Bitcoin. Ethereum. Litecoin. If you’ve seen these mentioned in the news recently, you probably heard someone discussing their volatility or their potential for extreme returns. Well, I’ve got news for you. Both are true. Here is chronicles of rationality’s take on bitcoin.
First, what is bitcoin? Basically, bitcoin is currency held digitally. Where does it come from? Mining bitcoin uses a complex algorithm (and I mean complex with a capital C) to confirm the state of the bitcoin system. To be confirmed, transactions must be packed in a block that fits very strict rules that will be verified by the network at a later date. These rules prevent previous blocks from being changed because this would corrupt all future blocks. If this sounds confusing, it is. In fact, mining is so complex that no individuals can control what is included in the block chain or replace parts of the block chain to roll back their own spends.
Ok Ok. So how does one get bitcoin? Exchanges. Yes, just like the NYSE. Depending on where you are. Here is a great guide for bitcoin exchanges. If you want to purchase through a broker, you can purchase bitcoin through various exchanges worldwide.
You can also use apps like Coinbase to purchase cryptocurrency. You have the option to store the crypto online on apps or on your computer. You also have the ability to purchase offline wallets that look like USB drives.
Here are five quality wallets to consider:
- KeepKey – Hardware Wallet-The coolest looking tech gadget to show off to your friends. Made by a relatively new company, KeepKey offers a hardware wallet of a polished design.
- Nano Ledger S – Hardware Wallet-is just as secure as the other two hardware wallets. It is popular because of its low price of $65 compared to its competitors. Being smaller than KeepKey, it is more portable and easier to carry around.
- Trezor – Hardware Wallet- sets the standard for crypto security. Trezor provides top-notch security, protecting against both virtual and physical theft. What Trezor lacks in style, it more than makes up in the security department. Even if your PC is compromised with malware, your private keys will still be safe with Trezor.
- Coinbase – Hot Wallet-is an online web-based wallet and is the beginner-friendly version of GDAX. As a hot wallet, you can easily transfer to the GDAX exchange instantly, and for free. In the same interface, you can make quick purchases with real money.
- MyEtherWallet – Paper Wallet-these wallets are for those who wish to have their own private wallets without forking out cash for hardware wallets. The money saved could be invested in their coins. Simply generate your wallet online at myetherwallet.com and note your private keys.
Ok, so how volatile is Bitcoin? Well in the last week, the coin’s range is $5,600-$7,200 per coin.
Keep an eye on bitcoin or other crypto. Amazon may eventually accept payment in crypto and some retailers already accept bitcoin. I’m looking at you, Dominos. Read the critics and the proponents, then decide how risky you feel. I have about 5% of my portfolio in crypto. If you want to dive down the rabbit hole, check out the Bad Crypto Podcast and get your crypto fill.
Stay rational
-B&T