No other investment and investment object has written such a sensational success story in recent years as the Bitcoin. In 2017 in particular, not only did the price for the forerunner of the crypto currencies reach dizzying heights, but media coverage also rose from one all-time high to the next. However, there are many other crypto currencies that use the same technology as bitcoin. These so-called altcoins have also achieved astonishing price gains, but are not only of interest to speculators. All about the best alternatives to Bitcoin can be found in this guide.
At the end of 2017, the attention paid to the first cryptocurrency surpassed almost all other central figures, companies or other events. As the picture below shows, interest in Bitcoin has recently been greater than in US President Donald Trump. At the same time, the price rose to an all-time high. 20,089 US $ was paid for a bitcoin on December 17th, according to coinmarketcap.com.
During this period, the search volume was also highest on Google. After the subsequent price slump – down to $11,833 – searches also declined again. An interaction is thus quite recognizable here. However, Google trends should not be used as an indicator for trading.
The prices of all crypto currencies fluctuate very strongly. Good traders take advantage of this volatility and make profits from it. But before we get into trading with cryptocurrencies, we will start with an introduction into the crypto currencies for those of you who have no previous knowledge in this field. After all, you should never do anything you don’t understand.
What Are Cryptocurrencies?
A crypto currency is digital money created by means of a computer code, usually in the C++ programming language. This currency is free of control by government or central banks. This will create an independent and decentralized means of payment that is available to all via the Internet. The cryptocurrencies are also called coins. Coins can be sent and received via peer-to-peer connection. This means they go directly from one computer to another. So the coins can be easily exchanged and traded.
Trading in the crypto currencies is similar to trading in ordinary shares. The cryptocurrencies are bought and sold on special exchanges. The price for the different currencies rises and falls depending on the number of available coins and the interest of the investors. Prices are therefore also based on supply and demand. Demand is influenced by other factors as already described above. There are therefore several analogies to stock trading.
The first and best-known cryptocurrency is Bitcoin. The first cryptocurrency was created in 2008. When the Bitcoin became tradable in 2009, the small number of 10,000 Bitcoins could be bought for one US $. You can’t even calculate how much money that would correspond to today.
How Do Cryptocurrencies Work?
Any computer connected to the network of a crypto currency is called a node. Whenever a transaction occurs, the data is sent to the nodes. They are designed to ensure that all transactions are legitimate. Complex algorithms are used for this check. The review process is also referred to as mining or digging. For mining, the computers involved usually receive coins of the specific crypto currency.
If the transaction passes the review and is considered eligible, it is combined with other transactions. Together they form a block. If the block size specified in the code (block size) is reached, the complete block is added to the so-called block chain. The blockchain is a kind of account book in which all transactions for the coin are stored. If the confirmed transactions are attached, the blockchain is final and unchangeable. Only new blocks can be added, but no old blocks can be changed. Blockchain technology could thus be the payment system of tomorrow.
What Are Altcoins?
The term Altcoins originated as a short form for alternative coins, because the other cryptocurrencies are (partly) an alternative to the bitcoins. For all other cryptocurrencies except the bitcoin the name Altcoin applies. Altcoins are also often based on bitcoin technology, as it is open source. However, there are also coins that do without the blockchain technology completely, but still have success (see: IOTA).
What is an ICO?
At the moment there are over 1,300 old coins and the number is increasing almost daily. In this context, the term ICO is often used. The abbreviation stands for Initial Coin Offering and describes the process of a company distributing coins to investors and supporters. In return, the company receives money, usually in the form of bitcoins.
An ICO is therefore an unregulated instrument for start-ups to make money without making use of the strictly regulated raising of capital. Altcoins are therefore an alternative to crowdfunding or even more difficult for companies to go public. Therefore, there are numerous coins in circulation, which are primarily not intended to serve as a means of payment at all, but rather to support the companies behind them and the projects associated with them.
How Do I Buy Altcoins?
There will be a larger guide, but we advise you to always have a base where you can convert your normal currency (also FIAT money) into Ether, Bitcoin or Litecoin. Coinbase is absolutely serious and reliable here. This link will take you to the platform. After that, a stock exchange that really has many currencies is recommended and there are several variants.
At the moment, most of these exchanges may be overloaded, but Binance, a platform from Asia that is also available internationally, has been very reliable so far. Advantages: Quite clear procedure for verification, reliable regarding accessibility and you can also activate the 2-factor registration.