Bitcoin Gold: A Return to Mining?

Cryptocurrencies have some confusing aspects and terms. For some people, this can start with the name itself. What is the “crypto” in cryptocurrency?  It can get more confusing from there. Looking at the bigger picture, cryptocurrencies are dependent on blockchain technology. This involves another set of new ideas and unique terms. Too often explanations are more confusing than helpful.

Fortunately, these concepts can be understood by the cryptocurrency and blockchain novice. Bitcoin Gold provides the perfect example of how all of these elements can come together and create value. A proper evaluation of Bitcoin Gold walks through the cryptocurrency world from start to finish.

What is Bitcoin Gold?

This journey starts with the idea that digital currencies can exist without centralized control. This is the brilliant concept that Bitcoin proved could work in the real world. In order to implement this idea, it was necessary to create the units of cryptocurrency through computer software. Bitcoin Gold and others pay individuals and groups to perform this task. This called mining.

Mining a cryptocurrency is nothing more than solving a math problem on a computer by running this software. The math involved in creating blocks is the “crypto” part of cryptocurrency. Those who solve the problem add that solution to the list of solutions. This is the blockchain. Those who solved the problem have the address of this block – i.e., own the cryptocurrency they created– and can transfer it to someone else.

Bitcoin ran into a problem because the type of math it used allowed certain types of computers to do the math better than other types. Because the value of Bitcoin was so high, it became financially rewarding to build this type of computer. These “ASIC” machines came to dominate mining, and so dominated the Bitcoin blockchain.

Some viewed this as centralized control of what was always intended to be de-centralized. They considered this a threat to the philosophical underpinning of blockchain that was serious enough that something had to be done about it. Their proposed solution was to change the type of math required to so that specialized computers did not have an advantage. The solution was Bitcoin Gold.

Hard Forks

Not everyone agreed that the problem was this severe or that the proposed solution was the best answer. This is not surprising since the community included those who owned machines specifically built to do the “old math” and had a financial incentive to keep things the way they were. A rift developed in the Bitcoin community over this issue.

The structure of blockchain includes a solution to this type of disagreement. The solution is called a hard fork, and it is just what it sounds like. A hard fork is a new string of transactions branching off from the previous list. The start of this new list is the change to Bitcoin Gold, and it happened on October 24, 2017. Everyone holding Bitcoin at that date received an equal amount of Bitcoin Gold to use on the new fork of the blockchain, that is, the new string of transactions.

This move was criticized at the time as a simple attempt to create new value off the “Bitcoin” brand. Keep in mind that the total number of cryptocurrency units doubled at the time of the hard fork. However, this does not mean the value double since the market value of Bitcoin Gold was not the market value of Bitcoin. In fact, if no one supported the new Bitcoin Gold cryptocurrency it would quickly become worthless.

This threatened to be the case, particularly because of criticism of how the transition was handled. Some actions by the proponents of Bitcoin Gold had at least the appearance of simple greed, including delaying the release of mining software to the cryptocurrency community. This supposedly allowed those with “insider “access the opportunity to create units of Bitcoin Gold without competition.

Eventually Bitcoin Gold achieved a stand-alone status in the cryptocurrency markets. Although the value does not rival Bitcoin, it does command a respectable market price and is actively involved in the development of new blockchain technology, including the Lightning Network.

Bitcoin Gold Mining

However, the low market price relative to Bitcoin means that specialized miners have not flocked to the creation of Bitcoin Gold. Keep in mind that any concentration would undermine the expressed purpose of creating Bitcoin Gold in the first place. This has created an opportunity for less technologically savvy individuals to participate in the creation of units of Bitcoin Gold without assembling computers specifically tailored to this purpose.

However, the value and potential value has attracted enough miners that some specialization is recommended. Remember that solving the math equation – hashing – is only one step in the process. It’s also necessary to arrive at the answer before anyone else and successfully post that solution to the blockchain. In effect, miners compete with each other in a cooperative venture.

Mining enthusiasts recommend against using a standard personal computer for this purpose. They suggest that using a high-quality graphics card significantly increases the likelihood of successful mining. Keep in mind that even if a computer is already owned and is not being used for other purposes, mining is not free. There are electrical costs. Mining Bitcoin Gold requires enough success to represent a return on this investment.

In addition to a graphics card, mining enthusiasts also recommend installing additional memory and checking the power supply for the entire system. The technical aspects of evaluating and installing any of these components are well beyond the scope of this article. However, they can be easily found on the Internet, along with the software required for mining.

For those unwilling or unable to take on the technical aspects of mining by themselves, it is possible to join a mining pool, which is a cooperative group that uses the computing power of individual machines to mine Bitcoin Gold. Each member of the group is rewarded with a percentage of the profits equal to their contribution. Mining groups can be easily found on the Internet and have a range of technical requirements.

How to Buy Bitcoin Gold (BTG)?

It is also possible to purchase Bitcoin Gold on a variety of exchanges. The market is very dynamic with new exchanges adding Bitcoin Gold. The best option for identifying an exchange is the official Bitcoin Gold website which currently lists 19 different exchanges where Bitcoin Gold is available.

The exchanges operate in a variety of locations and are not available in all countries. Some offer to exchange national fiat currencies such as US dollars for Bitcoin Gold, while others only exchange for Bitcoin or Ethereum.

Buying Bitcoin Gold with Fiat Currencies

For those who are looking to buy Bitcoin Gold with fiat currencies, not many exchanges provide this option. CEX.IO is one of the only exchanges that provide you the purchase of Bitcoin Gold with USD. If you previously own Bitcoin, all you need to do is to register in CEX.IO, confirm your account and search for BTG/USD.

Other exchanges that support Bitcoin Gold with fiat currencies include YoBit and DSX.

Another easy way to buy Bitcoin Gold is via AvaTrade which provides Contract for Differences (CFD’s) on Bitcoin Gold. The broker allows you to buy cryptocurrencies with a leverage position in a fairly simple process.

Buying Bitcoin Gold with Cryptocurrencies

For those looking to buy Bitcoin Gold with cryptocurrencies, you will need to go through an exchange that caters for the BTG/BTC or BTG/ETH pairing that you are looking to buy Bitcoin Gold coins with. Binance has the largest wide selection of cryptocurrencies, including BTG/BTC.

In the event that you don’t already have an existing account on an exchange and are not holding Bitcoins or Ethereum, open an account on Coinbase and purchase Bitcoin or Ethereum. Do note that, while there are higher transaction fees when purchasing with debit or credit card, the purchase is instantaneous.

Buy & Sell Cryptocurrency Instantly

Bitcoin Gold Wallets

Regardless of how you plan on obtaining Bitcoin Gold, it will be necessary to hold it in a wallet. Like everything else in the cryptocurrency world, wallets are going through rapid change. Wallets that support the Bitcoin Gold blockchain are listed on the Bitcoin Gold website. Each has its own attributes and advantages.

The main distinction between wallets is between “hot” (online software wallets) and “cold” (offline hardware wallets). A cold wallet that is not plugged into the Internet is clearly more secure than a hot wallet that exists on a central server. Even wallets housed on personal computers that are connected to the Internet are vulnerable to attack.

Keep in mind that wallets are distinct from accounts on exchanges. While both can hold Bitcoin Gold or other cryptocurrency, accounts at exchanges are much more vulnerable to theft by hackers. This is simply because they represent a richer target. All cryptocurrency experts agree that Bitcoin Gold and other currencies should be stored in a private wallet –either hot or cold – and moved to an exchange only for trading.


Suggested Articles


BTG – Holding and Trading

Bitcoin Gold is growing in popularity, as evidenced by the growing number of exchanges that offer it. However, it is also still very young, even under the standards by which cryptocurrencies are measured. These factors mean that the brief trading history might not be a good indication of the trading value. Still, there is one clear relationship that stands out.

The chart below from Coinmarketcap.com shows the price of Bitcoin Gold expressed in US dollars (Green line) and Bitcoin (Yellow line). There is a clear distinction before November 27, 2017, and afterward (seen as the point where the blue market cap line is calculated correctly).

Bitcoin Gold Chart
Bitcoin Gold Chart

Since this point in time, the price of Bitcoin Gold has been significantly more volatile when measured in US dollars than it has been when measured in Bitcoin. In fact, for most of 2018, the price of Bitcoin Gold has seen little movement when measured in Bitcoin.

This strongly suggests that the price of Bitcoin Gold moves directly with the price of Bitcoin. Anyone seeking to trade Bitcoin Gold based on volatility such as day traders will be disappointed if they hold Bitcoin as their reserve currency (assets that are held until a favorable buying opportunity is identified and after the targeted asset is sold).

There are two reasons for this. First, the movement in price going from Bitcoin to Bitcoin Gold is small (i.e., the yellow line is relatively flat). This leaves little opportunity for profitable trades. Second, volatility in the price of Bitcoin itself could potentially eliminate any profits made on trading Bitcoin Gold.

Holding Bitcoin Gold as a long-term asset instead of Bitcoin is also somewhat problematic. The chart indicates that the market does not perceive a significant difference between these two cryptocurrencies. Keep in mind that Bitcoin Gold has the same mission, vision, and values as Bitcoin. The developers simply feel that they have followed these standards more closely than Bitcoin.

In other words, as a cryptocurrency investment, Bitcoin Gold is fairly indistinguishable from Bitcoin. The most significant differences are the separate blockchain and the different mining technique. These are technical matters that may make a difference in market value in the future if Bitcoin Gold proves successful.

Buy & Sell Cryptocurrency Instantly

Conclusions

Understanding these core value propositions is critical to understanding Bitcoin Gold and the investment opportunity it may represent. It is impossible to predict if these factors will materialize in an increasing market price, and even more difficult to determine if that price movement will be independent of Bitcoin. In this view Bitcoin Gold is a very similar investment to Bitcoin.

However, the most fundamental error that can be made is to assume that the current price differential between Bitcoin Gold and Bitcoin will close because the two are interchangeable. This assumption ignores the “first mover” advantage of Bitcoin and the fact that the Bitcoin community does not completely support Bitcoin Gold.

The technical issues that distinguish Bitcoin Gold may prove to be inconsequential in the long-run, and the market price may continue to move with Bitcoin. It is simply too early in the development cycle of Bitcoin Gold to fully judge the situation accurately. However, to the extent that Bitcoin continues to be accepted as the premier cryptocurrency, Bitcoin Gold will not be far behind.

Buying Bitcoins with PayPal – Tricky But Possible

At first glance, Paypal and Bitcoin seem to be made for each other. Paypal is a well-established platform which was created for transferring money simply and easily over the Internet without the use of financial intermediaries. Bitcoin is a medium of exchange that is specifically engineered to operate outside the financial mainstream.

Yet the combination of these two has seemed like mixing oil and water. There have been times when it seems that they are blending well together. At other times they seem to have very obvious differences that cannot be overcome. These different periods are overlaid with the always interesting and changing cryptocurrency markets.

Bitcoin and PayPal – Roadblocks

At the time this is being written, there is no way to directly buy Bitcoin with the payment coming directly from a PayPal account. PayPal will not allow transfers of funds to pay for Bitcoin. Rumors that these transactions will be allowed have circulated for several years. There have even been rumors that PayPal is developing its own cryptocurrency to facilitate monetary transfers in a manner similar to how Ripple fills this role for banks and financial institutions.

However, PayPal has not changed its policy and has not announced the development of a cryptocurrency. In fact, given that PayPal works as an intermediary between banks and individuals a cryptocurrency seems counter to their business model. Unless banks begin to hold accounts in cryptocurrencies, there seems to be little incentive for PayPal to engage in the cryptocurrency sector.

In fact, PayPal may view Bitcoin as a rival for transactions between individuals. This point-of-view would be consistent with that of the banking industry generally. It is also possible that PayPal values their credibility and so is hesitant to get involved with cryptocurrencies. The number of scam transactions in the cryptocurrency world supports this theory. It would be consistent with their reluctance to allow users to access funds to pay for services on pornography websites.

However, like that industry, the cryptocurrency sector has developed several workarounds for using the PayPal infrastructure to pay for purchases of coins and tokens. These include the use of intermediaries in various forms. PayPal’s resistance to cryptocurrency may cause these avenues to be shut down, or PayPal may relent and allow them to continue. The very dynamic nature of cryptocurrency markets may also develop other solutions.

Global Currencies, National Restrictions

Part of the problem that PayPal faces is operating across international boundaries, which requires conforming to different rules and regulations. PayPal has expertly navigated that minefield. Cryptocurrency exchanges are developing that same ability, but are not there yet. This means that all exchanges do not operate in all countries.

This is the case with eToro, a popular financial trading site that has offers trades in various cryptocurrencies. The site offers the option to fund a trading account by transfer from PayPal but does not operate in the US. Fortunately for non-US citizens, the site does support trade in Bitcoin funded by Paypal. It also offers easy, step-by-step instructions, as shown below.

bitcoin paypal etoro

After creating a trading account and selecting “Fund Your Account”, you can simply type in the amount and pay through PayPal. The eToro site will then direct you to PayPal to log in and complete the transaction.

Please note that this step does not complete the transaction to purchase Bitcoin or any other cryptocurrency. That requires an additional step, which may offer some insight into why PayPal supports this transfer. A transfer to eToro is a transfer to another banking institution and not a purchase of Bitcoin.

If eToro is an example of a global trading platform, LocalBitcoins is at the other end of the spectrum. It is an intermediary that lists individuals willing to sell (and buy) Bitcoin to other individuals located nearby. The form of payment varies, but PayPal may be acceptable to some individuals. Many sellers list a local bank as a place to deposit funds, and the time required to transfer funds with PayPal may be a limiting factor.

This issue is resolved with online trading platforms such as Paxful. This is another intermediary what matches buyers and sellers of Bitcoin. Many individuals list PayPal as a method of payment. However, reviews of this site include complaints of stolen Bitcoin and poor or nonexistent customer service. These might reflect the growing pains of the cryptocurrency industry, or they may be the reason PayPal does not explicitly support trading in Bitcoin.

Card Methods

It is important to remember that direct transfers from PayPal are not the only means of transacting business with funds stored on the PayPal platform. PayPal also offers a credit card and a debit card that provide a convenient intermediate step in transferring funds through the existing credit card network.

Utilizing this method of paying with PayPal is straightforward, although it is not a direct means of paying for Bitcoin with PayPal. It involves creating either a debit or credit account through PayPal, and then using that account at an exchange to purchase Bitcoin. To the extent that this credit or debit card would be used for other purchases, this may be a reasonable approach.

bitcoin paypal 2

As described on the PayPal website, the process of obtaining a PayPal Prepaid MasterCard is straightforward. The card is ordered through the PayPal website and is sent through the mail. After it is activated on the site, funds currently in PayPal can be transferred to the card account. It can then be used at any website that supports the use of MasterCard debit cards to purchase Bitcoin or other cryptocurrencies.

CEX.IO is one exchange that allows links to MasterCard debit cards and other credit cards. These can be used to both buy and sell Bitcoin and other cryptocurrencies. The website has at times reported that the link to the PayPal cards is inoperative, and the exchange is not currently accepting new accounts. However, these can be considered temporary problems that should be resolved shortly.

Other Methods

For the one time purchaser of Bitcoin, creating a PayPal MasterCard debit card exclusively for this purpose may seem complicated and too burdensome. For this individual, there are other methods that use an intermediary relationship to arrive at the same destination. One of the more imaginative of these routes is through the Virwox site.

Virwox (the “Virtual World Exchange”) is not a cryptocurrency exchange or site. It is a platform for trading imaginary currencies used in online gaming. One of these currencies is Second Life Linden Dollars (SLL), an imaginary currency used in the game Second Life. This game is one of the most popular online fantasy games on the Internet.

The transaction begins with purchasing SLL with money in a PayPal account. Create an account on the Virwox exchange, ignoring the information on the avatar you will use in the Second Life game. Fund this account with money transferred from your PayPal account. Once this transfer has been completed, you can purchase SLL by going to Exchange->USD/SLL on the left side of the screen.

Once this transaction is confirmed, return to the same section on the left side of the screen and exchange SLL for Bitcoin. You will need a Bitcoin wallet to hold the newly purchased Bitcoin. This exchange is not a Bitcoin exchange but accepts Bitcoin as one way of paying for SLL. Because the Second Life game can make money for players, the site also accommodates transfers back to other currencies.

Keep in mind that buying Bitcoin through Viwox involves two transactions and a fixed price for Bitcoin. The dual transactions mean that the total fees for this transaction are higher than for other methods, and the fixed price for Bitcoin may not be the lowest available on the market. However, by “washing” PayPal funds through SLL it is possible to complete a Bitcoin purchase.

Individuals who want more flexibility in conducting business with Bitcoin may find a significant benefit by creating an account on Wirexapp. This is an integrated cryptocurrency site that supports several functions, including buying and transferring Bitcoin. It also offers a Bitcoin wallet and a payment card. This card is the link to the PayPal system.

After creating an account on the Wirexapp site, click on “Request a card” on the upper right-hand portion of the screen. You can select either a physical or a virtual card.

Once you have the card information, go to the PayPal site and link this card to your PayPal account. You can now transfer funds from your PayPal account to this Wirexapp card. Please note that this is subject to the normal transfer times of any PayPal transaction.

Once your Wirexapp card has received the US dollars from your PayPal account, you can return to the Wirexapp and purchase Bitcoin. As with the Viwox site, there is only one price for Bitcoin on Wirexapp. However, unlike Viwox there is only one transaction fee since you are purchasing Bitcoin with US dollars. Once the card is established and linked to PayPal it can also be used to transfer sale proceeds to PayPal from the Wirexapp site when you sell Bitcoin.

Coinbase is one of the Bitcoin exchanges that lists PayPal as one of the available methods for withdrawing funds from the sale of Bitcoin. Like Cex.io, this link is sometimes inoperative. It should also be noted that Coinbase charges a fee of 3.99% to transfer money to a PayPal account. Some users may consider this too high, considering transfers through ACH are done free of charge.

Derivative Transactions

Although not technically buying Bitcoin with funds on PayPal, there are two other methods that create the same financial position. These are supported by PayPal and have other advantages as well. The first of these involves purchasing a Contract for Difference (CFD) which gives the owner the right to the profit from a change in the value of Bitcoin.

CFD are available to non-US citizens on the eToro site, Please note that this financial exchange does not involve actually purchasing Bitcoin and that the financial instrument involved includes the use of leverage. This magnifies both gains and losses. Financial leverage is a powerful tool but is not suitable for novice or beginning investors.

Another transaction that fully mimics the ownership of Bitcoin without the use of leverage is a secured loan as offered by Xcoins. This platform does support the transfer of funds from PayPal and boasts a secure and stable connection. This provides what is perhaps the closest and most direct way to “buy Bitcoin with PayPal.”

The transaction looks like a sale, and produces the same financial result, but is structured as a loan of Bitcoin with the market value plus an interest payment held as collateral by the lender.

After the payment through PayPal to the person loaning the Bitcoin, Xcoin transfers the Bitcoin to your wallet. They are now yours to hold, spend or sell.

If the price of Bitcoin falls, you will need to add additional money to the transfer when you return them to repay the loan. If the price of Bitcoin goes up, you can sell the Bitcoin and repay the loan while pocketing the increase. In every way, the secure loan mimics the direct ownership of Bitcoin.

Conclusions

Buying Bitcoin with funds on deposit at PayPal directly is not possible. Some exchanges report that sales proceeds can be transferred to PayPal, but those systems have also reported outages. It is fair to say that PayPal’s reluctance to get involved in the Bitcoin market has been effective. Some third-party intermediary is necessary to complete a direct purchase of Bitcoin.

For some, the use of a bank as an intermediary through a PayPal MasterCard debit card is a simple step and even one that is already in place. For trading platforms that allow links to MasterCard, this is the most direct approach. However, for the one-time purchaser, creating a new card may be more trouble than it is worth. This is probably the case with creating a Wirexapp account as well, which is simply the same relationship from the other side of the trade.

All things considered, the Xcoins transaction, although not an actual purchase of Bitcoin, probably comes closest to the goal of buying Bitcoin with PayPal funds. It replicates the financial results of owning Bitcoin and can be completed through PayPal. It is admittedly more complicated but gets the job done.

How to Buy Bitcoin with Cash?

Bitcoin does not exist as a physical asset, but cash does. There are currently a few bridges between the electronic world of cryptocurrencies and the physical world of cash. Please keep in mind that the marketplace for Bitcoin and cryptocurrencies is changing rapidly and that additional options may be available in the future.

Buying Bitcoin with Cash Only

There is an important distinction to be made before describing the ways of buying Bitcoin for cash, and that is between physical cash and bank deposits. Physical cash is cash held in your hand. Bank deposits are often treated as cash since they can be withdrawn easily or accessed electronically. The options described here are for individuals using physical cash, not bank deposits

Individuals can have a variety of reasons for choosing to buy Bitcoin with cash, including the desire to remain anonymous. One of the primary purposes of Bitcoin is to allow untraceable transactions, and individuals valuing this feature may want to start with a “blank slate”. Others may be concerned with using any type of electronic transfer over the Internet for fear of exposing their account information to hackers.

5 Ways to Buy Bitcoin for Cash

Cash transactions have their own risks, and care needs to be exercised anytime you are carrying cash. This is of particular concern since the amount of cash necessary to purchase even a small amount of Bitcoin can be significant. The risk that comes from this reality may make some of these methods more attractive than others.

LocalBitcoins is an intermediary that allows individuals to buy (and sell) Bitcoin to other individuals. It matches people based on location and provides quotes that specify price and quantities of Bitcoins available from each seller. Individuals make their own arrangements for meetings, which increases the element of risk.

The website has acknowledged that it has listed scam transactions, and fees are generally higher than on other exchanges. However, many sellers do not require any identification at all, making this a completely untraceable transaction. The website also lists online alternatives to meeting in person.

BitQuick allows matches buyers and sellers but is functionally more like an exchange. Sellers place Bitcoin into escrow and buyers deposit the funds for the purchase in the bank account of the seller. The transaction is completed when the buyer provides evidence of this deposit.

The fact that money changes hands at a bank and the parties do not meet makes this a safer transaction. However, the website does require registration with identification and is only available in the United States (excluding New York).

WallofCoins connects buyers and sellers while acting as an intermediary. It lists sellers like LocalBitcoins, but works off bank deposits like BitQuick. This means that the most convenient banking location may not be associated with a seller who offers the lowest price.

WallofCoins prices include fees, which can make comparisons with prices on other platforms more difficult. However, it also offers a live chat feature and a toll-free number for customer service. These features make it an attractive option for first-time buyers.

LibertyX is the closest any exchange comes to a retail operation. The website directs you to an affiliated retail location based on your zip code. A mobile app is available to find locations when you are on the road. The payment and transfer take place at the retail location, increasing personal security.

However, identification is required and the service is only available in the United States. In addition, the participating locations add their own fees on top of those charged by LibertyX. Each location also sets its own minimum, and there is a $1,000 maximum platform daily limit.

MyCeliumWallet is one of several mobile applications that is available through GooglePlay to buy, store and send Bitcoin. Most of the applications include a feature that allows buyers to find sellers based on location.

These applications do not act as intermediaries like other platforms listed here. The terms of the exchange are negotiated between the buyer and the seller individually, as is the price. While this increases the potential risk, it also allows the buyer to select sellers who will provide the desired level of anonymity.

Keep in mind that the cryptocurrency market is extremely dynamic, and changes in purchase limits and operational systems are taking place continually. In addition, fees are expected to experience rapid change as a new way to buy Bitcoin for cash come into the marketplace and create competition.

Bitcoin ATM’s

There is a second method of purchasing Bitcoin for cash that does not involve meeting with the seller, either in person or through an intermediary. This is the Bitcoin ATM. These are Bitcoin kiosks that are connected to the Internet and which accept cash as the means of payment.

Please note that the use of the phrase “ATM” can be confusing, as it typically associated with a bank. Bitcoin ATMs are not stand-alone tellers and are not connected to any banking institutions. Rather, they can be thought of as computers with input devices that accept currency and transfer Bitcoin to a new or existing wallet.

Several trading platforms offer Bitcoin ATMs, and the number of locations is increasing rapidly. Although they are most prevalent in the United States, most countries offer at least one location. It is not unusual to find Bitcoin ATMs located in convenience stores and gas stations in the United States since they generate revenue for the store owner with little to no maintenance.

Operation of ATMs

Because they operate on several different platforms there is no standard procedure on how to use a Bitcoin ATM. However, each version is equipped with a touchscreen and provides step-by-step instructions. Bitcoin ATMs are clearly designed for the beginning purchaser.

The basic safety precautions that apply to using any ATM also apply to using a Bitcoin ATM. These include The amount of Bitcoin that can be purchased also varies by machine.

Some Bitcoin ATMs create a new Bitcoin wallet for each purchase, and some allow the newly purchased coins to be deposited into an existing wallet. Instructions on how to select from the available options will appear on the screen. Bitcoin ATMs that do create a new wallet either as an option or by default will then print a paper wallet for each transaction.

The paper wallet is a QR or alphanumeric code that includes both the public key and the private key. The Bitcoins are actually stored on the blockchain, and the information on the paper contains all the necessary information to access them. This is vital information and should be treated carefully.


Suggested Articles


Key Decision Points

Evaluating all these options for buying Bitcoin with cash can seem like a complicated process, but keep in mind that not all options may be available to all buyers. Some, like Bitcoin ATMs and LibertyX, are not common in rural locations. However, for buyers who have a range of options the following decision points may be helpful.

Safety Comes First

It is reasonable to put personal safety at the top of the list of considerations when purchasing Bitcoin for cash. In general, as buying and owning cryptocurrencies might be risky, there are some methods and tips to secure your device and crypto coins. Meeting an unknown person to transact business is more concerning for some individuals than others. These concerns are highlighted by the fact that many exchanges that facilitate meeting in person stress that it is advisable to bring someone along.

Quantity

Each of the different methods of buying Bitcoin for cash has a different lower and upper limit on the amount that can be purchased. This is clearly a determining factor in choosing a platform. Like the rest of the Bitcoin market, these limits are changing quickly and should be reviewed at the appropriate website before selecting an option.

Price

References to the “price of Bitcoin” are slightly misleading. The market for Bitcoin has different prices. A review of the options for personal sales, as an example, shows Bitcoin offered at various prices. Other platforms have only a single price. The volatility of the price at the time of purchase may make one option more attractive.

Fees

Fees are difficult to evaluate because they are not always transparent. Of course, this is unfortunate since lower transaction fees are attractive. However, given the difficulty and the variation in price among platforms, the most sensible approach may be to look at the total cost of the transaction rather than the level of fees charged.

Convenience

This factor can mean both the location of and travel time to the exchange or Bitcoin ATM, but it can also mean the level of anonymity provided by the platform. Some purchasers will prefer to travel in order not to provide identification. For others the safety

Balancing these factors means that there is no “best” way to buy Bitcoin for cash. The developing market has created a range of options that, depending on location, may make it possible for most buyers to find the venue that meets their needs. As the market continues to grow, the platforms described here will continue to expand and other options may become available.

Don’t Trade Cryptocurrencies Before You Read this Guide

Imagine that a friend takes you to a nice bar that is a known hang-out for smart, professional investment managers. You walk into an unfamiliar place filled with well-dressed, successful looking people and strike up a conversation with one of them. They tell you about a great investment, and then offer to “let you in” by taking a picture of your credit card and charging the amount you want to invest.

Does this strike you as a good idea? It describes what is happening in the cryptocurrency markets these days. There are real opportunities and plenty of advice on where to make a nice profit, but the way anyone should go about investing has not changed. The problem is that some of the people in the “nice bar” are not nice at all and are looking for people who are new here so they can take advantage of them.

What is Cryptocurrency?

To understand this you need to understand the people. Cryptocurrencies are based on sophisticated computer codes and networks. The first people to understand and use them were people familiar with computers, computer coding, and computer networks. This is who is in the “nice bar” on our opening analogy. Of course, some of these people are nice, but no one would assume everyone in any crowd is nice.

Cryptocurrencies have become very valuable. That means people who know how to steal things like credit card numbers or other personal information have a great incentive to steal cryptocurrency. Those who are familiar with computer networks and computer coding have a natural advantage because cryptocurrency exists on their “turf”.

Cryptocurrencies are blocks of code stored in a decentralized ledger. A person owns the cryptocurrency by having the address of that block of code. The address is where the code can be found on the ledger. Cryptocurrencies are spent by sending the block of code from one address to another.

Each address has a public access and a private access. Anyone can use the public access – called the public key – to put money into the address. It’s like putting money into a vending machine. Only the person with the private access – the private key – can take money out of the address. It’s like the key that unlocks the vending machine, giving the person with the key access to everything inside.

Safety Measures Start at Home. Secure Your Computer.

Keep in mind that trading cryptocurrencies are done over the Internet, and all the safety precautions that apply to e-commerce apply to cryptocurrencies. In addition, it is always a good idea to keep the Operating System (OS) of your computer up-to-date by installing updates as soon as they are available. Updates often include protection against malware and computer viruses.

There is an additional step some experts advice before investing in cryptocurrencies. In order to be certain your computer is not infected with a virus already, they recommend removing all data files and reinstalling the OS.  This is sometimes referred to as “rebuilding the machine”, and is the ultimate method of ensuring the computer is free of viruses.

There are also a variety of commercial software programs that provide anti-virus protection. These range in price and effectiveness. However, the current trend in cyber attacks is moving away from viruses and toward other strategies. These include phishing attacks which attempt to trick individuals into sharing important information through deception. Because this strategy involves human action, computer software is not an effective defense.

A Word about Passwords

Passwords are important because trading cryptocurrencies at this point in time (Early 2018) require establishing accounts in several places. You need to create a wallet that will hold your cryptocurrencies (more on this later) and accounts at the exchanges where you will do trading. It may be necessary to create separate wallets for different cryptocurrencies as well as accounts at different exchanges.

These accounts will require passwords. Be sure to create strong passwords that include capitalizations, numbers and any other characters allowed by the system. Some systems allow passphrases rather than passwords. In either case, use the strongest possible password you can create. Do not use the same password or passphrase on multiple sites.

Remembering these passwords is absolutely critical. Experts highly recommend a password manager to help maintain the passwords and passphrases. A password manager is an online service that encrypts passwords and unlocks them with a different password. Alternatively, you can write down your passwords on paper. If you take this approach store the paper in a secure location away from your computer.

An increasingly common approach with many cryptocurrency passwords is two-factor authentication (2FA). This turns a password into a process that requires the use of two devices. For example, entering a password or passphrase on a website sends a unique security code to the phone number registered to that account. That code must be entered before access to the account is given.

The development of 2FA and passphrases both indicates both the importance of the information in the cryptocurrency accounts and the technological ability of those designing these systems. It is a feature of the overall environment and should be understood by anyone who wants to own or trade cryptocurrencies.

How do I Store my Cryptocurrencies?

Wallets have already been mentioned. Remember that to own a cryptocurrency means you own the address on the blockchain where that unit of the currency is stored. This address is a bit of computer code that has to be recorded somewhere. The place where it is stored is called a wallet, and like passwords and passphrases, these need to be protected.

However, unlike passwords the computer code addresses for cryptocurrencies cannot be written down on paper. They must be stored electronically, which means they have to be either online or on a removable computer storage device.  In the jargon of cryptocurrencies, this means either “hot” or “cold”.

There is an important distinction to be made here. When trading cryptocurrencies it is necessary to transfer them to an exchange. This account at an exchange is password protected, but it is not a wallet. Accounts at exchanges should only be used as a temporary holding place while trading. As soon as the trade is complete transfer the cryptocurrency to a secure hot or cold wallet.

Wallets are sometimes confusing because we are still at the beginning of the cryptocurrency industry, and there are only a few wallets that can hold different cryptocurrencies. This is a byproduct of the coding used to create blockchain.  Rapid developments in this area may soon result in universal wallets that can hold all types of cryptocurrencies.

Hot Wallets

As was mentioned, these are online wallets that are accessed through a website. The information in the wallet is stored on a server that is always connected to the Internet. Hot wallets are password and passphrase protected but are vulnerable to attack by hackers.

Desktop and mobile wallets are a hybrid between hot and cold, and so might be called a lukewarm wallet. These wallets store the cryptocurrency information on a desktop, laptop or mobile device and not on an Internet-connected website. This is potentially safer but is not without risks.

The greatest risk is that the safety protocols of personally owned devices are not enough to stop a determined attacker. This risk is why experts recommend reinstalling an OS prior to trading cryptocurrencies. Another layer of security is available by using a Virtual Private Network (VPN). This will be discussed later.

The benefits of an online hot wallet include professional security management.  However, this is offset by the “larger prize” of successfully breaching the protective protocols, since that could provide the hacker(s) with access to multiple wallets. A downloaded lukewarm wallet represents a “smaller prize” but a potentially easier target.

Cold Wallets

Storing cryptocurrency information on a removable computer storage device is the functional equivalent of disconnecting a laptop or mobile device containing this information from the Internet. When the storage device, such as a USB thumb drive, is removed from the computer it is removed from the Internet.  This is the safest place to prevent this information from being stolen by way of the Internet.

However, the small size and portability of USB thumb drive also mean that they can be easily lost or damaged.  This is an unavoidable trade-off. However, it is easier to protect a USB thumb drive than it is to install and remain current on Internet security protocols.

Some experts would classify paper wallets as another form of cold wallet. The name is misleading since a paper wallet is actually just the public and private addresses of a hot wallet in alphanumeric or QR code printed on a piece of paper. This information does not have to be printed but can be stored in another computer document.

Storing a paper wallet on a personal computer or mobile device, of course, raises many of the same issues as storing a hot wallet on such a device. One difference is that the document storing the public and private keys may not include the website where the wallet actually resides. However, a dedicated hacker seeing a transaction on a cryptocurrency exchange may trace the account back to the electronically stored “paper wallet”.


Suggested Articles


Operate on a Virtual Private Network

“Covering your tracks” against this possibility is the purpose of a Virtual Private Network (VPN). To understand how this works and why it might be beneficial it is necessary to understand an Internet Protocol (IP) address and what it does.  Simply put, it is the location of any Internet-connected device.

It just makes sense that this type of address is necessary. After all, opening a webpage means the webpage that has the graphics and text needs to send that information to your computer. This means it needs an address, just like the webpage itself has an address. Individuals with computer skills can track these addresses.

Preventing this tracking is the role of a VPN. Technically it is a second IP address that operates on your computer and the rest of the Internet. Your computer connects to this IP address, which then passes along all requests for information to the rest of the Internet while protecting your computer’s IP address. Anyone watching Internet traffic at a website only sees the IP address of the VPN.

This procedure prevents anyone from “following” your trail back from a cryptocurrency exchange. They can only get as far as the VPN. Keep in mind that anyone spying on your computer over public Wi-Fi is already behind the VPN address and is watching your activity directly. This strongly suggests not trading cryptocurrencies over this type of Internet connection.

Conclusion

All of these security precautions may make it seem that investing in cryptocurrencies is just too difficult for the average person. This is not correct.  Many of these procedures are recommended for anyone buying anything over the Internet. Information on credit card numbers and other financial information is just as valuable as cryptocurrency assets and deserves the same level of protection.

In addition, the market for cryptocurrencies is developing rapidly. Both large, traditional financial organizations and new start-ups are entering the market, bringing a range of services that may simplify the security processes described here. These organizations may create cryptocurrency brokerage accounts similar to those that exist for stocks and bonds.

This would obviously simplify the processes described here and make investing in cryptocurrency much more accessible for the average person. This, in turn, could bring more buyers to the market and positively impact prices. If this happens, individuals who have gone through the process of creating wallets and exchange accounts could be well rewarded for the time and effort invested in that process.

How to Buy QTUM: The Ultimate Guide

QTUM: Best of the Best

There is a memorable scene in the classic 1966 western The Good, the Bad and the Ugly in which the character Tuco assembles a revolver from parts of the best guns available. Anyone who wants to understand QTUM (pronounced “quantum”) should keep this scene in mind. The team at QTUM is taking the same approach to building what they hope to be the definitive blockchain for business applications.

However, just as a gunsmith has a better understanding of what Tuco is doing than the average moviegoer, evaluating the approach QTUM has adopted requires an understanding of the parts they are putting together. This involves some complicated concepts, such as traditional Byzantine fault tolerance research, but the learning curve is not so steep that it is insurmountable.

How to Buy QTUM?

To buy QTUM it will be necessary to establish a QTUM wallet that will hold the cryptocurrency, and to create an account at a cryptocurrency exchange. Once these two accounts are established, the basic process is to buy or transfer Bitcoin or Ethereum (preferably ETH as it decreases the time of transfer and the cost of fees) to the exchange, exchange the Bitcoin or Ethereum for QTUM, and then transfer the QTUM cryptocurrency back to the new wallet.

Step 1 – Create a QTUM Wallet

Download the wallet by selecting the type of wallet that works on your computer (Linux, Windows or Mac) under the section labeled “Quickstart”. There is an extensive line of wallets, and some computer proficiency is necessary to select one. This poor interface is a characteristic of QTUM and one of the problems management needs to solve.

After the download is complete, unzip the file and find the folder named “Bin”.  In this folder is a file named “qtum-qt”. Open this file to install the wallet. It will need internet access and will pop up a box on the status of the download and installation.

Once the download is complete choose “Settings” and “Encrypt Wallet”. Choose a difficult but memorable passphrase. Press “OK” and read the warning that appears, and then press “Yes”. The program will encrypt your wallet and close.

Reopen your wallet and select “File” and “Backup Wallet”. Give the file a memorable name, and save it onto a secure device like a USB or cryptocurrency stick.  After saving a copy, select “Receive” and “Request Payment”. Copy down the long list of letters and numbers correctly.

Step 2 – Purchase Bitcoin or Ethereum

You now need to buy some Bitcoin/Ethereum to exchange for QTUM. At the time of this writing, no exchange supports buying QTUM for national fiat currency, but the market is extremely fluid, and this may have changed. If so, it will still be necessary to establish an account at that exchange.

There are many exchanges that allow the purchase of Bitcoin/Ethereum for national currencies. They offer a variety of features, including ease of use and security. In addition, the cost of purchasing Bitcoin/Ethereum changes frequently, so it is impossible to identify a “best” option for this step. Coinbase is a popular option, and this guide will describe the process of creating an account to purchase Bitcoin. If you already own Bitcoin or Ethereum, this step is unnecessary. You can move forward to the next section.

After using the link to go to Coinbase, select “Sign up” and enter your personal information. Coinbase treats client identification very seriously, so be sure to verify your account by supplying a phone number, uploading an image of your photo ID and verifying a credit/debit card or bank account.

After completing these steps, select “Buy/Sell” at the top menu.  Select “Bitcoin” and enter either the number of coins or the amount you want to spend.  Bitcoin can be purchased in fractional units and the system will do the math for set amounts of local currency.  Verify the information you have entered and “Buy”, and then “Confirm buy.”

If you are located in a country that Coinbase services are not available, you can purchase Bitcoin in other exchanges such as CEX.IO or Coinmama.

Step 3 – Exchange Bitcoin for QTUM

Now go to an exchange such as Binance to exchange your Bitcoin for QTUM.

First, enter Binance and open an account, verify the account in the email you received. Then, you need to fund your account with BTC or ETH that you have purchased before at one of the exchanges above. In order to do that, click the “Funds” tab and search for BTC or ETH, choose “deposit”, copy the BTC or ETH deposit address and paste it to the exchange that you withdraw the money from. The process might take up to one hour (vary according to different exchanges).

Now, after completing these steps, you have Bitcoin or Ethereum in your Binance account. Click the “exchanges” and search for QTUM/BTC, enter the amount and click “Buy QTUM”.

 


Suggested Articles


Blockchain Basics

It helps to start with the basics because everything that QTUM hopes to accomplish address core issues of blockchain technology. Blockchain stores information on identical copies of a ledger stored on different computers that are connected through the Internet. Sophisticated systems check each new entry against the existing copies to make sure the new entry is correct before adding it to the chain.

There are two basic methods to check the existing copies. They are called Proof of Work (PoW) and Proof of Stake (PoS). Each has its advantages and shortcomings.  PoW was used initially because it allows anyone with a computer to participate in the blockchain. One problem with PoW is that it requires a significant amount of electricity to run the blockchain because powerful computers have to do complicated math.

Proof of Stake (PoS) overcomes this by allowing anyone with a financial stake in the accuracy of the calculation – commonly called ‘skin in the game’ – to participate in the verification process. This avoids the complicated math, but effectively allows participants to “buy votes.” A blockchain participant who has more money committed to the system has more votes in the verification process.  This is fundamentally undemocratic and a problem for some blockchain advocates.

Because blockchain was initially envisioned as a way to move away from centralized control of the monetary system, PoW was used as the method of choosing those who would be allowed to validate the blockchain. Bitcoin and Ethereum use PoW, but the energy demands and other drawbacks make this approach difficult to continue.

QTUM – Choices, Choices, and More Choices

QTUM takes a very practical view of these matters. Their goal is to bring the potential financial benefits of blockchain technology into the real world of operating businesses. So, in deciding between PoW and PoS, they simply asked their target users – business owners and operators – which they preferred.  The clear answer was the PoS approach.

Ethereum has made this same transition with the introduction of the Casper protocol. QTUM obviously believes that this is the right choice, but feels that the Ethereum blockchain still has fundamental disadvantages to the Bitcoin blockchain. However, the management team feels that certain features of Ethereum smart contracts are vastly superior to those available on the Bitcoin blockchain.

So, like the character in the movie, QTUM’s solution is to fit together the parts they like from each of the two blockchains. However, unlike the parts of different guns, parts of these two blockchains do not fit together at all. In fact, the Bitcoin and Ethereum blockchains use two different methods of actually processing a transaction. Bitcoin uses a complex methodology called unspent transaction outputs (“UTXOs”), while Ethereum uses the simple concept of account balances.

Like PoW and PoS, there are both practical and philosophical differences between these approaches. Each has its benefits and each has its shortcomings.  The simple fact is that the two approaches are not compatible. The situation can be compared to a gasoline and a diesel engine. You cannot expect one type of engine to run on the other type of fuel.

Rather than the start of scratch with a new blockchain environment – an approach some competitors have taken – QTUM set out to engineer a solution. They have built a bridge called Account Abstraction Layer which exists on the Bitcoin blockchain but which operates in the Ethereum environment. This innovative solution is one of the core value propositions of QTUM. If it works and is accepted in the marketplace it will prove to be a key element in QTUM’s success.

Quantum Coin – Built for Business

QTUM’s success will be determined by business users. While there has been a great deal of analysis and speculation on the value of blockchain for business, the actual applications are few and far between. QTUM looks to change that by making blockchain accessible. This is why they met with operating businesses to decide the PoW / PoS issue.

However, meeting the needs of the business community is a tall order, particularly when the goal is to develop a broad-based platform rather than something tailored for a particular need or industry like Ripple. One of the problems that have to be addressed is the amount of information stored on existing systems.

This problem can’t be overstated. Computer programmers have a joke that asks how God could create the universe in 6 days. The answer is that “He started from scratch and did not have to deal with an existing user base.” The ubiquitous use of the “QWERTY” keyboard in spite of its obsolesce is a great example of this problem.

QTUM is addressing this problem with another software bridge. In this case, it is between the smart contracts and existing legacy data systems. The team refers to these as “oracles”. They can be considered a type of Application Programming Interface (API) which provides the business with the tools needed to customize their own connection to existing data systems.

QTUM oracles are intended to power the smart contracts built in the Ethereum environment. Smart contracts are self-executing arrangements, and any degree of automation that can be applied to them will undoubtedly provide significant cost savings and gain market acceptance. It is fair to say that this is one of the most potentially lucrative aspects of blockchain technology for businesses.

It makes sense to think of oracles as putting together parts of two different guns – data from old systems feeding into smart contracts on the blockchain. The same is true for QTUM’s focus on building out blockchain use for mobile devices.  Business has incorporated the use of smartphones into Standard Operating Procedure (SOP) and QTUM is very focused on bringing the power of smart contracts to those devices.

QTUM Strengths

The development team at QTUM is made up of individuals with impressive backgrounds in a wide variety of fields, as befits a company that is attempting to blend elements of different blockchains. They also benefit from capital supplied by angel investors with similarly confidence-inspiring resumes.

There is little doubt that QTUM knows the technology behind what they are trying to accomplish, and has taken a thoughtful, considered approach to bringing the core value of blockchain to a wide businesses audience. The idea of using proven technology and fitting it together is a great example of the value that can come from such an approach.

QTUM Challenges

Of course, QTUM is not the only blockchain developer trying to enter the business mainstream, and it is uncertain how many providers can find a seat at this table.  QTUM is a late entrant and may need to produce results fairly quickly in order to win business users. Getting computer programmers to develop the customize oracles that allow efficient use of smart contracts is a large hurdle the company has to overcome.

In addition, there is a strange, tone-deaf quality to QTUM’s public face on its website. English words break inappropriately, ignoring the rules of spelling and making the entire website very difficult to read. Although poor English grammar is a hallmark of the cryptocurrency sector, QTUM’s website takes this to another level. In the business world where “perception is reality”, this odd quirk may create a perception of incompetence.

Conclusion

QTUM is a relatively young entrant into an increasingly crowded field. They have an intelligent approach to problem-solving that should appeal to their target end-user. The unknown issue is if that business will invest in this blockchain solution or some other provider who comes close to meeting their core criteria of usability and reliability.

How to Buy Cardano (ADA): The Complete Guide

Cardano: Intelligent Design

Economic history has countless examples of ideas that were carried to their full potential by the second or third attempt at the concept. Sometimes the newcomer causes the initial leader to be all but forgotten like the internal combustion engine did to steam power. The leadership at Cardano seems to have a sense of this economic history.

What is Cardano? What is ADA?

Cardano is a blockchain environment. This means it is a public network available to anyone who wants to create a blockchain. ADA is the cryptocurrency that is used to pay the individuals who contribute to the Cardano environment by storing the blockchains and performing other functions. The success of one is clearly related to the success of the other.

If Cardano becomes a popular place for new blockchain developers, the demand for the ADA cryptocurrency will increase. Increasing demand with a relatively fixed supply increases the market price. If the price of ADA increases for any reason, this should attract more developers to the Cardano environment. There are reasons to feel confident that both parts of this system are contributing to the long-term success and value of the other part.

Why did the Cardano (ADA) Price Surge?

ADA had a very quiet and unassuming entry into the cryptocurrency market with a long-running Initial Coin Offering (ICO) that ended in January 2017. It maintained a low price for most of the year, getting a boost from announcements by the team at Cardano in late November and then a second, stronger surge in value in late December.

Cardano Daily Chart
Cardano Daily Chart

This remarkable increase may be due to nothing more than the listing of ADA on more cryptocurrency trading platforms. It may be caused by investors moving out of Bitcoin and into other cryptocurrencies that have caught their attention. If this is the case it is a simply a delayed continuation of the increase in late November.

How to Buy ADA (Cardano)? – A Step-by-Step Guide

The entire cryptocurrency market sometimes can seem like it is in its infancy at times. This is the case with the process of buying ADA. The first step is to create a Daedalus Wallet. It will also be necessary to establish an account at a cryptocurrency exchange.

Once these two accounts are established, the basic process is to buy or transfer Bitcoin to the exchange, exchange the Bitcoin for ADA, and then transfer the ADA cryptocurrency back to the Daedalus Wallet. It is extremely important not to leave any cryptocurrencies in the account at the exchange. These have been shown to be vulnerable to theft.

Step 1 – Create a Daedalus Wallet

Download the wallet by selecting the type of wallet that works on your computer (Windows or Mac). A Linux wallet is promised for the future. After downloading the correct wallet, install it on your computer by running the program.

Select the appropriate language and “continue”. Read the terms of use, click the box that indicates you have done this and “continue”. Decide if you want to send logs to Cardano about the use of your wallet by selecting the appropriate box. Be patient while your wallet is connected to the Cardano blockchain. This may take ½ hour or more.

Once the connection is established, choose “Create a new wallet” and give the wallet a name you will remember. Select “Activate to create password”, then enter a password that meets the specified criteria. Re-enter the password in the second box and “create personal wallet”.

Confirm that no one is watching your screen and you will be given a 12-word passphrase. Write this down and keep it in a very secure place, then select “Yes, I have written it down.” Recreate the passphrase, and then read the two warnings.  Check that you understand them and “confirm”.

Your wallet is now open. Click “receive” and you will be provided with your wallet’s address. As with the passphrase, write this down and keep it in a safe place.

Step 2 – Purchase Bitcoin or Ethereum

You now need to buy some Bitcoin or Ethereum to exchange for ADA (we recommend buying Ethereum as the process time is faster). At the time of this writing, no exchange supports buying ADA for national fiat currency, but the market is extremely fluid, and this may have changed. If so, it will still be necessary to establish an account at that exchange.

There are many exchanges that allow the purchase of Bitcoin or Ethereum for national currencies. They offer a variety of features, including ease of use and security. In addition, the cost of purchasing Bitcoin or Ethereum changes frequently, so it is impossible to identify a “best” option for this step. Coinbase, CEX.IO and Coinmama are popular options, and this guide will describe the process of creating an account to purchase Bitcoin but it’s the same as Ethereum. If you already own Bitcoin or Ether, this step is unnecessary. You can move forward to the next section.

After using the link to go to CoinbaseCEX.IO or Coinmama, select “Sign up” and enter your personal information. Those exchanges treat client identification very seriously, so be sure to verify your account by supplying a phone number, uploading an image of your photo ID and verifying a credit/debit card or bank account.

After completing these steps, select “Buy/Sell” at the top menu. Select “Bitcoin” and enter either the number of coins or the amount you want to spend. Bitcoin can be purchased in fractional units and the system will do the math for set amounts of local currency. Verify the information you have entered and “Buy”, and then “Confirm buy.”

Step 3 – Exchange Bitcoin for ADA

Now go to an exchange such as Binance to exchange your Bitcoin for ADA. First, enter Binance and open an account, verify the account in the email you received. Then, you need to fund your account with BTC or ETH that you have purchased before at one of the exchanges above. In order to do that, click the “Funds” tab and search for BTC or ETH, choose “deposit”, copy the BTC or ETH deposit address and paste it to the exchange that you withdraw the money from. The process might take up to one hour (vary according to different exchanges).

Now, after completing these steps, you have Bitcoin or Ethereum in your Binance account. Click the “exchanges” and search for ADA/BTC or ETH/ADA, enter the amount and click “Buy ADA”.

Alternatively, Coinswitch is an aggregator, which means that it surveys the market for you and returns suggestions on the best exchange rates available. In addition, this site automatically transfers your newly acquired ADA coins to your Daedalus Wallet, eliminating the dangerous possibility of leaving your coins on the exchange.

Choose “Register” in the upper right corner of the Coinswitch website, then enter your email and a new password. While you are waiting for the email, complete the personal information, including the phone verification. After you have received the verification email, click on the embedded link, re-enter your email address and password.

On the site, select Bitcoin on the left, entering the number of coins you have and the ADA on the right. Coinswitch will return with a recommended exchange as well as a listing of other exchanges. Make your selection and you will be prompted for the address of your Daedalus Wallet. Enter that information and you will be given an address to which you should send your Bitcoin.

Copy that address and return to the site or wallet that has your Bitcoin, such as Coinbase. Enter the address you were given by the Coinswitch site and transfer the Bitcoin to that address. Once the transfer is complete the selected exchange will initiate the conversion to ADA and transfer them to your new Daedalus Wallet.

Return to that site and verify the coins have been transferred. You may need to update or enter additional information to view the balance.

Cardano Opportunities

The process currently required to purchase ADA demonstrates the opportunity Cardano sees in the cryptocurrency marketplace. It is still in a technical infancy, with involved steps for every transaction. In many ways, it is similar to the early automotive industry before the invention of the electric starter and other modern conveniences.

Cardano hopes to advance the industry in much the same way. For example, they plan on providing the Daedalus Wallet with the capability of storing multiple cryptocurrencies instead of just ADA. They also are the process of creating user-friendly addresses for transferring cryptocurrencies. These are just two of the projects underway at the company.

Cardano Challenges

The number of projects undertaken and their ambitious scope is only two of the challenges Cardano faces in establishing itself as the preeminent blockchain in the market. In addition, it must overcome other blockchain environments that have become established in this sector while Cardano was in development.

The academics working on the projects have impressive backgrounds and credentials, but Cardano must harness this intellectual capacity in a productive direction. The long development time suggests there may be problems in this area. Furthermore, the company must bridge the gap between the philosophical stance of blockchain purists and the practical concerns with producing measurable results.


Suggested Articles


Is Cardano the Big Next Thing?

Investors buying ADA are undoubtedly hoping they now own “the next Bitcoin”.  They have reasons for this optimism beyond the price surge. The management team at Cardano is incredibly experienced in blockchain technology, and they are attracting some of the brightest minds in the academic world. In addition, they are taking a thoughtful approach to developing what they hope to be the blockchain environment of the future.

However, “the future” for cryptocurrency investors may mean a much shorter period of time. It is uncertain if the buyers who drove up the price of ADA did research into the fundamental value of the cryptocurrency or if they just saw the increase in November and created the increase in December. This is the nature of financial markets as they develop. Value and speculation combine in different measures at different times to impact market price.

Cardano is More than a Cryptocurrency

Keep in mind that Cardano has a long-term value proposition that is dependent on accomplishing some very ambitious goals. While the organization has many of the hallmarks of a successful enterprise, they have little to show so far in terms of actual accomplishments. In this sense, any investment in ADA could be considered speculative because there is no assurance that the company will achieve its goals.

Before getting into the specifics of what they hope to do, it is important to discuss their philosophical basis. This is firmly rooted in the concept of decentralized control by the entire community. Cardano states clearly that their control and decision-making authority is intended to be temporary. Their vision includes developing mechanisms by which all decisions are made by those who use and support the blockchain.

Cardano is Testing a Philosophy

Decentralized control of the blockchain environment is a core premise of the blockchain concept. Some critics of Ripple contend that it is not a blockchain application because it lacks this component.  Satoshi Nakamoto, the pseudonym for the founder of Bitcoin, advocated for a decision-making process that includes the entire community as a way to eliminate governmental decisions that benefitted one class of society rather than the common good.

Bitcoin was an attempt to implement this philosophy over the Internet, but it ran into problems that could not be addressed by the initial rules of the blockchain.  Nakamoto’s solution to these problems was to allow the blockchain to split into two in what is referred to as a “hard fork”. This process has created Bitcoin Cash and other cryptocurrencies under the Bitcoin “name brand”.

Cardano Anticipates Problems

The management team at Cardano includes individuals who experienced the hard fork at Ethereum, another blockchain environment. This split in the blockchain was caused by an inappropriate application of the rules which most people would characterize as a theft. The individuals who felt that the blockchain should not be changed in spite of this unforeseen circumstance are now creating Cardano.

They’ve learned from the experience. The structure of Cardano includes elements that provide for changes without splitting the blockchain. This may prove to create a more stable and manageable blockchain. If so, the Cardano blockchain may be able to gain greater acceptance and use than other blockchains already in existence.

Cardano – The Exchange of Smart Contracts

One of the other areas where Cardano is trying to make progress is smart contracts.  These are self-executing agreements between two parties that have the potential to revolutionize transactions. Proponents of smart contracts believe that they will eliminate the need for lawyers, accountants and other professionals who oversee the executions of contractual agreements.

Smart contracts are written into the blockchain and cannot be changed without altering the blockchain. Once the conditions of the smart contract are satisfied the contract is automatically executed. The Bitcoin blockchain includes only the most basic types of smart contracts that mimic the use of other currencies.  Cardano wants to improve on that functionality.

Cardano vs. Ethereum – Why Cardano is Better than Ethereum?

More flexible smart contracts are one of the features of the Ethereum blockchain environment.  Ethereum is also a public blockchain that can be used by developers of other blockchains. It offers smart contracts that can mimic any transaction that can be done in the physical world. These are referred to as Turing-complete contracts.

Although some commentators question the expense of maintaining this level of functionality on a public blockchain, Cardano seeks to offer something even better. They represent their programming as better able to tolerate errors in coding. They have also promised to make segments of coding available to anyone to make Cardano smart contracts easier to use.

The Daedalus Wallet

This sums up one the main value propositions for Cardano. They want to make blockchain easier for everyone to use. This is a very common, and commonly successful, for late entrants into a developing field. The cryptocurrency wallet from Cardano is a great example of this idea.

It is necessary to have a Daedalus wallet to buy or use ADA. It can be downloaded from their website free of charge and promises to add features that will make a universal wallet suitable for any cryptocurrency use. One of the upcoming features touted is protection against quantum computer theft, even though quantum computers are still in their infancy.

Conclusion

Cardano certainly has the intellectual capabilities necessary to tackle the next generation of blockchain issues. It also has the experienced leadership that is required to manage such a monumental undertaking. There can be little doubt that the ideas it is pursuing would be well received by blockchain users.

The risk is that development time will stretch out past the patience of investors and that the final delivered product will not be able to differentiate itself successfully from other options already in operation. Given these factors, those buying ADA may want to prepare themselves for a long wait before they realize the full potential value of the cryptocurrency.

A Basic Introduction to Ripple and How to Buy XRP?

What is Ripple?

Ripple was founded in 2012 in order to fill a need in the international business market for a fast and efficient way to transfer funds from one country to another. The goal of Ripple is to establish a blockchain that will be used to verify financial transactions. This strategy has the potential to remake the entire global financial system, and the Ripple cryptocurrency – also called Ripple but technically named XRP – is an integral part of this goal.

The Situation

It seems incredible that when Amazon can promise same-day delivery that it can still take 3 to 5 business days to transfer money between countries. Globalization has remade supply chains and the manufacturing process, but the financial system remains stuck at an earlier time.

That system is known as SWIFT – the Society for Worldwide Interbank Financial Telecommunications. According to their website, SWIFT is a cooperative founded in the 1970’s and did a tremendous amount of work in standardizing the format and communication of international monetary transfers. It’s easy to forget how difficult their task was in the era before fax machines.

Unfortunately, as a cooperative SWIFT has responded slowly to changes in technology. Large corporations react more slowly than small companies, and cooperatives of large corporations move even slower. The result is an out-of-date international financial network that does not adequately utilize technology or meet the needs of the modern, global economy.

How to Buy XRP?

Buying ripple can be done by two main options. The first option being via cryptocurrency exchanges such as CEX.IO (Ripple will be available soon) and Kraken.

How to Buy XRP in 4 Easy Steps

Step 1 – Get XRP Wallet

In order to buy Ripple via exchanges, you will have to open a digital wallet prior to the purchase. You can use websites such Gatehub.net to open a digital wallet.

Step 2 – Open an Account with an Exchange

The next step will be to open an account in one of the exchanges that support Ripple (XRP). Currently, not many exchanges support Ripple and the demand for the crypto are increasing constantly. Two major cryptocurrencies exchanges that support Ripple (XRP ) are CEX.IO and Changelly.

Note that if you wish to speculate the price of Ripple and do not own the coin, you can turn to Plus500 *(72% of retail CFD accounts lose money, Availability subject to regulation) which provides you CFD’s trading on various cryptocurrencies as well as Ripple.

Step 3 – Verify your Account 

Cryptocurrencies exchanges require new users to verify their account prior any trading activity.  Therefore, Following your account registration, you must verify your details in order to continue the process.

Step 4 – Buy XRP with Fiat Currency

That’s it, now you can log in to your exchange account, search for XRP/USD or XRP/BTC, XRP/XBT and buy the coin. Following the purchase, withdraw your Ripple (XRP) to the digital wallet you opened at the beginning of the process.

The other method being via brokers that provide a contract for differences (CFD’s). Currently, not all exchanges provide the opportunity to trade Ripple, however, Plus500 allows traders and investors to buy and sell Ripple easily. Sign in to Plus500 *(72% of retail CFD accounts lose money), deposit funds via bank transfer or credit card and you can trade Ripple either from your desktop or mobile app.

XRP Exchanges

Ripple only sells XRP to banks and institutions, but individual investors can find it on a variety of cryptocurrency exchanges.  It can be purchased with other cryptocurrencies or with US dollars. The exchanges have different cost structures and pricing policies, so comparison shopping is highly recommended. There is also a useful website that compile lists of exchanges with user ratings.

Keep in mind that the acceptance of XRP by the cryptocurrency community at large is going through significant change as 2017 comes to a close. Exchanges are adding XRP as demand increases, and pricing policies are also changing quickly.  Buyers and sellers should check the status of XRP frequently to keep up to date on the situation.

XRP is at the vanguard of the new era of cryptocurrency. Ripple has applied new blockchain technology to an existing structural bottleneck in a way that has the potential to remake the global financial system. They have proceeded slowly and methodically with little fanfare for most of the process. That has ended, and now individual investors are joining in.

Ripple – A Company and a Blockchain

Ripple was founded to develop a cost-effective, secure solution to this problem.  Of course, as a private business, they hope to profit from that solution. This is one of the important distinctions between Ripple and the promoters of many other cryptocurrencies. Ripple is in the money business to make money.

This means that the idea of decentralized control that is at the heart of Bitcoin is not part of the Ripple infrastructure. The company raised the seed capital through traditional channels and not through an Initial Coin Offering (ICO). This standard business structure gives Ripple greater creditability with its primary user base and strongly suggests that it has a real competitive advantage over Bitcoin.

Ripple created RippleNet, the world’s first commercially operational blockchain network. This decentralized network is also commonly referred to as Ripple.  Members use the network to validate important information and transfer money around the world. It is much more efficient than the SWIFT system and is growing quickly.

XRP – The Cryptocurrency

XRP is the cryptocurrency that Ripple (the company) created to operate on Ripple (the blockchain). The basic idea is that using a common unit of currency makes the transactions easier to record. Anyone transferring money converts their native currency to XRP and transfers that. The recipient then converts XRP into their native currency. XRP simply functions as a common accounting entry.

This approach has several benefits. First, it disconnects the transfer itself from the currency markets. It treats the movement of value as a distinct event. Ripple and others refer to this as the creation of an “Internet of Value”.  The use of an independent medium of exchange also separates the transfer from the market for US dollars, which are still the most commonly used currency in international trade.

In addition, the use of a cryptocurrency makes it possible to compensate the blockchain members for recording the transactions and maintaining the blockchain. This, in turn, attracts other members to the network. So long as the transaction fees are lower than the alternative forms of transferring money, compensating network members through XRP is a financial “win-win”.

The Benefits of XRP

The potential benefits of the Ripple network to financial institutions go beyond the ability to earn additional revenue by maintaining the blockchain. In fact, that is a very small part of the overall equation. The primary benefits are the speed at which transactions can be settled, the lower cost and the absolute certainty of the transfer.

The benefit of reducing the time it takes to securely transfer money from days to seconds is obvious. Banks make money by lending it out, and capital tied up in transfers is a lost opportunity. Similarly, the benefit of lowering the cost of doing business is easy to understand. However, the certainty provided by the Ripple network is at least as significant to banks and financial institutions.

Banks and institutions “bounce checks”, just like people. Banks lose significant amounts of money on these failed transactions. In addition, banks lose their money on deposit with another bank in another country when that bank fails.  This is known as counter-party risk, and it is completely eliminated by the Ripple blockchain and the XRP cryptocurrency.

Ripple Success

These benefits have fueled acceptance of XRP and growth of RippleNet. The company has carefully nurtured this growth both by working with the banking establishment and by slowly expanding the blockchain. This nuanced approach by Ripple shows an intimate understanding of the industry that they are trying to remake. Banking is a staid, traditional business that does not respond well to be being pushed.

Banks and financial institutions are responding positively to the thoughtful approach. The Mitsubishi UFJ Financial Group (MUFG), the fifth-largest bank in the world by total assets has signed on, as has American Express and the Royal Bank of Canada (RBC), Canada’s second-largest bank. The list is growing longer every day as Ripple gains credibility in a very conservative industry.

Ripple has also been able to attract top leaders from the financial and digital worlds. These experienced professionals have a diverse set of backgrounds but a common goal of creating a stable accepted and robust blockchain for the banking industry. Perhaps the best measure of success in this area is the hiring of former SWIFT Directors.  These individuals see a changing of the guard and want to be on the winning team.

XRP Price

These facts are vitally important not only to the success of Ripple but also to the value of XRP.  It is too easy to forget that it is the community of users that create market value for a cryptocurrency. Bitcoin skyrocketed in price because more investors became willing to use the coin as an investment. In exactly the same way a growing community of XRP users will determine the value of this coin.


However, this fundamental progress toward the ultimate goal of remaking international financial transactions is not responsible for the price spikes XRP has experienced in 2017. The price chart through mid-December shows the impact of cryptocurrency investors beginning to accept the core value proposition of XRP, or perhaps only trying to diversify their portfolios.

It is absolutely critical to understand that these new investors in XRP are not the primary focus of Ripple. Of course, any company likes to see their stock – or cryptocurrency go up in price, but these price charts which are a critical component of the analysis done by cryptocurrency traders are far less important to Ripple than the continued growth and acceptance of XRP in the banking industry.

XRP Value

These two markets, the institutional user and the individual investor, have very different definitions of “value”. The institutional market sees value in how XRP can be used in their business operations while the individual investors see the price appreciation described in the previous section as the primary source of value. Currently, this group has no other use for XRP.

Ripple itself has another perspective that reflects both of these viewpoints. Because the primary focus of the company is on the institutional market, Ripple wants a value that is best suited to this user. In this sense what is most important is not the current market price of the cryptocurrency, but rather its price stability. More than anything and unlike other cryptos, Ripple wants an orderly market that is devoid of large spikes.

This is because the institutional user of XRP is indifferent to the actual market price of the coin. They are using it solely as a medium of exchange to transfer national fiat currency. Simply put, they do not care how many units of XRP they transfer, but they do care if the value of the XRP changes suddenly while they own the coin.

XRP Volatility

Ripple boasts that each transfer on RippleNet takes only 4 seconds to complete, but of course, the entire transaction from the purchase by the bank sending XRP to the liquidation by the receiving bank to their native fiat currency takes longer than that. This exposes the banks and financial institutions to unexpected gains or losses due to changes in the market price of XRP. Unacceptable losses will damage the use of the coin and RippleNet as a payment transfer system.

Fortunately for Ripple and the institutions, there are mitigating circumstances that make these large losses unlikely. First of all, each party to the transfer holds the risk for only a portion of the time. The risk of loss is transferred along with the cryptocurrency. If each party to the transfer is equally adept at buying or selling XRP, this fact evenly shares the risk between the two.

In addition, banks and financial institutions are accustomed to the risks of changes in currency values and have developed sophisticated methods of reducing it. As RippleNet grows, the ability of these institutions to quickly move into and out of XRP will also grow. Furthermore, there are separate companies that see an opportunity to profit from this volatility and who will ensure the bank against losses stemming from it.

XRP Supply

A large segment of individual investors also takes a buy and hold approach to XRP and is basically indifferent to volatility, other than the occasional sleepless night it can cause. Those investors who trade cryptocurrencies on an active basis actually see volatility as an opportunity to profit from the market. However, what all individual investors care about is the long-term increase in the market price of XRP.

These investors often rely very heavily on the basic law of supply and demand.  The “fixed supply” of Bitcoin is almost legendary in the cryptocurrency world as a driver of market price. Those who think supply is the main component of price view XRP as a problematic investment because Ripple, the company, has a monopoly on the production of XRP.

Keep in mind that Ripple is a private company and that XRP is a private cryptocurrency. There is no mining of XRP. Ripple has placed most of the supply of XRP in time lock contracts on RippleNet.  1 billion coins will be available for issue on the first of each month for the next 55 months. Ripple can choose to issue some or all of the coins with any unissued coins returned to a new time lock contract opened in 55 months.

XRP is a Centralized Coin

This active management of the supply of XRP is despised by cryptocurrency purists. Decentralized control of the currency is a very important philosophical part of Bitcoin, which allows individuals to create new coins. Centralized control by Ripple of the supply of XRP stands in complete opposition to this principle.  This is a fundamental difference that cannot be reconciled.

Many individual investors who are indifferent to these philosophical differences are also concerned about the time lock feature. They are concerned that Ripple will “dump” 1 billion XRP on to the market the first of every month, inundating the supply and driving down the price. From this very limited perspective, XRP looks like a bad investment, but it ignores the reality of the situation.

Ripple is committed to a stable price of XRP because it is focused on the institutional market. The last thing that Ripple wants is those institutional customers to suffer a price drop while using XRP on RippleNet. They also do not want their institutional users to avoid using the network around the first of each month. In addition, the company profits from the sale of XRP and can use the proceeds to finance growth.

How to Short Bitcoin – A Complete Guide

Buy low.  Sell high.  Just not necessarily in that order.

A simple example will show why this is the case. An investor borrows a Bitcoin from a friend and sells it at a price of $15,000. After the price drops to $10,000 the investor buys a Bitcoin back and returns it to the friend. This is a classic short sale, and the investor in the example made $5,000.

The most the investor could have made is $15,000 which would happen if Bitcoin became worthless. Of course, the risk is that the price of Bitcoin goes up and the investor has to buy it at a higher price in order to return it to the friend. Given the increase in price, there seems to be no practical limit to the amount that the investor could lose in the transaction.

Shorting Bitcoin Via Exchange

The first problem with implementing this strategy is finding someone who is willing to lend you the Bitcoin. Many exchanges offer this service which falls under the category of a “margin account”. Because you are borrowing something, there is an interest charge on the loan in addition to other transaction fees.

The terms of borrowing – how much you can borrow and what rate you will be charged – varies by exchange. The terms and the qualifications for a margin account are changing very quickly as the market for Bitcoin and cryptocurrencies, in general, continues to develop. Kraken reports margin fees of .01% for every 4 hours the trade is open, a time frame that demonstrates how quickly active traders open and close margin positions.

Investors interested in establishing a margin account for short selling need to do some serious research to find the terms that best suit their intended trades.  Some websites offer an overview of the different trading platforms and are a great place to start. Keep in mind that many of the trading platforms are unregulated and so have a larger embedded risk.

Margin trading platforms are now available across a large number of Bitcoin brokers, including AvaTrade and Plus500 *(72% of retail CFD accounts lose money, Availability subject to regulation).

Shorting Bitcoin through Contract for Differences(CFD’s)

One of the key points to understand about shorting is that it isolates the change in the price. This is easy to understand on the “long” side – where the investor buys Bitcoin with the expectation that the price will increase but can be a bit confusing on the short sale. This isolation of the change in price is the key to understanding a Contract for Difference (CFD).

A CFD is a derivative. This is a frightening word for newcomers, but it simply means that the value of the instrument is determined by the value of something else. In this case, the value of the CFD is determined by the change in the price of Bitcoin. Investors buying a CFD do not actually own Bitcoin. They only own the change in the price of Bitcoin.

Just like the terms of shorting, the terms of a CFD vary by broker. Again, investors need to do some homework and find a broker that meets their needs. This includes the financial requirements for trading. Among these brokers, you can find Plus 500 *(72% of retail CFD accounts lose money), AvaTrade and FXTM. Investors who meet the definition of an accredited investor have access to investment products and strategies that are not available to the general public under US securities law.

Furthermore, there are various brokers that provide CFD’s which allow you to short other cryptocurrencies. See the list below:

Shorting Bitcoin via Futures Market (Cboe/CME)

One the easiest parts of a CFD to understand is that it measures the difference in the price of Bitcoin over a period of time. In this sense, a CFD “buys” the future price of Bitcoin. This can be done directly through the latest development in Bitcoin trading, futures contracts in Bitcoin.

Futures are easy to understand by beginning with their origins in the agricultural sector. A farmer who plants a corn crop cannot know what price it will bring when the crop is harvested. To eliminate this uncertainty he can buy a futures contract that will give him the right to sell his corn at a started price when it is harvested. The actual price at that time – the “spot” price – may be higher or lower, but his price is fixed by the futures contract.

Bitcoin futures contracts are available for as few as a single Bitcoin and have expiration dates ranging from one week to three months. One of the benefits of a future is that they can be traded before the contract expires. This means an investor can buy a futures contract and realize some of the value from that contract (presuming it has value) before the expiration date by selling the contract to another investor.


Suggested Articles


Bitcoin Short – Pros and Cons

Shorting Bitcoin, or any financial asset for that matter, can get fairly complicated. However, the most important point to remember is that the most basic risk remains the same for the futures buyer as the straight short-seller. The potential loss has no cap, but the potential gain is limited to the current market price.

Investors use the strategies to short Bitcoin for a more important reason than just an expectation that the price will drop. Keep in mind that every strategy to short Bitcoin can be used to profit from a price increase. The most basic reason investors use margin, derivatives and futures is that these strategies employ leverage in one way or another.

These strategies allow the investor to own the change in price with a smaller investment than the current price of Bitcoin. In the case of a short, the price is the total transaction fees and interest. Leverage is a powerful financial tool used by every homeowner with a mortgage. Leverage multiplies the return on an investment that performs as expected, but also multiples the loss when it does not pan out.

Conclusion

Investors who have managed to grasp the relationship between blockchain and cryptocurrencies and then built on that to learn how to trade Bitcoin on exchanges have still only scratched the surface of how to profit from their knowledge. Understanding technical analysis –reading the patterns in the ups and downs of the market – is also only a step on the path to becoming a fully-equipped Bitcoin investor.

Gaining an understanding of how to profit from any movement in the price of Bitcoin could be the most important task the serious, savvy investor can undertake. Working through the math of how leverage increases Return on Investment (ROI) is part of understanding why margins, derivatives, and futures are so powerful. Working through the math of these instruments when they move in a bad direction is just as important to understanding the risk of leverage.

These building blocks are not always easy to acquire, but they are always worthwhile to have, even if the investor chooses not to use them. Understanding and tracking the futures market, for example, gives the investor insight into what other, perhaps more sophisticated investors, think will happen in the future.  That knowledge can be power.