Comedian and talk show host Bill Maher recently criticized cryptocurrency and the cryptocurrency hype on a recent episode of his show. His scathing comment has gutted people who love cryptocurrencies but don’t know what they are, how to create them, or how to make money from them.
And that’s the problem with the recent cryptocurrency boom – too many people are in it for the hype, not the investment potential. The problem is that if you didn’t invest in Bitcoin, the original cryptocurrency, a long time ago, you will have to pay a lot. The good news is that if you are prone to hype investing, you can probably start investing in altcoins, especially after the GameStop retail investment scandal. Are Altcoins the New Game Stop Investment? All signs point to yes – although that doesn’t necessarily have to be a good thing.
The best way to explain altcoin investing and why it might not be a great thing is to start by explaining cryptocurrency investments in general and the Game Stop investment scandal.
Don’t worry, I’ll use simple, easy-to-understand terms and keep myself brief. It is financial misconduct and financially irresponsible to invest in things the hype makes you fail to understand.
The best way to explain altcoins that are identical to cryptocurrencies is to explain Bitcoin, the first cryptocurrency.
After the global financial crisis of 2008, economic theorists and computer programmers began developing decentralized digital currencies that could be controlled and created by ordinary people.
Bitcoin was introduced in January 2009. It was initially given away for free or for a few dollars each. If you had invested in cryptocurrencies back then, you would have made a fortune selling it now. One bitcoin has a trade value of $ 55,000.
In December 2017, the start of the cryptocurrency craze, a bitcoin was worth around $ 20,000.
A cryptocurrency is a digital currency that is created in a digital ledger called a blockchain. The easiest way (in relative terms) to create a cryptocurrency is to use computers with advanced processing power called “mining rigs”.
Mining rigs solve advanced math problems on a blockchain. If this is successful, bitcoins will be rewarded and the transaction will be logged in the blockchain.
Cryptocurrencies are not regulated or controlled by any government or central bank – that is why they are called “decentralized”.
Most cryptocurrencies have a limited number of coins in order to stabilize their value.
Although Bitcoin was designed as a decentralized currency, its slow processing times make it impractical for use as money. Bitcoin is extremely volatile in the financial markets. And more people are using Bitcoin wisely and otherwise as an investment vehicle than currency.
If you ask someone to name a cryptocurrency, they can likely only name Bitcoin, although there are thousands of cryptocurrencies. (Almost 10,000 at last count)
And that brings us to altcoins.
The prhase “altcoins” is just a cultural phrase that applies to every other cryptocurrency except Bitcoin. The term stands for “alternative coin”. And “coin” is an abbreviation for cryptocurrency.
Ethereum is a new alt-coin that was created in 2015. It uses smart contracts or digital versions of legal contracts on the blockchain to help enforce transactions online. You can also use Ethereum to create your own coin for donation purposes.
Since almost all cryptocurrencies derive their value from market actions, supply and demand, and investments, Tether was designed to peg each coin to the equivalent of $ 1. However, recently it was discovered that tether coins are tied to the equivalent of IOUs offered by lending companies.
XRP is an alt-coin that is ideal for paying utility bills, peer-to-peer payments, and various transactions. XRP wants to revolutionize how money is sent across borders.
Dogecoin was first conceived as a joke cryptocurrency that shouldn’t be taken seriously. Elon Musk praised the coin and its value rose over 14,000% that year, although it wasn’t created until 2013.
Dogecoin and various other altcoins have been labeled as a new “GameStop” investment opportunity. The GameStop scandal a few months ago was caused by online users on Reddit and Facebook who encouraged each other to buy stocks at the grassroots level in order to improve the system and create losses for seasoned, wealthy investors who are used to assert oneself.
This process is known as “mania investing”, “meme investing” and “retail investing”.
Are Alt Coins the new investment in Game Stop?
Are Altcoins the new GameStop investment method? Yes.
Unfortunately this is not a good thing. GameStop’s stock fell after retail investment calmed down. That’s because people have invested based on some hype, meme they saw online, or “leave it to the man”, rather than projecting a ROI based on a realistic investment plan.
Some salt coins, like Dogecoin, don’t have a cap on how coins can be created. While their value can soar now, it must plummet. Many people have lost their net worth investing in Bitcoin without understanding what it is.
Cryptocurrencies are not regulated. They are not a stable means of storing financial value. Cryptocurrencies are not minted or controlled by governments.
And cryptocurrencies are created via algorithms and mining rigs – they are inherently of no value without avid cryptocurrency believers or willing investors.
Do not invest in altcoins unless you understand how they work and seek advice from a financial advisor and cryptocurrency expert.
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