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What is the Next Bitcoin?

What a time for early Bitcoin traders! Did anyone foresee this blooming outcome in 2009? Is this a sign that we should invest in other prospective cryptocurrencies and wait for their golden days? No single answer is convincing enough as this is the first time for a blockchain-based asset to conquer the investment community. Based on the current events, only two things can be taken for granted: first, the world is permanently moving towards the digital ecosystem; and second, there’s room for new digital currencies to rock the world’s economy. In this article, we’ll start off with a brief history of Bitcoin and its way to the throne. With its rise in mind, we will discuss what criteria signal a “big” cryptocurrency. In the end, we’ll list the top three potential Bitcoin successors you should take into consideration.

The History of Bitcoin’s Price

Although we still call Bitcoin “the new currency,” its history dates back to 2009, when the mysterious Satoshi Nakamoto introduced the world to a new trading concept by posting a link to a white paper called "Bitcoin: A Peer-to-Peer Electronic Cash System." Bitcoin’s first price increase was noted in 2010 when a single Bitcoin reached the price of $0.08. Following a rough road, early Bitcoin traders faced an exhaustingly volatile market with daily fluctuations and a series of scams and frauds resulting from the lack of regulations. In April 2011, the Bitcoin price jumped by 3,200% reaching an amount of $32 only to sink to a $2 bottom price by November that same year. In the following years, the price of Bitcoin continued to oscillate with rapid jumps in the range between $4 to $1,200. By that time, the innovative digital market had caught the eye of many enthusiasts, experienced traders, and regular folks who wanted a fresh field to invest their capital in. In November 2017, Bitcoin hit an amazing price of $20,000, followed by a drastic price drop to $7,000 the very same year. The pandemic outbreak in early 2020 was the reason for the skyrocketing of Bitcoin’s value as the mainstream economy faced devastating losses. At the moment of writing this article, one Bitcoin is worth over $50k. However, the golden era of Bitcoin isn’t over yet. At this point, we can’t predict its further development even though financial experts try to “sell” diametrically opposite opinions. Meanwhile, it’s time we considered other promising altcoins. How can we know they’re worthy of our attention?

What Are the Features of the New Bitcoin?

Bitcoin is the pioneer but it isn’t alone on the digital frontier. There are over 8,000 active altcoins with an aggregate value of approximately $1.5 trillion, which is 40% of the total crypto trading volume. However, a great number of the upcoming cryptocurrencies have a short life-cycle and despite the first-class marketing and management behind them, they don’t succeed in maintaining the image of reputable cryptocurrency, so they fade out soon. On the other hand, we have a handful of success stories about cryptocurrencies on their way to becoming credible competitors to Bitcoin. Let’s outline what factors make the difference, apart from the inevitable market volatility.

Usefulness and Purpose

It’s an unmistakable rule that the demand for a particular altcoin will rise if people find it useful and believe in its purpose. At this point, there are a great number of cryptocurrencies on the market that meet all criteria for a valuable coin, but they lack a certain purpose. If users can’t find the purchase of a particular coin meaningful enough, that’s a clear sign the altcoin won’t last long.

Supply

The blockchain industry is based on a predefined maximum supply of coins and this is a solid test of whether a certain coin will have a bright future. If traders haven’t lost interest by the time the maximum or near-maximum has been reached, there’s a good chance that the cryptocurrency’s price will rise.

Current Price and Trading Volume

The price and other relevant information about each cryptocurrency are easily accessible online today. A deep analysis and research on its current market position can be the key factor in deciding on your next investment. Nonetheless, as you already know, there is no guarantee that the market won’t change direction tomorrow.

Easy and Fast Access

An appealing feature of a promising cryptocurrency is easy and fast access. This doesn’t mean that the cryptocurrency is cheap. Rather, a cryptocurrency that’s easy to reach should be available on the most reputable exchanges and other popular crypto trading services. This is a sign that it’s being managed effectively and seriously considered by experienced traders.

The Top 3 Cryptocurrencies Which Could Be the Next Bitcoin

Ethereum, Litecoin, and Stellar make up our top 3 cryptocurrencies that could be the next Bitcoin. Let’s take a deeper look into their basic traits.

Ethereum (ETH)

We mentioned that the purpose behind each cryptocurrency is what attracts potential traders most. Ethereum is based on a strong one: decentralizing the internet by substituting the existing servers with “one computer for the entire world,” accessible everywhere to everyone. Ethereum is, in fact, an open-source blockchain software that supports Ether, a coin placed right behind Bitcoin, worth over $139 billion. In simpler words, all Ethereum-linked programs require a certain amount of computing power. Ether is the asset you pay for this power. A remarkable number of 730k active traders see long-term potential in this innovative blockchain concept as it tends to offer its users greater control over funds and online data since Ethereum began in 2015.

Litecoin (LTC)

Litecoin is one of the cryptocurrencies with the longest tradition, founded in 2011 by former Google engineer Charles Lee. It seems to be an upgraded Bitcoin version in all aspects: lower costs, fast payments on its network, higher supply of coins, etc. Unlike Bitcoin and Ethereum, Litecoin didn’t reach a price spike in 2020 despite its exceptional technical strengths. However, it has achieved remarkable credibility and trust among experienced crypto-traders, which makes Litecoin one of the most serious candidates for the title of “the next Bitcoin.”

Stellar (XLM)

Stellar is an open blockchain network with a clear and meaningful vision. It provides practical and efficient business solutions to institutions and individuals. The most distinguishing feature of Stellar is its fascinating payment network speed for processing large transactions. One of the biggest drawbacks of traditional banking networks is the amount of time they take to process, approve, and settle high-net international transactions. Stellar does the same in no time. Their only condition is its native Lumens (XLM) coin to be supported on the respected network. Stellar’s platform is intuitive and easy to navigate. It is similar to modern payment processors like PayPal - the transaction process can be immediately initiated once you deposit funds on the network. To be clear, Stellar’s goal is to become the future of international payments, not necessarily Bitcoin’s successor. However, it’s worth taking XLM into account as your potential investment since its innovative approach is yet to be fully recognized. And since anything is possible in the crypto space, Stellar can also possibly be the next Bitcoin.

Final Thoughts

We hope that our blog post broadened your knowledge beyond Bitcoin as a single source for investing in digital assets. If you’ve decided to take action before another cryptocurrency makes headlines worldwide, get started by contacting Coin IRA. Their experienced cryptocurrency sales specialist will show you detailed crypto opportunities and the best practices for investing your savings wisely.
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Bitcoin vs Stocks: Where Should You Invest Your Money?

At some point in each of our lives there comes a time when we consider how best to invest our savings. No matter how little money you have, it's never too early—or too late—to start putting that money to work. Whether it's a simple pension fund, an IRA, or a mixed bag of stocks and assets, your money will almost always provide better returns when invested. However, investment opportunities change over time due to a multitude of factors including political, technological, and cultural trends. Savvy investors keep an eye on developing markets and continuously diversify their portfolios to accommodate the current climate. The most recent disruptor to hit the financial world in this way is Bitcoin, a new type of digital investment that is taking the world by storm. Bitcoin is part of a new class of assets known as cryptocurrencies which store monetary value securely in a digital format. Even though these assets don't have a physical form, they maintain value through advanced technology that ensures their scarcity and keeps them secure.

How Cryptocurrency Differs from Traditional Stocks

If you aren't well versed in the technology and fundamentals of cryptocurrencies, it’s easy to think of them in the same way as other assets like stocks or bonds. However, behind the scenes, cryptocurrencies function in a vastly different way to stocks, especially Bitcoin. Despite being intended as digital money, Bitcoin has evolved to act more like digital gold than a currency. In this way, it acts differently to both stocks and foreign exchange. Whereas a stock price is linked directly to the performance of the company, Bitcoin has no shareholders, no CEO, and is not linked to any country or government. This puts it in a league of its own—an entirely unique method of safely storing and transferring value with no need for a broker, bank, or third-party intermediary. Traditional investors may find this lack of intermediation unsettling but it has many advantages. Like gold, Bitcoin is immune to inflationary practices that damage fiat currency or insider trading that can damage the value of a company. Bitcoin offers all the same 'hard money' benefits of gold but in a more secure, easily transferable digital format. Nowadays, you can buy cryptocurrency with a variety of methods: either directly from a seller, on an exchange, through an investment fund, or as part of a product like an IRA. Thousands of financial institutions are beginning to offer cryptocurrency investments to their customers so they can benefit from this burgeoning new asset class.

Key Differences Between Stocks and Crypto

  • Hours: Cryptocurrency trades 24/7, 365 days a year, unlike stock markets which keep office hours.
  • Regulation: Stocks are regulated by government agencies, cryptocurrencies are secured by blockchain technology.
  • Volatility: Cryptocurrencies are typically more volatile than most stocks.
  • Ownership: Stocks remain tied to a company whereas with cryptocurrency you take full ownership and responsibility of the asset.

How Does Digital Currency Work?

Digital currencies like Bitcoin are recorded on a transparent and immutable ledger technology called a blockchain. In the same way that a bank keeps a record of your savings on its computers, Bitcoin keeps a record of your investment on the blockchain. However, unlike a bank that can run out of cash reserves, the exact amount of Bitcoin that you own is always available to you. There is only 21 million Bitcoin available and it's impossible to create more, so Bitcoin will never lose value due to inflation. Once all the Bitcoin available has been issued, its scarcity will ensure it continues to hold increasingly high value. Other cryptocurrencies use similar or equivalent methods of supply control to protect against rampant, uncontrolled printing that results in endless inflation. Due to the large choice on offer, many people are unsure which crypto to buy. Generally, the best way to judge a reliable crypto asset is to see how long it has been running. Bitcoin, Ethereum, and Litecoin have all been around for many years, proving themselves as reliable investments. Unlike some new crypto coins that may die after one year, these coins show strong promise as a safe, long-term investment.

Key Bitcoin Statistics

  • 11 years of secure operation
  • Limited to 21 million coins
  • US$1 trillion market valuation
  • 408.8 percent mean annual return

Why Both Bitcoin and Stocks Make a Good Investment

As you can see, cryptocurrency and traditional stocks offer very different investment opportunities. There are advantages and disadvantages to both asset classes, which is why it's always best to diversify your portfolio in a balanced way. Investing a percentage of your money into Bitcoin and stocks will ensure you don't miss out on the great returns of cryptocurrency while maintaining a secure long-term stock position. Statistically, Bitcoin offers the best returns of any asset over the past decade but the technology is still relatively new and lacks strong regulation. It may still take some time for governments to develop effective regulatory policies in the cryptocurrency sector, assuring traditional investors that cryptocurrency is safe. Stocks, on the other hand, have a long history of profitable and safe investment opportunities. If you do your research, keep an eye on emerging trends, and pick good stocks, you can be assured a decent return on investment (ROI). Companies like Apple, Amazon, and Microsoft have proven excellent long-term investments, although for each one there was also a promising company that has failed.

Should You Buy Cryptocurrency? Diversification is Key

Whatever you choose to invest in, always remember that diversification is key to ensuring your portfolio always stays in profit. No single asset or asset class is immune to losses, so make sure you don’t put all your eggs in one basket. A good investment portfolio should include a well-balanced mix of stocks, precious metals, and cryptocurrencies. For this reason, many people choose to invest in both stocks and a cryptocurrency product like an IRA, helping to protect against any single failure. Investing in a mix of cryptocurrencies and stocks can provide an extra level of protection, balancing out any losses against gains and providing a stable ROI.  
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How Does a Cryptocurrency IRA work?

An Introduction to IRA accounts

An individual retirement account (IRA) is one of the most popular ways to save for retirement giving you some of the best tax-saving benefits. Many savvy investors will begin contributing to an IRA as soon as they start working and earning income to complement their employee-sponsored 401k retirement account, or to plan early for their retirement when their employer does not have a 401k or other employer-sponsored plan.  You can also choose what to invest your IRA money in, from commonly held stocks, mutual funds, and other equities, to real estate, cryptocurrency, and other digital assets. IRAs provide several advantages over a typical savings account, most notably tax savings and diversified investment options.  For example, depending on your income level, you can get up to 100% tax savings on contributions made to a Traditional IRA. A Roth IRA is funded with after-tax dollars and grows tax-free, while a SEP IRA, a Simplified Employee Pension, has its own advantages for those who are self-employed or own a business, one of which is higher annual contribution limits than a Traditional or Roth IRA account.

What is a Cryptocurrency IRA?

A Cryptocurrency IRA describes an IRA where the investment of choice is any digital currency, including Bitcoin.  In 2018, the IRS defined cryptocurrencies as “property” rather than securities. This change made it possible for institutions to start offering cryptocurrency as an investment in a Self-Directed IRA. Cryptocurrency IRAs offer the option of a single cryptocurrency or a mix of carefully selected, eligible cryptocurrencies for a more diversified crypto portfolio. As with any IRA, your custodian must hold the assets. Bitcoin is the most popular choice for a Cryptocurrency IRA, because it has been around the longest and proven to be the most widely accepted. However, over the years, other cryptocurrencies such as Ethereum and Litecoin have also proven to be stable and profitable. Many Cryptocurrency IRA custodians offer a narrow range of digital assets to choose from if you wish to diversify beyond just Bitcoin, avoiding the riskier altcoins.

The Difference Between a Conventional IRA and a Cryptocurrency IRA

Cryptocurrency IRAs must adhere to all the same IRS guidelines as conventional IRAs according to the type of IRA it is (Traditional, Roth, SEP). This includes transfer eligibility, contributions, distributions, and taxable events.  In addition, IRS code dictates that all IRA assets must be held by a trustee or custodian. A custodian is the financial institution that is responsible to not only safeguard your investments but also to report any contributions and distributions to the IRS.  Because the IRS categorizes cryptocurrency as property and not a security, only a self-directed IRA that allows the account holder to invest in alternative assets can facilitate an investment in cryptocurrency. A Cryptocurrency IRA is simply a Self-Directed IRA that can invest in cryptocurrency. With a Self-Directed IRA, you, as the IRA account holder, choose how and when your IRA funds are invested - in this case, crypto rather than stocks, bonds, and mutual funds. However, not all Self-Directed IRA custodians have the capability of offering cryptocurrency as an alternative investment option, since they have very specific trading, tracking, and storage requirements.   

What Cryptocurrencies are eligible to be placed in IRAs?

The oldest and most popular cryptocurrency is Bitcoin, well known around the world for the incredible growth it has enjoyed over the past decade. Nowadays, there are over a thousand cryptocurrencies, but only a select few are eligible for IRA investment. Each custodian who offers cryptocurrency as an option determines which ones are eligible for their account holders. As Bitcoin gains institutional and individual acceptance, more and more investors are choosing Bitcoin and other cryptocurrencies as an IRA investment option. 

But is cryptocurrency safe?

Over the past decade, Bitcoin has become known for both its rapid growth and decline, prompting many to ask - is Bitcoin a good investment? Is it a stable investment? After all, we have seen cryptocurrencies move up or down in value by as much as ten or twenty percent in a day. These seemingly unpredictable and rapid swings make traditional investors wary and give the impression of an unstable investment. Bitcoin’s volatility during these times increased its implied risk.  While its acceptance was still in question, analysts struggled to determine what were the driving forces behind these market gyrations. However, Bitcoin has shown consistent growth with a mean annual return of 408.8% over the past decade.  Recently, however, Bitcoin has attracted the attention and acceptance of financial institutions like Microstrategy and tech giants like Tesla, both having invested billions of dollars into digital currency. These firms, along with many others, see Bitcoin as a hedge against inflation, similar to the way investors viewed gold during previous times of economic uncertainty. This type of large-scale corporate investment validates the legitimacy of Bitcoin and gives it more stability in the long run.

Get your own Cryptocurrency IRA today from Coin IRA

Coin IRA and its preferred custodians provide qualified Cryptocurrency IRAs helping thousands of customers enjoy the benefits of this new and exciting asset class.  Our highly-qualified consultants will help you choose from a range of options, including Bitcoin, Ethereum, and Litecoin with no maximum purchase limit. Investing in cryptocurrency opens you up to a modern asset class that has out-performed every other asset in the past decade.  Furthermore, it allows you to maximize the diversification in your investment portfolio, mitigating risk and hedging other markets.      Speak to a Coin IRA Cryptocurrency Specialist today about how you can better secure your retirement with a Cryptocurrency IRA. Our team will expertly and efficiently guide you through the process from start to finish.  It's easier than you might think.
Single bitcoin next to stack of bitcoins with rising graph in the background

Where is Bitcoin Heading in 2021?

A great year for Bitcoin

While most of us found 2020 to be a difficult and confusing year, Bitcoin enjoyed a period of strong growth throughout the year. Things started off a bit rocky when the COVID-19 pandemic caused financial markets worldwide to crash, sending Bitcoin to a 12-month low. However, by May, it had made a full recovery and continued to grow, registering a new record high price by year-end.

Coming into 2021, Bitcoin has faced some mild volatility but continues to move in an upward direction. After breaking above $30,000 in early January, it quickly reached $40,000 before running out of steam and cooling off for a period. Most recently, a renewed rally has seen the leading cryptocurrency break through the significant $50,000 mark.

What to expect in 2021?

The unexpectedly strong growth over the past few months has left many analysts wondering what we can expect to see from Bitcoin in 2021. There are several important factors to consider that are likely to affect the price, some that stem from historical movements and some with more immediate ramifications. In order to accurately assess the direction in which Bitcoin is headed, we need to investigate three core elements that define its price: public perception, institutional investment, and the underlying technology.

Public Perception

Public perception is one of the most critical factors driving the price of any asset. In the case of traditional company stocks, the reputation of the company can make or break public perception. In the case of Bitcoin, there is no easily definable product, service, or use case backing the asset. Digital assets like Bitcoin lack a physical product, so their value is largely derived from whether or not people believe it has value.  In the past, Bitcoin has received criticism from conservative financial groups who didn't take the time to understand the technology and couldn't see where the value came from.

More recently, however, big names in the fintech world are realizing the incredible use cases of cryptocurrencies, helping to drive a wider understanding of their importance. Equally, government regulators have begun to act more favorably towards cryptocurrencies, helping to improve their public image. People from all walks of life are finally beginning to see cryptocurrency as an investment for the future.

Institutional Investment

When it comes to money, the average person tends to trust their bank or financial advisor more than themselves or their friends. For cryptocurrencies to find a truly lasting foothold within the global economic landscape, acceptance by established financial institutions is paramount.

Over the years, Bitcoin has enjoyed a modicum of support from some high-profile analysts like Thomas Lee of Fundstrat Global Advisors. With 25 years of equity research experience, Lee has long touted Bitcoin's value, recently predicting even stronger performance this year than in 2020. Overall, the sentiment is high, and the vast majority of analysts see further growth for Bitcoin in the medium to long term. 

Over the past few months, institutional investment into the crypto market has exploded, with major tech and finance firms like Paypal, Tesla, Greyscale, and Microstrategy all buying up massive amounts of Bitcoin. These companies have taken the time to research whether Bitcoin is a good investment, evaluating risk, and making a calculated decision - they're not the type of firms to make speculative bets!

Underlying Technology

Those who truly understand Bitcoin usually have a basic understanding of blockchain, the underlying technology that makes cryptocurrencies entirely different from any other asset class. Blockchain is a highly secure ledger of transactions maintained by a decentralized network of computers that can be programmed to control the supply and demand of a digital asset.

Historically, Bitcoin has enjoyed strong periods of growth following a change to the network that ensures scarcity. Known as a 'halvening,' this hard-coded event occurs approximately every four years and halves the amount of Bitcoin that is created daily. The third and most recent halvening occurred on May 11th, 2020, putting us currently in the midst of a growth cycle.

Unlike traditional currencies or assets, Bitcoin has a supply cap of 21 million units and follows a release schedule of increasing scarcity that nobody can ever tamper with. Many financial experts believe this baked-in scarcity model is what gives Bitcoin its exceptional value and long-term viability. 

During times of financial uncertainty, many governments print money in large quantities to inject stimulus into the economy, resulting in rapid inflation and damage to the value of the currency. Bitcoin's carefully controlled scarcity and immunity to oversupply make it an excellent hedge against periods of inflation, leading many analysts to compare it to gold.

Is cryptocurrency safe?

Despite their exceptional long-term growth and widespread acceptance by top institutions, many people remain fearful of cryptocurrencies. This is largely due to a negative image painted by conservative economists and a fear-mongering media that doesn't understand the technology. In reality, Bitcoin is designed to make it one of the most secure monetary networks in the world. 

The decentralized, transparent, and immutable nature of blockchain technology makes it near impenetrable to theft or fraud. In fact, in over 11 years, the core Bitcoin network itself has never suffered a hack, theft, or data breach. However, when interacting with any blockchain network, there are some inherent dangers that could occur as a result of human error. 

This is why the majority of users enlist the help of a third-party company when they want to buy and sell crypto. If done through a trusted third-party, there is no reason why you should have any trouble dealing in cryptocurrency. Yes, fluctuating market conditions mean you could lose money trading cryptocurrencies, but this is no different from any other asset class.

The benefits of a cryptocurrency IRA

If you're looking to diversify your retirement portfolio into an asset with a high potential for profit, a Cryptocurrency IRA could be the ideal product for you. The traditional stock market is facing a tough time at the moment as economic uncertainty shakes confidence globally. Precious metals traditionally offer a safe hedge against this situation but historically provide only mild returns.

Diversifying a portion of your IRA into Bitcoin will expose you to the incredible potential that this new asset class has to offer. The expert advisors at Coin IRA can help guide you through each and every step of opening a cryptocurrency IRA. It's a small decision that can make a big difference!

When to Buy Bitcoin?

Bitcoin is changing the world, and those who know its value and its numerous benefits have already started investing in it. Even though Bitcoin's market is volatile, if you understand the basics of how the market works and keep an eye out for upcoming price movements, you'll lower the risk of potential losses. As Bitcoin continues to have an impressive bull run in 2021, many who want to jump onto the crypto bandwagon are wondering when to buy Bitcoin and whether or not 2021 is the right year to do so. If you are seeking an answer to this question as well, this article will come in handy. We’ll discuss when to buy Bitcoin, briefly go over the history of Bitcoin’s price, and provide you with a short overview of the macroeconomic climate. Finally, we’ll list some predictions on how the price of Bitcoin is expected to fluctuate in the years to come.

A Brief History of Bitcoin’s Price

The Bitcoin software was made available to the public for the first time in January 2009, which is when the first Bitcoin block was mined as well. During the first few years of its existence, the worth of one Bitcoin was no more than a few dollars. In 2013, the digital coin started getting more and more exposure in the media. Bitcoin’s value increased at $13.40 and kept going up, creating a price bubble. In mid-2015, the price of one bitcoin was around $300. This was when the second growth period started so that in January 2017, Bitcoin could reward investors with a 1,350% return and even reached an all-time high of $20,000. In 2018, things took a turn for the worse with Bitcoin’s price falling down to $4,000 by the end of the year. This year-long bear market greatly affected crypto-related businesses. Luckily, the currency got back on track the following year and even surpassed its all-time high in February 2021.

Macroeconomic Overview

Bitcoin’s price crashed twice, both in 2013 and 2017. Nevertheless, these declines were not a result of any major incident. The digital coin was mostly cut due to some speculations such as worries about hacking risks which hampered the advancement progress of cryptocurrencies in 2018. In 2020, however, Bitcoin and other cryptocurrencies experienced a real financial crisis with the outbreak of COVID-19. Cryptocurrencies were not resistant to the crisis caused by the pandemic, though, as investors began to sell off equities in February. However, regardless of the substantial losses in March 2020, and the disordered Covid-19 response by governments, worldwide markets have managed to make exceptional progress. Research by Dr. Marcin Watorek showed that Bitcoin did not frighten investors; quite the opposite - they didn’t shy away from including it in their investment portfolios. Moreover, his research confirmed that during the Covid-19 pandemic, the cryptocurrency market turned out to be mostly unaffected by the turbulence experienced by all global markets during this period. This observation is in line with and complements the previously published results on the approached stability and maturity of the cryptocurrency market in the past couple of years.

Why 2021 Is the Right Year to Buy Bitcoin

Bitcoin’s Network Is Increasing in Size

Slowly but surely, Bitcoin trading has been increasing in popularity, especially over the past few years. There are more wallets, exchanges, and platforms than ever before. According to the Bitcoin block explorer service data, the number of blockchain wallets used by traders shows an increase from 43 million to over 62 million wallets in the past twelve months. Furthermore, more and more vendors are starting to accept Bitcoin. There are even Bitcoin debit and credit cards that allow users to spend their bitcoins anywhere where Visa cards are accepted. These novelties mean that Bitcoin usage is set to increase in the foreseeable future.

Bitcoin Appears to be Following the Stock-to-Flow Model

An investing concept called “stock-to-flow” can be used to quantify the scarcity of a good. Stock represents the total supply in circulation and flow represents the amount of new supply per year. Supporters of this model have foreseen that the price of Bitcoin should reach somewhere between $100k and $200k at some point in 2021 or 2022. This prediction was a result of a study that covered the demand and scarcity of this asset and compared it to other assets, like gold. Similar to gold, Bitcoin represents a rare asset class but even more importantly, it’s the first rare digital object. When Bitcoin was created, its supply was hard-capped at 21 million BTC but the complex mathematics keeps the supply rate more or less even by increasing the mining difficulty, so that every 10 minutes, a new block containing 6.25 BTC is being mined. While there are critics of the stock-to-flow model, other high profile investors have taken note. In a July 2020 report by Fidelity, the U.S. investment house stated that "Commodities with a [high S2F] have historically served as superior stores of value. Bitcoin’s stock-to-flow will eclipse that of gold following the next halving (2024)."

Bitcoin’s Price Predictions

When it comes to future Bitcoin price growth, the majority of experts, investors, and crypto analysts share a positive outlook with more and more major financial institutions embracing crypto as a payment or investment choice. In that context, Bloomberg analyst Mike McGlone is setting a target of $50k in 2021 and $170k in 2022 for 1 BTC. Moreover, according to the Winklevoss twins, the founders of the US exchange Gemini, Bitcoin might reach $500k by 2030, at which point its market cap would come near that of gold. Finally, as mentioned above, estimations based on the stock-to-flow model show a possibility of Bitcoin rising to $200k in the next couple of years.

Final Words

If you’re wondering when to buy Bitcoin, the answer is now. We can conclude that Bitcoin is a good investment in 2021 and here’s why. Experts agree that the crypto industry is well-positioned to maintain its attractive place in the financial market. Moreover, the history of Bitcoin’s price indicates that Bitcoin is poised to surpass its most recent all-time high again. In addition, the value proposition of Bitcoin is ideally suited to the macro climate since it turned out to be mostly unaffected by the turbulence experienced by all global markets due to Covid-19. Finally, the fact that Bitcoin follows the stock-to-flow model is another sign that it’s a good investment for 2021 because it proves that the asset is scarce and, in turn, more valuable. Let Coin IRA show you how simple it can be to join the growing masses adding Bitcoin to their IRA. With a clear picture of Bitcoin’s forecast, this may be your once in a lifetime opportunity to dramatically impact the quality of your life in retirement.

Why Is Bitcoin Going Up

If you’re a novice Bitcoin supporter who wants to learn more about the crypto market before joining in, you must have noticed the newly-surrounded hype around this digital asset. The increased media attention is a result of the unprecedented price rally as Bitcoin smashed its records this year. In the last 12 months, Bitcoin’s price has increased at an unprecedented rate from lows of $4,000 to over $40,000. High-net-worth individuals and institutional investors are regarding Bitcoin as a hedge asset and consider it their safety net against inflation. Today, we’ll take a look at the factors that cause Bitcoin’s price to go up and down, what has influenced its current growth, and what are the implications for current and future Bitcoin investors.

What Factors Affect Bitcoin’s Price?

Scarcity

One of Bitcoin’s key trump cards that makes it an attractive asset and drives its price forward at the same time is its built-in scarcity. When Satoshi Nakamoto designed the world’s first cryptocurrency, he set an upper limit of 21 million for Bitcoin’s supply. Today, over 18.5 million BTC are already in circulation. However, the increasing mining difficulty ensures that new bitcoins are introduced at a fixed rate. Moreover, the number of BTC that enters a blockchain block together with the miners’ reward get slashed in half every four years in an event known as the halvening. Although we won’t run out of new BTC overnight, scarcity builds up buying pressure and the increased demand drives Bitcoin’s price up. It’s hardly surprising that the hype around every subsequent halvening resulted in a Bitcoin rally, no matter how small-scale or short-lived it was.

Sovereignty

A major difference between fiat and cryptocurrencies is that fiat currencies are backed by the government and central banks and possess no intrinsic value other than the one determined by these central authorities. Bitcoin, on the other hand, is backed by a complex algorithm and proofing mechanism that prevents any third-party meddling. Instead of relying on intermediaries and financial institutions, Bitcoin’s network functions in a decentralized and transparent manner. The network participants or “miners” verify the transactions by solving a cryptographic puzzle and storing them on a digital ledger called the blockchain. In times of financial crisis, Bitcoin is seen as more secure than fiat currencies. It represents a “safe haven” alternative for many investors and, as a result, increases in value against fiat.

Utility

Bitcoin’s price largely depends on its utility, i.e., the number of use cases that Bitcoin enthusiasts can find for their coins. Massive adoption will lead to higher demand but because of Bitcoin’s scarcity, the price of the asset will skyrocket. Gradually, Bitcoin is turning into a global currency as more and more people become interested in contactless and, above all, decentralized money transfers. Free from any ties to financial intermediaries, Bitcoin transactions are faster, cheaper, and more secure. Prompted by the Covid-19 pandemic, more and more merchants and retailers around the world have started supporting Bitcoin payments and research shows that the number of their customers has increased significantly.

Why Is Bitcoin Going Up Now

In the last couple of months, Bitcoin investors have anticipated an even larger-scale Bitcoin rally than the one in 2017 when Bitcoin’s price went from around $5,000 in October to almost $20,000 by the end of December. Unfortunately, the spike proved to be a bubble, and Bitcoin’s price was back to $7,000 by April 2018. However, this time things are different because Bitcoin’s adoption is higher than it was three years ago. PayPal has just made it possible for its users to buy, sell, and hold Bitcoin via their PayPal accounts. The company is also planning to allow users to purchase goods and services from PayPal’s 26 million merchants with Bitcoin in the future. Apart from the growing acceptance of Bitcoin as a means of payment, we’ve seen a rise in its potential as a store of value too. Both high-net-worth individuals and tech companies have taken a liking to this digital asset. For instance, CoinTelegraph informs that the leading business intelligence company, MicroStrategy, has recently announced that it has raised $650 million worth of convertible senior notes to purchase BTC as part of the company’s strategy to convert part of its cash reserves into alternative assets. Similarly, the American payment provider Square has purchased $50 million worth of Bitcoin for company purposes. Finally, Covid-19 has accelerated the digitalization of many industries. People have had no choice but to turn to online transactions during lockdown and many have, in a way, been initiated into the digital world. This is beneficial for Bitcoin because it takes away part of the stigma and suspicion that people might have towards new financial technologies. At this point, you might be asking yourself what these recent events and price surges mean for you as a future Bitcoin investor. Is this upward trend going to continue, or are we in for another bursting bubble? The truth is, no one knows for sure. The cryptocurrency market is largely built around speculations and market predictions (more so than other markets) because of its volatile nature. Conservative experts and Bitcoin nay-sayers are quick to dismiss Bitcoin’s potential by arguing that once Bitcoin’s price reaches its peak, it will tumble down within a few months. But the majority of financial experts and economists believe that this time there’s hope for a more steady growth that will continue throughout 2021. If we look at Bitcoin’s price history, we’ll see that although it’s true that it’s full of ups and downs, Bitcoin has always managed to recover and double if not triple in price. Moreover, its price fluctuations are directly linked to financial events, such as increased restrictions, new market players, economic crisis, large-scale purchases, etc. There is one thing that can’t be disputed, however, and that is that Bitcoin remains the most popular cryptocurrency,

Bottom Line

We hope our guide can help you make a well-informed decision about Bitcoin and potential Bitcoin investing. If we managed to spike your interest, we encourage you to browse through our Coin IRA website and get acquainted with our mission and services. Getting started in Bitcoin is easier than you think. Speak with a Coin IRA Crypto Specialist today about the benefits of crypto ownership. With our help, saving for your future has never been easier!

Why Cryptocurrency Is the Future?

After the launch of Bitcoin, the world’s first cryptocurrency, there were a lot of naysayers criticizing the project and dismissing its potential. However, contrary to their beliefs, Bitcoin and the cryptocurrencies that followed have gathered momentum in recent years. In the eyes of crypto enthusiasts, this was simply a natural transition. Just like people moved from gold to paper money in the past, so too in the digital era in which we live, people have shifted to cryptocurrencies or digital money. In this guide, we’ll talk about what makes crypto assets better than traditional fiat currencies. We’ll mention some of their challenges, and how they can be avoided or solved. Finally, we’ll discuss why cryptocurrency is the future, and what investors should expect.

Why Choose Cryptocurrency?

In order to understand why so many people are investing in cryptocurrencies, let’s take a look at their main features and use cases.

Decentralized Payments

The main incentive for designing the first cryptocurrency, Bitcoin, back in 2009, was to replace the central authority in charge of people’s transactions with a new model based on cryptographic proof. This model is implemented on a peer to peer (2P2) network that uses blockchain technology to store and secure the transactions. As a result, cryptocurrency transactions are faster, cheaper, and more private than bank transfers. The blockchain only incurs a small mining fee with no additional service costs. Even if you’re making an international payment, the procedure is quite straightforward, unlike wire transfers where the processing time of the recipient’s bank typically delays the payment. Moreover, when sending cryptocurrency, both the sender and recipient’s names are hidden. Instead, the blockchain shows their public key, i.e., an encrypted address that functions as a pseudonym. That’s why we say that cryptocurrency transactions aren’t anonymous but pseudonymous.

Scarcity

Scarcity refers to the total supply of a given cryptocurrency or the number of coins in circulation. Unlike the unlimited supply of fiat currencies, the supply of most crypto assets is limited. For instance, Bitcoin’s founder, Satoshi Nakamoto, hard-capped his coin at 21 million BTC. What’s even more interesting, despite the growing demand, is that the cryptocurrency mining process continues at the same rate. When the demand for the crypto assets increases, so too does their mining difficulty. This supply inelasticity is what causes price volatility, a quality that turns cryptos into a risky but profitable investment.

Utility

Cryptocurrencies are gradually turning into global virtual currencies thanks to their multifaceted utility. On the one hand, they’re lucrative investment assets that allow investors to diversify their portfolios. On the other, they’re becoming increasingly used as mediums of exchange. During the COVID-19 pandemic, contactless payments have become both a necessity and the rule, resulting in more and more merchants accepting cryptocurrencies as a payment method. For example, in partnership with the payment processor Salamantex, over 2,500 merchants in Austria support payments made with Bitcoin, Ethereum, or Dash. On top of that, leading payment companies like PayPal, Visa, and Mastercard are standing up for crypto assets as well. Cryptocurrencies are also increasingly used as utility tokens. It all started when the Ethereum platform created the first self-executable smart contracts, where tokens were used to foster a bond between the involved parties. In turn, smart contracts made it possible for developers to build decentralized applications.

What Are the Challenges of Cryptocurrency?

One of the main challenges that cryptocurrencies are facing today is the lack of regulation. Their decentralized nature makes it harder for governments to design suitable regulatory frameworks. On the one hand, this might compromise their decentralized nature but on the other, it can provide better user protection. In countries like Australia, the US, the UK, and Canada, cryptocurrencies are treated as property. As a result, crypto profits are subject to capital gains tax. Another challenge that affects crypto investors is the unstable and volatile nature of the crypto market. You should be very careful when choosing the asset you want to invest in, as you don’t want to be an easy target of experienced investors’ pump and dump schemes. These investors, known as “whales”, create a hype around a new cryptocurrency to lure novices to buy coins and drive their price up. When this happens, the whales sell their shares, but the tricked investors lose their money.

What Does the Future Hold for Cryptocurrency?

We’ve seen how cryptocurrencies are used today, now let’s see what the future has in store for these assets.

Central Bank Digital Coins

The interest in both stablecoins and central bank digital coins (CBDCs) is on the rise across the world. For example, the Bank of China is currently testing its CBDC pilot program in some major Chinese cities. The Bank of England, the Bank of Sweden, and the Bank of France are all showing interest in CBDCs as well. Experts predict that this shows their readiness to recognize the potential of cryptocurrency and blockchain technology. They see it as a step towards solving the problem with financial inclusion in many under-developed and developing countries.

Bitcoin’s All-Time High

At the start of 2020, a lot of experts predicted that Bitcoin’s price would experience a major surge after its halvening. A halvening takes place every four years and marks the date when the Bitcoin mining reward gets cut in half. The last Bitcoin halvening was in May 2020. Since then, Bitcoin’s price has more than doubled! In an interview for Forbes, Bloomberg analyst Mike McGlone predicts that Bitcoin can reach $20,000 or even more by the end of the year, hitting a new price record. This might cause a chain-reaction leading to other cryptocurrencies gaining in value.

Ethereum and the Rise of DeFi

Next to Bitcoin, Ethereum is the second most popular cryptocurrency on the market, both in terms of its value and market capitalization. When talking about utility, we mentioned that Ethereum is used to fuel smart contracts and decentralized applications. Apart from them, developers can use the Ethereum network to build new cryptos too. In order to improve the performance of the network and increase its scalability, Ethereum is planning to launch the Ethereum 2.0 blockchain. Among other improvements, this blockchain will use a different consensus mechanism called Proof of Stake that requires less computing power to mine new coins. The PoS will make the network more scalable, secure, and decentralized. Although we can only speculate on the future of cryptocurrency, we can’t neglect the fact that the majority of these predictions are highly promising. One can never be too careful when dealing with a volatile market, but we’re confident that if you do your research and choose a reliable cryptocurrency, there’s no room for doubt. We encourage you to invest in cryptocurrency and speak to a Coin IRA Crypto Specialist about the benefits of opening a Cryptocurrency IRA account. That way, you’ll be both saving for your future and protecting your assets from inflation and devaluation. It's easier than you might think!

How Many People Own Cryptocurrency

Five or six years ago, the majority of the world’s population was still unaware of the full potential and use cases of cryptocurrencies. All that started to change with the emergence of crypto exchange platforms and the increased attention they received in the media. This was our incentive to try to find out whether this publicity has led to massive adoption or have cryptocurrencies remained a too-good-to-be-true alternative to fiat currencies. In this text, we’ll give you a brief account of the history and growth of crypto assets in order to find out just how many people own cryptocurrency today. As a bonus, we’ve included our top five cryptocurrencies that our Coin IRA customers can invest in. Let’s get started!

What’s Cryptocurrency?

Cryptocurrency is a digital or virtual currency created and secured with cryptography. It’s mined on a peer-to-peer network using a cryptographic proof of work consensus mechanism that involves a complex algorithm called a hash function. The cryptocurrency transactions are recorded and stored on the blockchain, an impenetrable and irreversible digital ledger. Organized in this way, the electronic payment system isn’t regulated by any central authority and isn’t tied to any bank or government institution. This makes crypto transactions faster, cheaper, more private, and more secure.

Why Do People Use Cryptocurrency?

Let’s take a look at some of the main reasons people are attracted to cryptocurrencies:
  • Cryptocurrency transactions are faster. 
Cryptocurrencies are transferred almost instantaneously from sender to receiver because there are no intermediaries to cause delays and no institutions to give their approval. Some cryptocurrencies are so scalable that they can process up to 3,000 transactions per second.
  • Cryptocurrency transactions are cheaper. 
Financial institutions typically charge hefty fees on their services, especially when it comes to international payments. Crypto transactions, on the other hand, only incur a small network fee for the miner.
  • More privacy and security.
When you’re making a money transfer using cryptocurrency, the transaction is stored on the blockchain and anyone can see it online. However, instead of your full name, the transaction shows an encrypted address called a public key. To sign the transactions and manage your balance you use a unique private key.
  • There’s no risk of inflation.
Most of the cryptocurrencies are hard-capped to create scarcity and protect them from inflation scenarios, unlike the unlimited supply of fiat currencies.

Cryptocurrency Growth Through the Years

Bitcoin, the world’s first cryptocurrency, emerged on the market in January 2009. However, it wasn’t until 2013 that the crypto market and crypto industry started to take off. Around this time, software engineers and crypto enthusiasts started launching both altcoins (“alternatives to Bitcoin”) and cryptocurrency exchanges, i.e. digital marketplaces where you can buy, sell, trade, or transfer crypto assets. We can say that the fintech industry has been booming ever since. These digital assets were enjoying a quiet but steady growth until 2017 when Bitcoin’s price suddenly skyrocketed to its all-time high of $20,000. “The year of the cryptocurrency”, as the crypto community now refers to 2017, saw the emergence of over 700 new altcoins. Before 2017, the total crypto market capitalization (calculated by multiplying the total number of Bitcoins in circulation by the Bitcoin price) had been $18 billion. In 2018, this number climbed to over $128 billion. Today, the cryptocurrency market cap is approaching $500 billion!

How Many People Own Cryptocurrency Today?

In 2018, Dalia Research conducted a survey of 29,492 internet-connected respondents from the US, Germany, the UK, Brazil, Japan, South Korea, China, and India on cryptocurrencies. They found out that 3 out of 4 respondents have heard about cryptocurrencies, while half of them know what cryptocurrencies are. But what about the number of people who own cryptocurrencies? To arrive at the approximate number of crypto owners, we can take into account the number of cryptocurrency or blockchain wallets. According to Statista, in October 2020, there were over 55 million blockchain wallets. However, this doesn’t mean that there are 55 million blockchain wallet holders because an individual can have multiple wallet addresses. One of the most popular cryptocurrency exchanges, Coinbase, has recently published a new report in which it claims that over 35 million people in over 10 countries are using their platform. Therefore, we might conclude that the number of people owning cryptocurrency today stands between 35 and 55 million.

The Most Popular Cryptocurrencies Today

Bitcoin

According to Finder, every three seconds there’s a new post about Bitcoin on social media. Launched back in 2009, Bitcoin (BTC) remains the number one cryptocurrency both in terms of mainstream adoption, price worth, and market capitalization. People like to invest in Bitcoin for a number of reasons - to diversify their portfolio, to wait for future price surges and then sell their coins, or simply because they prefer this currency over fiat ones as it gives them more privacy.

Ethereum

The second-largest cryptocurrency on the market, Ethereum or Ether (ETH), was launched in 2015 by Vitalik Buterin. Ethereum is more than just an attractive investment or another currency to purchase goods with. It’s also a utility token that drives the fintech industry forward. Ethereum’s founder discovered the potential of blockchain technology and created the first self-executable contract called a smart contract that can be used to build decentralized applications and organizations in which Ethereum tokens are used to execute different functions.

Litecoin

Litecoin (LTC) was designed by Charlie Lee, a former Google employee, who became aware of some of the challenges that Bitcoin was facing on the road to becoming a regular medium of exchange. He realized that Bitcoin lacks scalability, so he designed a new coin that processes up to 56 transitions per second. Litecoin is best used for small everyday purchases, i.e. micro-payments, which is why a lot of people refer to this asset as the silver to Bitcoin’s gold.

Ripple

Ripple (XRP) was launched in 2012 by fintech experts who wanted to design a coin that would make international money transfers faster and cheaper. It doesn’t make much sense that in a digital era when information is shared from one corner of the world to another in less than a second, it takes days to process a cross-border payment. Therefore, it’s no wonder that many institutional investors and central banks such as Yes Bank, Union Credit, UBS, NBAD, Santander, and others support this project.

Zcash

ZCash (ZE) was created in 2016 by the developer Zooko Wilcox. What’s unique about this cryptocurrency is the extra privacy of its anonymous or “shielded” transactions that are part of the network’s “Zero-Knowledge Proof” protocol. Thanks to this protocol, the Zcash blockchain hides the public address of the sender and receiver. All of the cryptocurrencies mentioned above and more are custodian-approved for Cryptocurrency IRAs. If you’re curious about crypto investing and want to learn more, visit our website or call Coin IRA today to speak with a Cryptocurrency Specialist who can answer all of your questions and show you why it's still not too late to join the masses of investors riding the cryptocurrency wave.

Which Cryptocurrency to Invest In?

Are you having doubts about whether cryptocurrency is still a profitable investment in 2020 and whether it can stay afloat the challenges posed by the COVID-19 pandemic? It’s true that the pandemic has hit the stock market and cryptos were no exception. However, investing in cryptocurrency has helped investors diversify their portfolios, minimize their losses, and take market turbulence in their stride. Today, we’ll take a look at the most promising cryptocurrency in which to invest in 2020, their highlights and obstacles, and their target purpose and audience in order to help you make an informed investment decision. CoinIRA always has your back!

The Most Promising Cryptocurrency for 2020

Bitcoin

When people think of cryptocurrency, Bitcoin (BTC) is the first digital asset that comes to their mind. That’s because it was the world’s first cryptocurrency and continues to be the most popular and most profitable among them. In 2008, a developer known as Satoshi Nakamoto published a whitepaper in which he introduced the world to Bitcoin, its peer-to-peer payment network, and underlying blockchain technology. In early 2009, Bitcoin’s blockchain was open-sourced to the public. Bitcoin managed to maintain a steady price growth, despite occasional setbacks. Right now, it has over $195 billion in market cap, owning 40% of all crypto market cap shares. At the start of the pandemic, Bitcoin had a small downturn but went on to outperform the majority of global assets. In a recent report, the researchers over at Kraken Intelligence went so far as to predict that by 2035 Bitcoin’s price will reach $350,000 mainly due to its fixed supply and high demand! Whether or not this happens to be the case, there’s no doubt that Bitcoin remains a profitable investment for 2020.

Ethereum

Ethereum is the creation of Russian-Canadian developer Vitalik Buterin. This genius mind launched his crypto project in 2015 when he was only 21 years old. The native token of the Ethereum blockchain is actually called Ether (ETH) but most people simply use Ethereum to refer to both the coin and network. Ethereum is more affordable than Bitcoin because 1 ETH is now worth around $300. That might make it a less attractive investment if you’re looking for quick enrichment but Ethereum is more than just a form of digital money. Its blockchain was the first to introduce smart contracts to the digital world, self-executable contracts that act on predetermined conditions between the involved parties. The main reason why Ethereum will remain an attractive investment is its leading position in the fintech industry. The Ethereum network is a place for developers to experiment with and build new decentralized financial services at a low-cost.

Litecoin

Litecoin (LTC) is one of the earliest cryptocurrencies and a close relative to Bitcoin. It was designed by Charlie Lee, a former Google employee, who became attracted to Bitcoin as soon as he found out about the project. As he started learning more about how cryptocurrency works, Lee began to notice some of Bitcoin’s shortcomings. For example, Bitcoin’s blockchain needs 10 minutes to generate one block and it can only process seven transactions per second. Lee thought that Bitcoin’s popularity grows over time, so will its scalability problems. To avoid such scenarios with his crypto project, he made Litecoin more scalable. Litecoin’s blockchain generates a new block every 2.5 minutes and is able to process up to 56 transactions per second! Moreover, Litecoin was created for smaller purchases so that consumers can spend their LTC on a daily basis. For instance, in September 2020, the number of Litecoin transactions exceeded 130,000 after the launch of a decentralized fantasy game called LiteBringer where users have to make micro-payments with LTC.

Ripple

Even though Ripple (XRP) is worth barely $0.25, it’s still the third-largest cryptocurrency by market capitalization. What makes this coin so attractive? Ripple was launched in 2012 by a group of entrepreneur and fintech experts whose main vision was to transform the cross-border payment system and the speed at which we exchange money around the world. In times when it takes less than a few seconds to exchange all kinds of information regardless of your location, it seems absurd having to use outdated money services like SWIFT and wait up to one week to complete an international transfer. Thanks to Ripple, you can now make cheap, quick, and secure cross-border payments. It’s no surprise why these services have caught the attention of leading institutional investors and central banks such as Yes Bank, Union Credit, UBS, NBAD, Santander, Axis Bank, Westpac, etc.

Zcash

ZCash (ZE) beginnings go back to 2013 when a group of crypto enthusiasts proposed that Bitcoin should include a privacy extension called Zerocoin at the time. The proposal was rejected by the main developers with an explanation that it was too costly and impractical. However, the group of researchers didn’t back down and hired the developer Zooko Wilcox from the Zcash Company to design an independent currency, Zerocash/ Zcash, launched in 2016. What sets Zcash apart from other cryptocurrency is the extra privacy made possible with anonymous “shielded” transactions implemented via the “Zero-Knowledge Proof” protocol that hides both the identity of the sender and the receiver on the blockchain. With this protocol, Zcash doesn’t need to show the encrypted addresses (public keys) to verify transactions.

Why Invest in Cryptocurrency?

Cryptocurrency changed our monetary system forever because it showed us that we can have a speedier, more transparent, and more reliable way of making money transactions. Most cryptocurrencies have high liquidity and it’s really easy to purchase them, unlike some investments with notoriously high thresholds. You simply need to find a trustworthy online platform and register an account. Bitcoin and other crypto-assets allow investors to turn their money into currencies that defy manipulation not only from central banks but global financial institutions as well. It’s no wonder that the number of people storing their crypto holdings in crypto interest or retirement accounts is on the rise. There are also investors who decide to invest in cryptocurrency because they’ve seen the importance of portfolio diversification. It’s a far better idea to invest in a couple of asset classes to minimize the risk of loss. You can argue that cryptocurrencies are risky assets but that can be said of any investment. If you do thorough research of the market and pay attention to its movements and trends, there’s nothing to be afraid of.

Final Thoughts

The information in this article aims to incite crypto investing novices and inform experienced traders of the current and future cryptocurrency trends. If you want to learn more about cryptocurrency IRA offers and how to invest your crypto into your retirement savings, contact Coin IRA today. All the cryptocurrencies mentioned above can be found on our platform. Our experienced support team will answer all your questions and help you decide on the strategy that works for you.

How Does Cryptocurrency Work?

For years now, banks and governments have been holding the reins of our monetary system. We rely on them to issue the fiat currency we use and determine its value. Banks collect our personal information, approve or reject our requests, oversee and keep track of money transactions, enable cross-border payments, etc. These services cost extra but apart from cash, people lose time, privacy, and control over their own money. Enters Bitcoin, the world’s first cryptocurrency. Suddenly, all of the above can be executed in a decentralized manner by a complex algorithm. A new form of cash whose value can jump up exponentially. It’s expected of you to have questions. In fact, we all have questions. Today, our team will help you grasp the main concepts behind these assets, how they work, what are the most popular cryptos, and how to use them.

What’s Cryptocurrency?

The “crypto” in cryptocurrency stands for cryptography, the process of converting ordinary data into unintelligible code for secure communication. In our modern digital era, cryptography is based on a combination of mathematical theory and computer science. In 2009, a developer under the pseudonym of Satoshi Nakamoto made a breakthrough in cryptographic technology, designing an impenetrable digital ledger now-called the blockchain Blockchain is the underlying technology behind almost all digital assets and the reason why they can exist outside of the centralized monetary system and its institutional trust-based model. Cryptocurrencies are part of peer-to-peer (P2P) networks where money transactions are faster, cheaper, and more private. Cryptocurrencies enjoy the status of currency because although virtual they’re still fungible, divisible, and countable, and they’re becoming increasingly valued as mediums of exchange and stores of value.

Blockchain Technology and Verifying Transactions

To understand how cryptocurrency works, we have to start with blockchain technology. The main purpose of this digital ledger is to ensure a cost-effective exchange of information and securely store that information after (in this case that information would be money transactions). This is only possible if the whole P2P network works together to verify and add the transactions to the ledger which is basically what ”mining” cryptocurrency is all about. For the purpose of illustrating the mining process, we’ll focus on Bitcoin’s blockchain. Bitcoin’s P2P network consists of volunteers/miners operating on their computers or mining hardware known as nodes. To mine new bitcoins, the nodes run the incoming transactions through a hash function - in Bitcoin’s case, that’s the SHA-256 function - multiple times until they arrive at a solution, i.e. the right hash value. This is a complex algorithmic process that takes time and consumes a lot of computational power.  When one of the miners solves the problem, he/she broadcasts it to the whole network and waits for its approval from the majority of the network. Only then, the transaction is verified and can be added to the next chained block of data (hence: blockchain).  To eliminate the risk of double-spending and prevent outsiders from making changes to the blockchain or erasing data, every new block contains the hash value of the previous block. Therefore, if someone wants to meddle with the stored data, they would have to go all the way back and change every block. This is considered practically impossible because they would have to generate enormous computational power to outperform over 50% of the P2P network.  This process of mining new coins and verifying transactions is known as the Proof of Work consensus mechanism. Since Bitcoin’s emergence, the technology has continued to work on more sustainable solutions which is why PoW is no longer the only mechanism although it remains the most common one among cryptocurrencies.

What Are the Most Popular Cryptocurrencies?

Bitcoin

Bitcoin (BTC) is the first and most popular cryptocurrency in the world. It was launched in 2009, by Satoshi Nakamoto, who explained the mechanisms and technology behind the first fully-fledged electronic payment system built on cryptographic proof in his 2008 whitepaper Bitcoin: A Peer-to-Peer Electronic Cash System>. At the moment 1 BTC is worth over $10,000 with a total market capitalization of more than $195 billion! It’s a great long-term investment that has continually brought high returns to investors. Moreover, an increasing number of merchants, online platforms, and leading companies are starting to accept Bitcoin payments for their goods and services.

Ethereum

Ether or better known as Ethereum (ETH) is the second-largest cryptocurrency by market capitalization with over $38 billion towards the end of 2020. Ethereum was launched in 2015 by Russian-Canadian developer Vitalik Buterin. Buterin envisioned a cryptocurrency that would be more than just a store of value. He predicted the smart economy of the future where businesses make self-executable contracts and developers build decentralized applications. This is exactly what the Ethereum blockchain is all about. Since 2017, third-parties can launch their digital tokens known as ERC-20 tokens on Ethereum’s blockchain.

Litecoin

Litecoin (LTC), or the silver to Bitcoin’s gold, was created by a Bitcoin aficionado when the crypto market was still in its infancy. After studying Bitcoin’s blockchain and mechanism, Charlie Lee, a former Google employee, launched his own crypto project in 2011. Litecoin was supposed to be used side by side with Bitcoin but instead of long-term investments and large purchases, Litecoin would be more suitable for small everyday purchases. In order to achieve that, Charlie focused on making Litecoin’s blockchain more scalable.

Ripple

Ripple (XRP) is a joint crypto project between OpenCoin developer Ryan Fugger, software engineer Jed McCaleb, and angel investor Chris Larsen. Initial misunderstandings led to McCaleb’s departure as he went on to work on other projects (Stellar Lumens). Nevertheless, Ripple’s ecosystem continued to grow and the coin is now fourth by market cap. The main use case of Ripple is making international payments that are faster and cheaper and that would benefit both retail investors and central banks.

What Are the Use Cases of Cryptocurrency?

Few years ago, it seemed less likely that cryptocurrency was the future of our finances but things have changed since. There’s a raised level of awareness and crypto usage among the mainstream population mostly because there are more and more online crypto platforms, media coverage, shops and restaurants that accept crypto as payment, etc. There are even crypto debit cards. If this popularity continues, assets with a fixed supply such as Bitcoin will become scarce and their price would go up significantly to the benefit of Bitcoin investors. Moreover, a lot of investors simply choose crypto to diversify their portfolio. Finally, there are those who see crypto as more secure so they exchange their fiat currencies for crypto ones and store them in a digital wallet or open a retirement savings account with us, Coin IRA.

Final Thoughts

We hope you found our guide on how cryptocurrencies work as detailed and informative as we intended for it to be. If you’re curious to learn more about cryptocurrency IRAs and how to invest your crypto in retirement savings, don’t hesitate to contact Coin IRA today. As one of the pioneers in the cryptocurrency IRA industry, our representatives have plenty of experience helping investors just like you make cryptocurrencies an important part of their investment portfolios. Don’t wait for cryptocurrencies to double in price again before you make your move. Try your hand at cryptocurrency and contact our Coin IRA team today.
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