Please visit Source Site
Bitcoin price was rising like a crazy and that’s why more and more people are interested in it. I did my informal survey every time I was at a restaurant or taxi by asking waiters and taxi drivers if they invested in Bitcoin. Most of them said no or “what is bitcoin?”, so this article is for them.
Why Blockchain is The Future
Blockchain is the technology behind Bitcoin, Ethereum and pretty much all other 40+ cryptocurrencies. Blockchain is an open source (like free) tech and it’s finding use in corporations and probably governments and big banks will roll out their own semi-decentralized blockchains. Blockchain is a very advanced and good technology. Everyone agrees on that, even people who bash Bitcoin and think Bitcoin is a scam.
At the heart of the Blockchain’s tech lies proof-of-work or PoW (although other algorithms like proof-of-stake are becoming more popular due to their lower demand on computation and thus electricity). PoW is when other independent computers (miners) confirms your transactions (e.g., send 0.005 BTC from your address to address).
That’s why in blockchain and cryptocurrencies there’s no need for a server or any central organization. Having a decentralized currency eliminates the need to trust one entity (federal government, central bank, corporation). Look at the Facebook and Twitter censorship or failures of Amazon Web Services or Google privacy violations, and you’ll understand the appeal of the decentralization.
Under the hood, this network of miners work to confirm transactions and earn crypto rewards for that. They consume a lot of electricity because it takes time to confirm an encrypted/signed with a private key transaction which makes blockchain secure. All transactions are open to see for anyone in what is called public ledger. However who has what address is anonymized (hidden), because anyone can create an address and a private key pair which all they need to send or receive money. An address or a key look like a long string of mixed up characters. You can even print them on a piece of paper if you’re afraid of a hacker stealing the keys from a digital wallet (which happens very often to people who rely not on local but on wallets with supposedly secure exchanges and companies).
What is Bitcoin and How to Invest and Short It
Bitcoin is one of the earliest (first?) real-world applications of Blockchain. Bitcoin (BTC) is the most popular and thus most expensive. Someone could have made 4x in two months by buying BTC for $5K and selling at $20K. If you want to buy and hold, then there are multiple ways to get a Bitcoin: buy from miners, buy from other bitcoin investors, buy from an exchange (like a middleman), mine your own. Buying from an exchange is the easiest and the most secure (mining is slow while dealing without a middleman can lead to you becoming a victim of a fraud). Coinbase is one of such exchanges. You sign up, connect your bank account and ready to buy BTC. Coinbase uses GDAX which you can use as well to avoid paying fees on Coinbase but GDAX will take some learning while Coinbase can be used by your grandpa. That’s for buying long (betting on the price rising).
If you think that Bitcoin is a scam and/or a pyramid scheme (as do I), then you are wondering how to short (bet on the price going down). I spent a few hours and learned how to do just that so you can save time and learn from me. I made two short orders and lost $30 in the process (BTC was going up). I used Kraken.
The way shorting on Kraken works is that after you log in and verify your identity, create a sell order with some leverage like 1, 2, 3, 4 or 5. This will make you borrow a BTC from the Kraken exchange. Of course you pay an interest to Kraken on an hourly basis so make sure you know that the price will go down in 1–2 days not 1–2 months (hard, I know!). You sell the borrowed BTC to the market and then when you close or settle the order, you buy at the lower market.
All this is done automatically by Kraken. You just create a sell order with a leverage and then you will see your profit (or loss like I did). You can trade other crypo on Kraken including myriads of clones, jokes (and/or scams?) cryptos like Bitcoin Cash, Dogecoin, etc.
Kraken software is very shitty so try sending your orders a few times until you see it in the list of orders. I had to do that and I also had to refresh my browser like a maniac because their website was unavailable. Another annoying fact with Kraken is that they call BTC XBT or some made-up bullshit like that.
Why Ethereum Is Better than Bitcoin
While Bitcoin is popular, the downsides are: it’s slow (Litecoin is faster) and it’s just a number. Ethereum (ETH) on the other hand is not just a number. Ethereum is like a computer. Anyone can put a program into its network and the program (dapp) will live there forever and be transparent and work. Dapps can do anything: crowdfunding (ICO), insurance, file storage, betting, settlement, etc. They are decentralized (d in dapps) which makes them more trustworthy since there’s no single entity anyone must trust. Miners power the network and verify and run dapps. Users use Mist or MetaMask to interact with dapps.
You can buy ETH on Coinbase, GDAX or Kraken while it’s still low (relative to BTC). Don’t sell or mortgage your house though. Speculate (this is a speculation since crypot don’t produce dividends or rent) only with the money you can lose. (Disclaimer: I’m not a financial adviser and I lost money on shorting so take my advise for what it’s worth which is free as this blog post.)
If you want to invest in BTC better go to Las Vegas (in my humble opinion, investing in Bitcoin is like gambling cause almost no one knows what will happen). If you want to invest in educating yourself and building tools, exchanges and apps on blockchain, then you can make a fortune cause most of the software and tools suck.
Please visit Source Site