huge market for the adoption of blockchain applications. Since EOS has hit exchanges, the price of the digital currency has risen from $1.05 to over $12 and its market capitalization has grown to over $4.5 billion.
While none of these altcoins are close to taking the top spot by market capitalization right away, each shows potential for growth.
Bitcoin vs. the Top 10 Altcoins by Market Cap was originally posted at https://www.bitcoinmarketjournal.com/top-10-altcoins/ by Alex Lielacher
Cryptocurrency Glossary: Dictionary of Cryptocurrency and Bitcoin Terms
The cryptosphere is getting more crowded than ever. More and more people are joining the space every day with the hopes of making quick money.
However, in the process, they are bombarded with numerous terminologies and crypto jargons that makes most of them feel out of the sink.
When I started, I felt the same. But trust me when I say that learning these new terms and jargons is worth every bit of the hassle. Needless to say, it might seem overwhelming at first, but you will get used to it with time. If you intend to stay in the game, it is very important that you understand the terms used in the cryptosphere.
Moreover, if you are not a quick learner and don’t like updating yourself, you are destined to get outdated very soon considering this space is growing at an astronomical pace.
A Glossary of all the Cryptocurrency Terms you need to know
1. Bitcoin: When the B is capitalized, it represents the overarching concept of Bitcoin: The technology, the community, the protocol, and the software.
2. bitcoin: When the b is not capitalized, it is describing the unit of currency.
3. Altcoins: Alternative cryptocurrencies to Bitcoin. Examples: Ethereum, Litecoin, Dogecoin etc.
4. Bit: A sub-unit of bitcoin. 1 bitcoin (BTC) = 1,000,000 bits. You can always buy and sell less than one bitcoin.
5. Satoshi: A Satoshi is the smallest unit of Bitcoin. It is named after Satoshi Nakamoto, the creator of Bitcoin. Each BTC is divisible until the 1/10^8 part. A unit of Satoshi is equal to 0.00000001 bitcoin.
6. XBT and BTC: Common abbreviations for bitcoin. There is no difference between these two abbreviations.
7. Confirmation: When a Bitcoin transaction takes place, the blockchain confirms the transaction’s validity. The confirmation is done by “miners” every 10 minutes when a block is mined. It is always advised that you wait for at least 6 confirmations to avoid double spending.
8. Mining: The process of computer hardware doing mathematical calculations for the Bitcoin network to confirm transactions and increase security. Users who use their computers and/or rent resources for mining are called miners.
9. Recovery phrase/seed keyword: Random 12, 18, 24 words that are used to derive numerous pairs of private and public keys. Using these seeds, you can restore your wallet in any other supported seed key wallet.
10. Cryptography: A branch of mathematics and computer science that is behind the invention of cryptocurrencies.
11. Private Key: A private key is a secret, alphanumeric password/number used to spend/send your bitcoins to another Bitcoin address.
12. Public Key/Bitcoin address: This is another alphanumeric address/number which is derived from private keys and is used to publicly receive bitcoins.
13. Bitcoin wallet (Hardware, Software, Mobile wallet): A physical or software object where you have a combination of public and private key stored. Here you can find a list of best hardware wallets.
14. Whitepaper: A report which articulates the problem and solution that the blockchain project/cryptocurrency is trying to solve.
15. Transaction ID: Another alphanumeric string through which you can publicly see the transfer details (amount sent, sending/receiving bitcoin address, as well as the date of transfer) on the bitcoin blockchain.
16. Blockchain: A universal public ledger of bitcoin transactions till date.
17. Satoshi Nakamoto: The anonymous creator of Bitcoin.
18. Cold storage: A kind of storage where you keep Bitcoin private keys offline.
19. HD wallet: Wallets which generate the hierarchical tree-like structure of numerous public and private keys starting from the root seed key.
20. Hardware wallet: A hardware device which stores public and private keys of Bitcoin.
23. Transaction fees: Bitcoin transaction incentives that the miners receive for mining block via bitcoins, which is actually a small fee that the bitcoin users pay in order to complete BTC transactions.
24. P2P: It means peer to peer or person to person.
25. Block: A group of bundled-up transactions which miners choose to verify.
26. Proof Of Work: A decentralized consensus mechanism that is done by mining algorithms by spending computational power.
27. Proof Of Stake: A decentralized consensus mechanism in which your existing stake in currency is used to mine or forge blocks to reach the consensus.
28. Pump & Dump: Massive buying and selling of cryptocurrencies when the price is to one’s benefit.
29. Hash: A digital fingerprint of a fixed size produced by a hashing algorithm by processing data of any arbitrary size (numbers, alphabets, media files).
30. ICO: Initial Coin Offering of new crypto coins or tokens offered to the general public in return for their fixed priced investments. It is a new way of decentralized crowdfunding.
31. Hard Fork: A software update or an update on the blockchain protocol that is not backward compatible.
32. Soft Fork: A software update or an update on the blockchain protocol that is backward compatible.
33. Faucet: A service or website that pay you in cryptocurrencies in exchange for playing games or doing certain tasks.
34. Fiat: A regulated and centralized paper currency of any nation.
35. Block Reward: It is a reward in the form of native cryptocurrency given to miners for solving a computationally difficult problem. Bitcoin miners now get 12.5 BTC for solving each problem for adding blocks to the blockchain.
36. ASIC Miner: An application-specific integrated circuit machine designed specifically for mining cryptocurrencies.
37. Block Height: It is the number of blocks mined after the genesis block.
38. Halving: It is the 50% reduction in block reward after a certain number of blocks are mined. In Bitcoin, the halving happens after every 210,000 blocks.
39. Hash Rate: Hash Rate or Hash Power is the measuring unit of the power Bitcoin network is consuming to be continuously functional.
40. Crypto Exchange: A website that helps one buy/sell cryptocurrencies. Here is a list of top exchanges.
41. Limit Order (Limit Buy/Limit Sell): Buy/Sell orders placed by traders to buy or sell a crypto-currency when the price meets their target amount.
42. HODL: It is a meme term which is basically means hold or Hold on for dear life. It means to hold onto the cryptocurrency that you have invested and ignore the sentiments.
43. Whale: It refers to an entity or a person who holds an absurd amount of particular cryptocurrency and has the potential to manipulate the market.
44. Bullish: A feeling based on some factors that the price of a crypto will increase.
45. Bearish: A feeling based on some factors that the the price of a crypto will decrease.
46. ATH: An All-time-high price of a cryptocurrency.
47. FOMO: Fear of missing out. A feeling in which you want to get onboard a skyrocketing price rally.
48. FUD: Fear, Uncertainty and Doubt related to the market.
49. FUDster: A person who spreads FUD based on facts or gut feelings.
50. To The Moon: Refers to price moving to astronomical heights.
51. Bag Holder: Someone still holding an altcoin after a pump and dump crash.
With time, and the ever evolving crypto space, I am sure that many new terms will come up. Hence, I will keep updating this list of cryptocurrency terms regularly on CoinSutra.
Know some more common crypto jargons that can be added to this list? Let me know in the comments below!
Cryptocurrency Glossary: Dictionary of Cryptocurrency and Bitcoin Terms was originally posted at https://coinsutra.com/cryptocurrency-glossary-terminology/ by Sudhir Khatwani
Should You Borrow Money to Buy Bitcoin?
Borrowing money to buy bitcoin is a perilous undertaking with tremendous risks. What if you borrow $19,000 to buy one bitcoin, but BTC suddenly drops to $10,000? You still have to pay back the $19,000 with interest and your asset has lost nearly half its value. These kinds of declines, even if they are temporary, can leave you in agony, hoping your asset returns to the price you paid for it.
It is possible to borrow money from your credit card to buy bitcoin, Litecoin, Ethereum, or Bitcoin Cash through CoinBase. If you pay off the credit card every month, you should be okay. Credit cards are a convenient way to lend money. However, do not miss payments because you can suffer from late fees, interest expenses, or possible downgrading of your credit score.
If you are a holder of bitcoin, you can use your bitcoin to borrow money in order to buy more bitcoin. This type of leverage has been common for stocks on Wall Street for a long time, but now these types of arrangements are popping up in the crypto markets. If this type of arrangement interests you, check out our recent article detailing seven borrowing and lending platforms for bitcoin.
Traders and investors use debt to increase their returns. Let’s say you have $100,000. You borrow another $100,000. You might be able to double your returns, and if your return is 10 percent, you could make $20,000. But what if your investment goes south and you lose 10 percent or $20,000? You still have to pay back the loan with interest, which compounds your losses.
Some traders are overly dependent on debt in order to make returns. The borrow-to-buy mentality can lead to a dreadful trap. You may never get out of debt, and you are always making debt payments as a slave to lenders.
You can look for examples on Wall Street on how leverage affects investments like exchange-traded funds (ETFs). Investors like Tristan Yates have studied leveraged 2x Bull ETFs and 2X Bear ETFs and concluded these leveraged ETFs are a constant leverage trap and do not double returns of an underlying index. These funds only double the daily return, and there is a big difference between doubling the daily return and doubling the annual return.
Another reason to avoid debt with cryptocurrency is the massive volatility in the price of coins. For example, if you borrowed $19,000 to buy one bitcoin on Dec. 17, 2017, you would have lost 30 percent of your investment by Dec. 31, 2017, when the price dropped to $13,000. Then you would have had to decide whether to hold onto your bitcoin until it gets back to $19,000 — all the while paying interest on the loan. Suppose your interest rate is 9 percent. That is $1,710 per year in interest expense, and that does not include principal payments.
There are better ways to acquire bitcoin than borrowing!
A Better Way
There is a better, safer way to invest. Develop an aggressive payment plan to get out of debt. This way 100 percent of your discretionary income is yours to spend, save, or invest. What money you once spent on debt payments can now go into investments, potentially increasing your savings rate. One of the surest and fastest ways to gain wealth is by becoming a debt-free investor who saves and invests 15 percent of annual income.
A wise investor will diversify assets; that way, if one asset class falls apart, he is not ruined. Crypto is an important asset class. Yet crypto is highly volatile, with higher risks than owning the S&P 500. Do not compound your risk in crypto by borrowing money to buy it.
Investing in cryptocurrencies is complex and challenging with plenty of opportunities. Stay up-to-date with the latest news in cryptocurrencies by subscribing to the Bitcoin Market Journal newsletter.
Should You Borrow Money to Buy Bitcoin? was originally posted at https://www.bitcoinmarketjournal.com/buy-bitcoin-instantly/ by Michael Hooper
Bitcoin Explained: 3 Easy Analogies for Understanding Bitcoin
I’ve been drinking a lot of coffee lately with a lot of financial advisors and wealth managers who want to know about bitcoin. The first question they ask me is, “Why are your teeth vibrating?” (Answer: I’ve been drinking a lot of coffee lately.)
After that, here are the top three questions they ask me about bitcoin:
- What is it?
- Should I buy it?
- How do I buy it?
For those of us who have been investing in this world for years, it’s easy to forget that even sophisticated financial professionals are still trying to understand how it works, and how the New Finance revolution is going to impact their lives.
To make the world of bitcoin more accessible to traditional investors, here are three analogies that might help.
Bitcoin is Like a Checking Account
When you withdraw money from an ATM, you’ll see a number representing the balance in your checking account. The bank doesn’t show you a picture of all your cash sitting in neat piles, just a number.
You may have the illusion that cash is the only thing that’s “real,” and this number represents your cash available. The numbers, you might think, are a shortcut. But it’s more accurate to say that the numbers are more real than the cash.
It’s true that you could withdraw that money into cash, but you probably won’t. More and more is handled by credit or debit cards, automatic withdrawals, or checks. There’s no cash exchanged, just numbers flying from one account to another.
Cash is just a physical representation of the numbers, and an inconvenient one at that: cash can be lost, stolen, or put in the washing machine. Cash is untraceable, so it can be used for criminal activities. It’s risky to even hold cash in your pocket, especially if you live in New York.
And even cash is an illusion, because if everyone tried to withdraw their cash at the same time (like during a financial crisis), the system would collapse. The banks don’t really hold all that cash; like you, they just hold enough to manage their daily needs.
So you don’t really own cash, you own a number. When you own bitcoin, you don’t own a thing, you just own a number. Like a checking account, you could exchange bitcoin for cash. But unlike your checking account, bitcoin has the potential to greatly increase in value.
Which brings us to our second analogy…
Bitcoin is Like a Stock
Imagine you bought Apple stock in 2013, just before it began its great bull run. Back then it was $75 a share; today it’s trading at $175. That would have represented a 133% profit in five years.
Now imagine you bought bitcoin in 2013, when it was around $100 per bitcoin. Today, that bitcoin is worth around $15,000, for a 14,900% profit in five years. That’s not a typo.
Like your Apple stock, you could have sold your bitcoin at any time (and many did, much to their later regret). You could have also bought bitcoin at any time using dollar-cost averaging, investing $100 a month regardless of the price.
A share of stock is a small piece of ownership in a company … but is it really? As a shareholder, you can’t walk into Apple headquarters and demand to talk to Tim Cook. You do have certain rights, but the truth is you’re hoping Apple stock will appreciate in value, and be worth more than you paid for it.
In that sense, bitcoin is like stock: most investors are holding onto it, hoping that it will continue to increase in value. Bitcoin can be bought, sold, and traded on online exchanges, just like stock. The more people have confidence in it, the higher the price goes—just like a popular stock.
People get confused because bitcoin is often called a “digital currency.” Bitcoin is a digital currency, and you can use it to pay for (a few) things, but the truth is that most investors are not using bitcoin to pay for their morning latte. Why would you, when that $4.00 worth of bitcoin may eventually buy the entire coffee shop?
I’m spending too much time in coffee shops. Here’s the third analogy…
Bitcoin is Like Email
Back in the day, there was something called “mail,” which was delivered in small parcels called “envelopes,” and paid for with colorful stickers called “stamps.” It was slow and inefficient, and it wasted a lot of trees, but it gave the government something to do.
Eventually, humans evolved from mail into email, but the transition was not without challenges. “I just click a button, and the email is delivered?” “How do I know it sent?” “Who is this strange person reaching out to me?” “Why am I getting all these Viagra ads?”
You can send and receive bitcoin using a simple address. You don’t need to go to the bank and withdraw cash, you don’t need to write a check, you don’t need to do a wire transfer that takes three days and requires your mother’s maiden name (which everybody knows by now).
Just an address. Like email.
Email is second nature to us now, just as bitcoin (and digital currencies) will be second nature to us in the future. As the price stabilizes and the technology improves, we’ll be using bitcoin—or something like it—to pay for everything. It will be like the transition from snail mail to email.
Cash will still exist in some form, just like we still use postal mail when we need to send Christmas cards or thank you notes. But how many of us pine for the days when everything had to be sent in the mail? The whole system now seems clunky and outdated, like VHS tapes.
None of these analogies are perfect, because bitcoin really is something new. Hopefully they help you understand a bit of bitcoin’s promise and potential. But should you buy it, and how do you buy it? That’s where Bitcoin Market Journal can help: subscribe and we’ll show you how.
Bitcoin Explained: 3 Easy Analogies for Understanding Bitcoin was originally posted at https://www.bitcoinmarketjournal.com/bitcoin-explained/ by Sir John Hargrave