By: Steve McGarry
I am merely a follower of crypto currencies. I am not an expert.
I was an Economics major in college and became fascinated by digital currencies because it’s disruptive power, and their heavy reliance on demand and supply, similar to other physical currencies.
In non-technical terms, a crypto currency is a digital currency in which transactions can be performed without the need for a credit card or central bank. It’s designed to enable users to send money over the Internet in a very simple and efficient way. All transactions can be seen on the public “ledger” known as the blockchain.
Bitcoin is the golden boy of crypto currencies.
Bitcoin is decentralized, meaning that it belongs to no government, has no taxes, and has no transaction fees. However the currency does follow a set of network guidelines. These guidelines are something called the “Bitcoin Protocol.”
This protocol is essentially the nuts and bolts of how transactions work in the scripting (cryptography) that Bitcoin is comprised of. The wiki documentation for the Bitcoin protocol
is where the “people” who created the currency communicate. This ensures that the protocol is up-to-date. I won’t go into the Bitcoin protocol rabbit hole in this post.
I started actively following and mining for Bitcoin in January 2013 while living in Cambridge, MA. The price of one Bitcoin met the price of mining efforts in January 2013, which was a tectonic shift for the currency.
By the end of January 2013 the price was $20.42, and everyone in the startup/tech scene in Boston, was going mental over how low volatile it had become. After researching and seeing the explosive growth behind Bitcoin first hand, I set my sights on Altcoins.
I moved out to San Francisco, CA in February 2014 to co-found and peer to peer lending startup and saw the shift to Altcoins had already happened in the crypto currency community. It was almost as if everything happened in San Francisco, and 2-3 months later it would slowly leak to the East Coast cities.
Altcoins are any crypto currency that is not Bitcoin. Usually Altcoins are direct clones of the Litecoin code. (example; Dogecoin, Darkcoin)
Bitcoin is seen as the gold, and it is a race amongst Altcoins to become the silver and bronze currency.
Given both Bitcoin and Litecoin are open source and available on Github, everyone and their uncle is forking the code and trying to create the next Altcoin, to sit behind the behemoth Bitcoin.
Startups have even capitalized on this and created services like:
The catch to services like these, is that if you can’t deploy a blockchain explorer, obtain a Bitcointalk.org following, get onto an exchange, or start a mining operation, you will not be successful with your Altcoin. Full stop.
Side note: There are a no laws with crypto currencies or exchanges. In order to get your currency on an exchange, there are no rules to how much it will cost, or what you will be required to do.
It is possible though 😉
There are thousands of Altcoin day traders now that help with the 1M Bitcoins and Altcoins exchange hands on the many BTC exchanges. The traders bet on the upcoming coins with the biggest following, help them promote the coin, and they can see up to a 300% return overnight with proper marketing and mining pools.
The current logistics of day trading Altcoin is as follows:
- Buy Bitcoin (BTC) with your countries currency with a secure Bitcoin wallet service known as Coinbase.
- Create an account on a secure Bitcoin exchange (BTC-E, CEX, BitStamp)
- Research Altcoins through BitcoinTalk
- Buy Altcoins with BTC.
- Sell Altcoins for BTC.
- Withdraw BTC in your countries currency through your secure Bitcoin wallet.
We will see huge amounts of innovation in 2015 around the logistics of Altcoins and how they are traded.
Until then, I follow a cardinal rule when it comes to Altcoins, buy it, don’t understand it.
This is why my parents own one bitcoin. The Bitcoin is printed off, and stored, for a rainy day.
Steve McGarry is the co-founder of LendLayer, a startup company that provides financing options for students. Follow Steve on Twitter @StvMcg!