- The fiat currencies of countries like Venezuela and Zimbabwe are much more volatile than cryptocurrencies
- Massive debt and capital outflows are putting pressure on emerging markets
- Cryptocurrency provides the POTENTIAL for a semblance of stability in some of the more volatile economies, but faces the headwinds of lack of access and slow adoption
The Value of Currency
Currency is only effective if it does three of the following things:
- Medium of exchange: money must be widely accepted as a method of payment in the market
- The sandwich store will accept the same $5 that the shoe store will
- Store of value: you know that the money will be worth at least something tomorrow (not perfect, discounting for inflation)
- Rainy day funds: you expect them to retain value
- Unit of account: ruler by which other values are measured
- Divisible, fungible, and countable
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Decentralization is an important part of the blockchain, and one of the reasons that a lot of investors are curious in the product. The way that the blockchain operates is on a peer to peer network, utilizing consensus mechanisms. There is no over-arching “person-in-charge” (on Bitcoin). On some of the other coins, such as Ethereum and Vitalik Buterin, there is direction and input from the creator of the coin, but they don’t control the entire exchange process.
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Oh, the cryptos. It’s more than just Bitcoin.
Everyone is speculating about how high the coins can go, and throwing money at them. I’ve dedicated this blog to explaining some of the larger altcoins, their facts and figures, and what is special about them.
Before I begin the analysis, I just want to remind people that the altcoin technology is going through a lot of adjustments. Binance is currently (1/8/2018) not accepting new users. Coinbase has had an absolute plethora of issues.
If you want to invest, you better set at least 5 days aside to open up all the accounts and the required time for transfers. You’ll have a couple of different online wallets. Many different accounts.
The (Very Basic) Steps
- Open a Coinbase Account
- Put money in it (takes ~7 days)
- Transfer money to Binance or another altcoin platform
- Wait for that money to get into the account(~2 days)
- Buy Altcoins
It’s all incredibly non-intuitive, at this point.
Before you make any investment decision, it is important to do your research. Do not buy into something because your best friend’s grandma thinks it will take off, unless you agree with her based on analysis. Make sure you support what you buy into, understand the value of the platform, and take on calculated risk.
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Cryptocurrency is an absolute mind boggler.
Bitcoin first caught my eye about 2 weeks ago, so I was definitely late to the party, as it has been on the markets since 2010 (at the ripe price of $0.04).
It has been on a tear. Right now at time of writing (12/5/17 3:20 pm CT) the coin is at $11,810 according to the GDAX exchange. Its increased 2% in the last day, which is actually small compared to its past movements.
To give you an idea of the volatility of this asset/currency, it was at $11,621 a mere 15 minutes ago, and at time of publishing, it is at $14,050 (12/6/2017 8:37 pm CT). It is one of the more complicated things out on the market right now, and extremely prone to large price movements.
Despite this, the asset has grown into a market cap that surpassed Goldman Sachs and Morgan Stanley, two of the biggest banks, back in early October. The coin currently has a market cap of $199,407,776,020, according to Coinmarketcap.com. That’s $199 BILLION.
Below is a ranking of the top 26 stocks in terms of market capitalization. As you can see, Bitcoin’s market cap puts right at #26 in terms of WORLDWIDE stocks market cap.
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