Alt Coins – which ones to buy?

ALT COIN (2).pngIf you are a first-time buyer of crypto currencies you will probably ask this question. I get this in my inbox at least once a day lately, so I decided to write this blog and give you my piece of mind on this subject.

There is a big difference between choosing a crypto from an investor point of view to choosing it as a trader.

With trading you will be looking at charts and base your selection on trends, performance and price catalyst factors so that will be a topic of a whole other post. This time I will focus on the more passive investment approach, something that most people seem to be aiming for.

Trading is not an easy skill to master and it is extremely time-consuming, so I entered that marketplace as an investor first and later tapped into the trading world.

So, how do you pick the right crypto currencies to buy and hold?

The obvious start is with Bitcoin – the big daddy of the crypto world. The most valuable, most usable of all, most sought-after and so on.. you get the idea. As far as safety goes, the long term potential for growth is definitely high here.

So, what next?

  • Look for VOLUME

    Big volume means big capital is invested already, that also means popularity, usability, which basically tells us that the project is having a good potential for growth and longevity. Nothing is guaranteed and we are yet to find out how many of the current 1000+ crypto currencies are going to hang around for longer, but the ones that have a lot of volume are those with the highest chances at achieving that. The best place to find out how these compare by volume is to go to  https://coinmarketcap.com where you will see their quick stats and you can arrange them in order by a few indicators, volume being the default one.

  • Look for USP [unique selling point]

    Bitcoin is a crypto currency and so are most crypto coins. Some are application specific while some are purely crypto coins. Look out for those that are innovative. Those that offer something new, an improvement of sorts or something really different, are the ones with potential.

  • Look for popularity and media presence.

    If a crypto is talked about, if it has media coverage, a strong, identifiable brand, this would mean it is already quite popular and that also drives the price up. If a crypto makes it to the mainstream [or at least semi-mainstream] that brings a lot of new buyers, thus with a growing demand you can expect a jump in value.

  • Research thoroughly.

    There are so many sources these days, facebook groups, twitter, slackchats, telegram groups, forums [reddit, bitcointalk and more]… and of course each crypto currency is a project of a kind and as such they have their own website. Make sure you check out their website, read their white paper, check their development team and current+upcoming projects, what is the future plan for this project, is there a long-term vision and where does it lead to… these are just some of the criteria you should consider in your research.

  • Gather public opinion.

    Aside from the forums, where you will be getting a lot of public opinion from the users and fans or haters of the project, try to also find just general public opinion, through facebook and other social media that is not saturated with crypto fans, try to find what the average Joe knows and if they get excited about it, that would be another good indicator that the price will rise with time as the project/coin becomes more and more popular.

  • Did I mention RESEARCH?

    Yeah, I know. I just wanted to emphasize the importance of doing your own research and learning about the coins you are buying. After all, you wouldn’t  invest in stocks of a company without knowing enough about it, so same rule applies here. You must understand “why” and “if” your investment will bring you amazing return or not… You must also keep informed about any new development on the project that is supported by the coin, make sure that the development is not abandoned or any other internal or external factors that may change its course with time.

Where to start?

The most useful website for any crypto currency user is CoinMarketCap. This is where you can keep track on price, volume, ranking, popularity, performance and more. By default, the coins listed will be arranged by volume.

Another useful website that will facilitate your analysis is CryptoCompare which has a slightly more trading look and functionality.
To gather public opinion and feedback you can look into blogs, videos on youtube, twitter, telegram groups, facebook groups, steemIt network or slack chats which most crypto currencies have. Also check out these forums https://bitcointalk.org or reddit

Don’t forget to go to each project’s website. Many of the coins are only born out of a necessity to support the network and its developers so they will have a lot of information there to help you in your research.

For a start you should research each of the top 20 -30 coins. If you are going to be an investor, you might want to spread your capital and buy a few of these rather than go big on just one of them. Unless there is a strong reason for it, I would not advise to go big on any one coin because there might be a big potential in another coin that could surprise you. I bought Strat and Ripple very early on when I started and despite my passion for Dash or ETH, both Strat and Ripple gave me much more profit [at the time of writing this]. So even though I didn’t know much about Strat at first, the feedback I gathered about it pointed toward an uptrend [and that hasn’t stopped for the past 3 months now] and I’m looking at over 1000% profit from both XRP and STRAT. This is just an example. If I was a maximalist, I would have chosen Dash at the time, but today I am looking at 40% profit from it, which cannot compare to the performance of XRP and Strat.

This is why I would advise you to diversify and buy at least 10 of the top coins, the gain is always bigger than the losses [if any]. Doesn’t make sense? Let me elaborate.
Say you deposit 0.1 btc in Dash and 0.1btc in ETC [only hypothetical] and Dash plummets to -50% while ETC jumps by 100% [ which is very likely]. You will loose 0.05 but your gain would be 0.1 so you’re not loosing really. And what if you also had 0.1 in SC and that shoots up to 300% … you would have made 0.2 just from that so who cares about the 0.05 loss that Dash made… This is pretty much my strategy, except… I actually bought something like 30 coins in my first month and now my portfolio has grown to about 50. Only a quarter of them are long term for me, the rest are trading material.

 

 

What is an Alt Coin?

ALT COIN (1).pngAltcoin is a term given to all crypto currencies other than Bitcoin. It literally means alternate coin. Altcoins are alternative blockchains to Bitcoin, they use the same basic principals as Bitcoin but with some changes (e.g different mining algorithms or consensus rules etc…).

Most alt coins are forks on Bitcoin, some are built on the Bitcoin blockchain, others operate their own blockchains and offer diversity in functionality, innovation, niche-specific developments or just improvements on what is already there. For instance faster transacting, better privacy, easier coding or more popular and usable language (Bitcoin is built on C++ which is a computer language not very popular these days, while many of the new cryptos are written on Java or Microsoft’s .NET that attract vast communities of developers and freelances who work with these computer code languages).

Many alt coins are competing to be the next big success story but the market is already saturated and only a small percentage of the currently circulating cryptos are in fact worth looking into.

There are nearly 1000 crypto currencies currently in circulation and the ones that I am trading or investing in, are only the top 30 or so. The best way to find out how they perform is by going to https://coinmarketcap.com/ and see their current rating by volume.

But what really makes a cryto currency valuable and why some of these virtually unknown and brand new coins go up in price is determined by a series of factors outlined in my next post. But just before I leave you, please note that you should definitely avoid any crypto currency that involves heavy recruiting and is based on a deep multi level marketing system. The likes of Onecoin, Dascoin, Swisscoin, Scoin or The Billion Coin [TBC] are all in this category. These are not on the public exchanges and they only serve as community tokens system, therefore they are not easily spendable or tradable, if at all…

Bitcoin Forking Simplified

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There has been a lot of noise lately in the media and on all social media about the possible Bitcoin hard fork, some say it will be a soft fork, others are calling for no fork whatsoever…but what the heck is this all about and why all the panic?

The problem Bitcoin faces right now is one of scale-ability. The current block size is limited to 1MB – a cautionary measure implemented early on in the Bitcoin development after the blockchain suffered numerous hacking attacks. This was supposed to be a temporary limit on the block size but it was never lifted and we now face a big backlog on transactions, some days amounting to 100 000+  pending transactions for hours on end. Which in effect brings the fees up with many companies allowing their customers to pay higher fees and speed up their transactions processing. Currently, the daily revenue of fees on Bitcoin transactions is $350 000. Each day….

At the same time there are new coins, most of which are soft forks on Bitcoin in a way and offer improvements like instant-pay [by DASH] or higher privacy [Zcash, PIVX] or superior blockchain [Ethereum].

Many argue that if Bitcoin is to stay the dominant crypto currency, it has to be able to evolve and rise to the challenges of the times. The debate about the possible forking is not new, but it was reignited in December last year [2016] when the news about Bitcoin Unlimited began circulating.

What exactly is a Fork?

Forking is used as a term to describe a split in the system.  In simple terms, we see a proposal of a diversion from the current software that will enable size blocks to . There are two ways to do this.

“Hard Fork”is a permanent change in the block chain, where only the new software is accepted in the network. It means that every node – miners, merchants and users – has to upgrade to be able to validate the new blocks. Old nodes will not be able to validate new blocks. This will cause a split in the blockchain [version A and version B].

“Soft fork” does not cause a split in two blockchains because it is backwards-compatible and self-correcting in that only a majority of miners need to update to the new consensus rules. Old nodes will then see the new blocks as valid.

SegWit [ Segregated Witness] is one solution proposed for upgrading the block size to 2MB without the need to split the blockchain and it’s effectively a soft fork. This is not met with agreement by all miners unfortunately as some are in support of a bigger scale-ability of the blocks.

In the occurrence of a “Hard Fork” the result will be two development groups which is a split into:

  • Bitcoin Core [the current network]
  • Bitcoin Unlimited [the new version of the network with up-scaled block size].

BTC Vs BTU

Bitcoin Core [BTC] is the current version of Bitcoin that we know and use. It supports 1MB blocks and has the ability to support SegWit but does not agree with proposed upgrades by BTU

Bitcoin Unlimited [BTU] is a group of miners who propose a change in the software that allows for greater size of the blocks to be determined by market demand [and accepted by consensus of the miners]. The change is, however, incompatible with the current Bitcoin software and would therefore create a “new coin,” while carrying over the entire transaction history of the currency. BTU was developed by software engineer Andrew Stone and is supported by a minority but headed strongly by one of the biggest Bitcoin PR faces – Roger Ver, CEO of Bitcoin.com

Under normal circumstances, a change of rules would only occur if the whole network would agree on the new rules. Only one coin would emerge, causing no problem. However, as this split is caused by the very disagreement on the rules, initiated by Bitcoin Unlimited, it is very unlikely that Bitcoin Core would give in and would move to Unlimited.

If more than 51% of the nodes agree on the changes proposed by BTU, a hard fork will be possible and there would be two coins, each adhering to their own rules and the public opinion is that BTU forming as an Alt Coin. Many Alt Coins are just different versions of Bitcoin. My research shows that BTU is not very well-received in the Bitcoin community and most people would prefer that a split did not happen.

How would this affect us?

At times of uncertainty we usually see a price-dip and this is already quite noticeable this week. Bitcoin is currently standing at $950-970 per coin, down from $1200 in February. In the short term this is expected and it could be a trend that will last for a few more weeks. As soon as we see the end of this debate or at least some stability in the market, we will expect a recovery and some readjustment back to the higher numbers. Many speculators will take advantage of this lower price and the media hype that surrounds this topic only feeds the panic that causes a big dump at the exchanges which will make those buyers very happy. Some are diversifying their holdings with Alt Coins, others prefer to convert to USD for a short time and buy Bitcoin at a lower rate.

If you are not an active trader but holding Bitcoin for longer term, I would advise to just do nothing. Hold it but make sure you are using a cold storage. [like Ledger or Trezor] so you are the owner of your private keys. This way you can benefit from the choice of what version you will use in the future while some vendors and wallet providers might only choose to work with one of the two versions. Trezor and Ledger both give this response to the question about the splitting of the blockchain:

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This might not be the case if you are holding your coins in an online wallet. Most cloud storage wallets might not offer a choice to customers, so we see warnings issued by Coinbase, Circle and other providers to their customers.


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Further reading:
http://www.coindesk.com/preparing-bitcoin-hard-fork/
http://bitcoin.stackexchange.com/questions/30817/what-is-a-soft-fork
https://cointelegraph.com/news/bitcoin-hard-fork-will-be-felt-deeper-than-ethereums-experts
https://blog.coinbase.com/update-for-customers-with-bitcoin-stored-on-coinbase-904dea08ac5f#.khru1mle3
https://arstechnica.com/business/2015/08/op-ed-why-is-bitcoin-forking/
https://blog.trezor.io/contingency-plan-bitcoin-hard-fork-b6ce85cde028#.s2g11vixi

Bitcoin ETF rejected today. Price dips by 15%

Bitcoin had been soaring in recent days on the anticipation of a ruling by the SEC on the listing of a bitcoin backed ETF. It jumped to $1279.00 in the last hour before the result was announced. Then moments later it was down to $1150.00 and later reached as low as $1060.00

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The event today was an important ruling by the U.S. Securities and Exchange Commission (SEC) that rejected the proposed Winklevoss Bitcoin ETF [a trading exchange similar to Forex and the stock market]

The reason the ETF was not approved, according to the SEC, was because bitcoin is “too susceptible to fraud due to its unregulated nature.”

This is quite wry coming from the ultra-corrupt and anti-free market SEC. The market needs no regulation by an outside and violent entity (government) operating through the use of stolen funds (taxes) to manipulate, extort and attack people who do not pay enough bribes (political donations).

Bitcoin, in fact, is perfectly regulated the way it should be. By the blockchain itself. Bitcoin is 100% regulated by the blockchain which is a ledger system that is completely transparent, available to all, and unchangeable by any one entity.

In fact, “regulation” in and of itself is a tool used by branches of crime syndicates such as the SEC. Luckily, bitcoin cannot actually be regulated by the SEC, which makes it far more secure and less susceptible to manipulation and corruption.

Many in the bitcoin community were quite happy to hear that the SEC did not approve the ETF. Aside from not wanting the blessings of a corrupt, criminal entity they also said it limits the ability of some to manipulate the market, via shorting and other means that would be made easier via the ETF.

We now live in a very digital world. The largest population today is not China’s. It’s the internet. The largest economy in the world is not the United States. It’s the internet. The largest postal carrier is not the DHL, UPS or FEDEX. It’s the internet.

Bitcoin is internet’s money. It’s the defacto currency adopted by those on the internet. It has no state nor borders. No bank can control it. It’s not about “what country will adopt bitcoin first”. It’s about bitcoin not needing a country to exist.

That is what makes bitcoin so valuable. And, it is not going away anytime soon.

If you aren’t yet using Bitcoin, you are missing out on a very swift, easy and cheap way of transacting money. If you have not yet purchased any Bitcoin yet, you are missing on a massive earning potential. In the past year alone, the price of Bitcoin tripled, that’s 300% gain for those who had it already. In the coming year it will possibly reach around $2500-$3000 and then it will continue to rise due to its limited supply and ever increasing demand.

This is just a projection, but one that has been agreed and shared by almost every financial expert in the field. Make no mistake, Bitcoin is a must-have in any online entrepreneur’s portfolio. Don’t let it pass you by.

What is Bitcoin?

Let’s talk Bitcoin, shall we.

I first heard of the thing a few years back from an article in The Independent (newspaper). I got interested, excited even. But that excitement evaporated soon when I found out that it was costing more than 100 dollars and theway to obtain it seemed complicated and risky.

I accepted that I had missed the momentum and that it can’t get any more expensive than that and decided not to bother with Bitcoin at all. Fast forward 4 years and here I am, buying BTC faster than I can count.
Why the craze?image

I only properly got into bitcoin recently when I needed to deposit money into an investment programme online which was set up with Bitcoin only, so it was a matter of necessity rather than choice really.
I researched the popular Bitcoin ewallets and signed up with Coinbase which is one of the biggest and most reliable bitcoin wallet providers and it has its own inner exchange platform, so you are able to buy and sell your bitcoin currency and switch it to dollars or euros or pounds. Very convenient and simplified.
I also have the option to buy using my credit card, so in these times when the price is shooting straight up, I’m not confined by the restriction of my ever-thin bank account. My money is spread really thin at the moment, so this is a really important feature for me.
Still, let me explain why am I turning all my available funds into BTC right now.
I started monitoring bitcoin quite late,  it wasn’t until March this year (2016) that I started to buy and use Bitcoin for my online business.
In March I bought BTC at the rate of $430-450 (the rates were fluctuating between these numbers),  sometimes going up to $460 but nothing too crazy.
Then in May I noticed that the price started climbing. Slowly at first ( I mean, 10-20 dollars a day seems slow but in Stock-Market exchange terms this is still a massive jump). By the end of May the price for one BTC had passed the $550 mark and kept climbing up.
June was a great time for speculators and big investors and from what I understand the government of China was buying massive amounts, thus forcing a rapid and unexpected jump of over $280 from the previous month. By the 19th June one BTC reached $775 – something that forecasts were predicting would happen close to the middle of July when the next halving will occur.

What Is The Halving and the Block Reward?

In order to understand what this is, it’s important to first understand how Bitcoin and its database works. The database that keeps track of which addresses have how many bitcoins is stored in the form of a “block chain” (imagine a vast number of servers linked together), which is extended by one block roughly once every ten minutes. Each block contains all of the transactions that have taken place during that time, and when a block is added to the chain, it signifies a consensus among the Bitcoin network that those transactions took place at that time. As time goes on and more blocks are added on top of that block, the consensus solidifies, and after four to six blocks, any attempt to fraudulently change the transaction history to your own benefit becomes impractical because of all the work that has already been done overtop. Blocks can be created by any node on the Bitcoin network, and to regulate the rate of block creation, the network imposes constraints on the form that a valid block can take, with the result that it requires a lot of trial-and-error work to find a block that is valid – so much work that the entire network only manages to find one roughly once every ten minutes. That is a constant; there is an adjustable parameter called the “difficulty” which the network collectively manages to make sure that the actual block creation rate never strays far from that value.

Because creating (or “mining”) blocks is so crucial to the security of the Bitcoin network and yet so hard, the Bitcoin protocol includes a mechanism to encourage people to mine: every time a block is added, the programmer (miner) who found the block is given free BTC as a reward. At first that was 50 BTC and at the time of the first halving that became 25 BTC. This happened in 2013 and we saw a massive and sudden rise of the price back then. This July we will experience another halving where that reward will be down to 12.5 BTC but we’re now seeing the price jump much earlier due to people’s awareness of the event and a lot of speculation too.  The block reward also has another function: it is the only way that new bitcoins come into existence. Any bitcoin that you send or receive was at one point somebody’s block reward.

Why is this happening?
The main reason why this was done is to keep inflation under control. The rate at which new bitcoins are introduced into the system was never intended to stay at 50 BTC per 10 minutes forever. Rather, Bitcoin has a monetary policy that was coded into the system right from the start that reduces the rate over time, until the generation of new bitcoins finally stops entirely at a maximum of 21 million coins in 2140. There will still always be one block coming out every ten minutes, but the number of bitcoins handed out as a reward in each block will come down in sharp steps, cutting in half about once every four years (precisely, once every 210,000 blocks). The event that will happen in July is exactly this.

One of the major faults of traditional, “fiat”, currencies controlled by central banks is that the banks can print as much of the currency as they want, and if they print too much, the laws of supply and demand ensure that the value of the currency starts dropping quickly. Because the only use for money is to exchange it for something else later, a currency that is rapidly decreasing in value becomes even less valuable for that very reason, leading to a hyperinflationary spiral.

Bitcoin, on the other hand, is intended to simulate a commodity, like gold. There is only a limited amount of gold in the world, and with every gram of gold that is mined, the gold that still remains becomes harder and harder to extract. As a result of this limited supply, gold has maintained its value as an international medium of exchange and store of value for over six thousand years, and the hope is that Bitcoin will do the same.

What Will The Economic Effects Be?

The question that most people are focusing on right now is what will happen to the Bitcoin price. Thought on the issue is currently split into two camps. Those in the first camp believe that the decrease in the block reward will cause a “supply shock” in the Bitcoin economy as the number of available bitcoins suddenly goes down, pushing the price up by as much as two times to compensate. This line of thought rests on two key hypotheses. The first is that the supply of bitcoins on the market is largely made up of miners trying to collect a profit, and current major holders play a smaller role. This hypothesis holds increasing weight as mining becomes more and more dominated by professional “mining companies” seeking to earn a profit, and was bolstered further in another way by a recent study by Dorit Ron and Adi Shamir which found that 78% of bitcoins currently in existence are not in active circulation.

The second hypothesis is actually the one attacked more frequently and what those in the second camp argue is that traders anticipating the change have already bought up bitcoins in the months leading up to the event with the intent to sell them after. If they are correct, then even if the supply of bitcoins coming into the market from miners will soon cut in half, the supply from traders will make up for it, and the price will remain roughly the same.

My understanding is that even if that happens, it can only be a short term trend given the ever increasing popularity of Bitcoin and the whole cryptocurrency market in general.
If we listen to the experts, it seems that the potential of Bitcoin to reach a real commodity status, equal to Gold and beyond has already begun.

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