Did you know there are 726 different digital currencies? Did you know that you can partner with a mining pool and buy the hardware and essentially (for ease of explanation) rent the hashrate mathematics from the nerds and cultivate a coin in more than 200 of these crypto (crypto is the same as digital) currencies? I didn’t know this until this weekend, and I have been long Bitcoin for 2 years as an investment. I knew you could mine, but I had no idea how simple it is to invest in the digital mining craze also referred to as cryptocurrency.
The place to start is about understanding that these are liquid, and for a small 2% conversion rate (like an ATM fee) you can covert these to cash in any denomination. This is an important point as adoption will come from trust and word of mouth, with the aid of social media, the velocity of adoption is 10x faster than ever before. Word of mouth is no longer word of mouth, it is word of Facebook, and this message travels at shared speed of light. This is the reason shares in Bitcoin went from $450 to $2300 for the value of the coin – in one year. Know also that Ethereum (the second most popular digital currency), went from $11 to $190 in the same one year time period.
When I looked up Digital Currency in Wikipedia it said, “In 1983, a research paper by David Chaum introduced the idea of digital cash. In 1990, he founded DigiCash, an electronic cash company, in Amsterdam to commercialize the ideas in his research. It filed for bankruptcy in 1998. In 1999, Chaum left the company.”
Other digital currency forms emerged such as e-gold, but faced issues because it was used by criminals and was raided by US Feds in 2005. In 2008, bitcoin was introduced, which marked the start of Digital currencies.
Origins of digital currencies date back to the 1990s Dot-com bubble. The first was E-gold, founded in 1996 and backed by gold. Another known digital currency service was Liberty Reserve, founded in 2006; it let users convert dollars or euros to Liberty Reserve Dollars or Euros, and exchange them freely with one another at a 1% fee. Both services were centralized, reputed to be used for money laundering, and inevitably shut down by the US government.
We need to understand that the government will do everything they can to stop digital currency because it eliminates the monitoring which happens in all fiat currency. Everyone I know who owns digital currency owns it (in some part) because they can avoid paying taxes, and it is easier to move blocks of cash above the $10,000 red flag level.
The US is not the only government who has halted digital currency, Q coins or QQ coins, were used as a type of commodity-based digital currency on Tencent QQ’s messaging platform and emerged in early 2005. Q coins were so effective in China that they were said to have had a destabilizing effect on the Chinese Yuan due to speculation. Recent interest in cryptocurrencies has prompted renewed interest in digital currencies, with bitcoin, introduced in 2009, becoming the most widely used and accepted digital currency. There are now 729 digital currencies.
The top 10 digital currencies are Bitcoin, Ethereum, Ripple, NEM, Ethereum Classic, Litecoin, Dash, Monero, Bytecoin and Stratis. You can learn more by searching coinmarketcap.com. These are the most liquid and seven (7) of these are mine-able, while 3 cannot be mined because these were pre-mined. The three non mine-ables are Ripple, NEM and Stratis, and the explanation of non minables only means that you cannot invest in a pool mine operation. This story has so many legs, it is worth coming back here and learning more. As a financial journalist and researcher I have found over the years that the best way to learn about new trading markets is to jump in and own them, and I have been on the train since 2015 and now dig into mining with a pickaxe and shovel. For more news on Bitcoin, cryptocurrency and other fast-moving stocks, please subscribe to FinanceRegistrar.com below.