Bitcoin gets a bit of a weird rep these days. Sure, anyone who’s anyone on the black market uses it to buy their illegal wares of choice. At the same time, Bitcoin is a helpful disruption into the otherwise milquetoast finance world.
As you probably know, you can’t trace or counterfeit bitcoins. Bitcoin isn’t beholden to any one government, unlike every other currency on the planet. Everyone who uses Bitcoin has access to the current Bitcoin price and list of existing Bitcoins at any one time. You can also make a decent chunk of change by buying and selling Bitcoins. In short, Bitcoin could not only (maybe) make you money, but it also keeps those using it entirely honest. If only the rest of the finance world learned something from that!
Yet Bitcoin isn’t the only “cryptocurrency” out there. In fact, several newer cryptocurrencies are not only continuing Bitcoin’s work, but making gradual improvements to the cryptocurrency system over time. Some of these currencies are serious competitors to the Bitcoin world, while others are downright absurd. Knowing the differences, however, could save you from a world of hurt.
What is a cryptocurrency?
A cryptocurrency is a digital-only asset that uses complex math equations to create and exchange increments of value. These increments cannot be counterfeited, as anyone participating in the cryptocurrency economy has access to a “ledger” of sorts. The currency’s value relies on a delicate math equation that figures out how much of the currency can be created by using specialized computers and computer programs. In short, it’s virtual money that’s pretty much tamper-proof because of math and the internet.
Like stocks and other physical currencies, cryptocurrencies are based on the law of supply and demand. If demand outstrips supply, the value of a cryptocurrency increases, and vice versa. New increments of the currency are constantly created, but if demand outpaces the newly created currency, the value of that currency will increase.
What’s the most popular cryptocurrency?
Bitcoin is by and large the world’s biggest cryptocurrency. It counts for over half of the cryptocurrency market, as it was the decentralized cryptocurrency to launch. Ripple and Ethereum are two other major players in the cryptocurrency space, albeit with a fraction of Bitcoin’s value.
Are all cryptocurrencies the same?
Yes and no. Most cryptocurrencies operate using similar tenants like a ledger, specialized computers creating more currency, and anonymized transactions. Yet that’s where their similarities often end. Litecoin, for instance, operates in a way that allows for faster transactions between users. Ethereum started off as a crowdfunded project, whereas Bitcoin was the secret project of an anonymous creator. Each cryptocurrency has its own way of self-regulation, with some even having regulating bodies or communities to assure the quality of their cryptocurrency. No one cryptocurrency is the same, just like how the Yen and U.S. Dollar are completely different and independent of each other.
What’s this about doges and absurd currencies?
Anyone can make their own cryptocurrency if they know how. That’s why Billy Markus of Portland, Oregon made Dogecoin, a fun alternative to the Bitcoins and Ethereums of the world. After some time, Dogecoin took off and became a legitimate, tradable asset. The Dogecoin market is currently worth around $130 million, though this wealth is shared by the thousands of people who own dogecoins. (Visit Dogecoin’s official site to learn learn more about the cryptocurrency and actually use it.)
How do you buy cryptocurrencies?
You can buy cryptocurrencies through exchanges, or businesses that specialize in cryptocurrencies. These exchanges also offer services like wallets, which hold your total cryptocurrency stake in a cloud-based bank. These exchanges often take a fee in exchange for use of their services, though the fee is often small. Exchanges also place limits on your ability to buy and sell certain amounts of currency in a day, month, or year to avoid illegal activities. Though, if you really wanted to buy coins en masse and trade them frequently for whatever reason, you could do so with advanced exchanges.
Coinbase is arguably the most accessible and popular cryptocurrency exchange, though they currently only work with Bitcoin, Litecoin, and Ethereum. We personally recommend them due to their ease of use, security, and availability on smartphones.
Should you buy cryptocurrencies?
If you’re looking for an exciting new tradable asset that isn’t tied to the stock market or any one country, you might want to give cryptocurrencies a go. To learn how to buy Bitcoin, Litecoin, and the like, check out our how-to guide here. Just remember to keep your coins secure…or else.