BITCOIN AND CRYPTOCURRENCIES ARE NOT STOCKS, THEY ARE NOT BASED ON SPECULATIONS OF FUTURE EARNINGS SUCH AS THE STOCK MARKET OR BOND MARKET.
In the following paragraphs I will give a brief overview of what Bitcoin and Cryptocurrencies are while hopefully dispelling some bad information that has been floating around media outlets.
What are Decentralized and trustless systems?
Currently we rely on third parties to very transactions, those third parties are banks, brokerages, clearing houses etc. Bitcoin and other Cryptocurrencies were designed to remove those intermediaries which tend to charge exorbitant amounts of money (removing wealth from you and I). Using a immutable ledger transactions can’t be duplicated or falsified.
Bitcoin: criminals nightmare
Before I go further into detail regarding the top 3 Cryptocurrencies circulating in the world I would like to address the elephant in the room. It has been stated that Bitcoin is used for criminal activity because it is anonymous. Bitcoin is not anonymous it is pseudonymous in fact law enforcement agencies have had massive success cracking down on criminal and terrorist organizations attempting to us Bitcoin for criminal activity. Because of the blockchain technology every Bitcoin transaction can be completely traced this in fact makes it a very safe currency and law enforcements dream. Unlike cash which can be laundered through various techniques.
What are the top 3 Cryptocurrencies and how do they work.
Bitcoin, Ethereum and Litecoin are all a part of a decentralized system called the Block Chain. In 2008 during the mortgage crisis Bitcoin was created Satoshi Nakamoto (not a real person) to remove government restraints on individuals by removing manipulation of monetary supply. An example of government manipulation is creating more money which increases inflation and lowers the value of the dollar. Inflation is a hidden tax that you and I pay, with only 21,000,000 Bitcoin ever to be made this eliminates inflation. Banks and third parties charge us an abundance of fees. Fees to transact and to hold our money. We all rely on banks to validate our actual currency. Bitcoin creates a trustless system where we don’t need banks and 3rd parties to validate our money and this in turn will put wealth where it belongs and that’s in the hands of the people.
Banks earn their profits from loan interest payments, banks are based on a system of debt that use your money to loan to businesses and individuals. Bitcoin and other cryptocurrencies allow individuals to hold our own currency essentially acting as their own bank. Keep in mind your money is already digital once you put it in a bank, think about the transactions you have made over the last year how many were cash?
People ask what is backing Bitcoin? That question is easily answered when you ask yourself what is backing Fiat currency, the U.S. Dollar is no longer backed by the gold standard, this was done away with in 1971 by President Richard Nixon. This was done so the government could print more money for things such as loans to 3rd world countries and big bank bailouts which again cause you and I to pay a hidden tax called inflation. One might say that the government backs the value of the dollar, this is true because the full faith of the government means the taxing of its citizens. The truth is this, the only reason the dollar is worth something is because we believe in it.
Bitcoin allows us the people to regain control of our wealth and cut out both middle men and government influence. No bank fees, no western union fees no broker fees etc. With 200+trillion of currency in circulation and on 21 million Bitcoin to ever exist it may be something individuals should look further into. Keep in mind no more will ever be created and the last Bitcoin will be created in the year 2140, currently there are 16.8 million Bitcoin in circulation.
Litecoin was created by Charlie Lee in 2011 to work with Bitcoin, with 4 times the supply of Litecoin vs Bitcoin it is considered to be more of a currency. Litecoin has lower fees and faster transaction times and also has a system in place to allow different blockchain currencies to transact with each other. Bitcoin is gold and Litecoin is silver.
Ethereum is the system in which most blockchain tech is built consider it similar to googles android. Ethereum also has a system of smart contracting which will reduce the need for intermediaries such as title companies etc.
There are going to be Thousands of Blockchains (Cryptocurrencies) all designed to solve specific problems human beings are faced with today.
The Blockchain does not have centralized ownership, every project is open source allowing some of the most brilliant minds on the planet to create innovative solutions to today’s most pressing issues.