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Bitcoin, Litecon, Dogecoins and other cryptocurrencies – should you invest?

They call bitcoin the “new way” that money will be sent from to people around the world. For those who don’t already know, bitcoin (BTC) is a digital currency that is generated by solving algorithms using  Application Specific Integrated Circuit (ASIC) miners, Graphic Processing  Units (GPU’s), or Central Processing Units (CPU’s). Since I’m a bitcoin enthusiast, many people have asked me, how do I invest in bitcoins?

First in order to understand what bitcoins are, you need to understand the logic behind it. Many people ask me how a bitcoin is created, and the answer is simple – it’s the process of solving extremely hard algorithms that can only be done by the various processors listed above. Why are the algorithms being solved significant? It provides a whole new level of security for software.

Second, you must have an understanding of how the cryptocurrency is  generated. In the process of mining, you’re able to contribute to solve the algorithms that the software is designed to solve, and based on the contribution, you get paid. In the case of you being the one who solves the block, there is a block reward. The way that these block rewards work is that the finder of the block gets a set amount of bitcoins which get halved every 210,000 blocks. Additionally, the person who receives the block reward is also awarded any transaction fees that users pay to send their bitcoins for that block.

Third, you must understand the limits of bitcoin. There is a maximum of 20,999,999.99999999949 BTC that can be created. As each block is solved, the difficulty to “mine” these coins get higher. In other words as an example, you may be able to mine 1 bitcoin in a month, but in the next  few months you may need 2 months to mine 1 bitcoin. Note that each coin has it’s own maximum and difficulty.

With bitcoin’s existence being since 2009, and so many of them already mined, wouldn’t it be hard to mine them now? The answer is yes, but lucky for the newcomers there are plenty of alternate coins available.

Litecoins and dogecoins are popular alternatives for newer users who have come into the cryptocurrency craze late. Dogecoins are notable not only because of how the craze over them started, but is traded more than all the coins in existence combined, which shows its popularity. It was also used to help fund the Jamaican bobsled team to go to Sochi 2014.

All of this may be informative, but the question in your mind if you’re reading this is probably still – should I be investing into bitcoin?

This is a controversial topic. Many people say stay away from bitcoin because it’s extremely volatile. The bitcoin enthusiasts will always say that you should. Though I’m a bitcoin enthusiast, I don’t only believe in the coin but I look at other big players who believe in it too. Silicon Valley invested into the bitcoin industry by dumping $25 million into Coinbase, which is website that offer online bitcoin wallets for users. Wall Street also sees bitcoin as a potential new payment system. There was also a person who bought $100 in bitcoins before the spike and cashed a fifth of them in to buy a condominium in Oslo, Norway. Regardless of this, the volatility, bad publicity, and government regulations that have already come or will come in the future cannot be ignored. Government regulations in China and Russia have banned the use of bitcoin. Silk Road was an online black market which was a site that people could use to get access to things such as  hit men, hacking tools, guns, and drugs with payments in bitcoins. It is also worth mentioning that Silk Road 2.0 had recently been hacked, which ended up with a hefty $2.7 million dollar loss in bitcoins.

Despite all of this, the value of bitcoin hasn’t plummted back to the old values of $13 dollars a coin. It stayed at the high $700’s till a recent software flaw was discovered. Otherwise known as transaction malleability, the flaw allowed for users to manipulate the fingerprint of the transaction and make it seem like a payment hasn’t been sent when in fact it has been. As of now, bitcoin developers are still working on a long-term solution for the problem.

The advice I always give to people is to invest into the hardware to mine the different coins. Reason being hardware will always hold value despite the different fluctuations in price. If bitcoin and the other cryptocurrencies drop, there will be programmers, gamers, and other heavy computer users who will need or want the computer parts. This is also a much slower way to get into bitcoin though. If I had the money, I would buy into bitcoin right now, seeing as how the prices are low, a fix is yet to come, and after all the negative news, bitcoin and the other cryptocurrencies are still around.

For anyone who would like to start out with bitcoins, I’m also selling them in very small increments so that  you can get started.

Donations are appreciated.
Bitcoin : 1JP5b6GYYoBf5DpJKf4im7nafNaW74k1b6
Litecoin: LfRpk9JRxQ6JtWUUUyUP9qJ9DhCHeWWTn3
Dogecoin: DK4zoyErSyKcpAMKs3AtqDgQnNUjHsBx6d

 

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About theoriginaljath (15 Articles)
Jack Hui is the founder of The International Passion. He is currently studying business at York University. He has a passion for food, wine, and watches. You can follow him on Twitter at @theoriginaljath

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