What is Cryptocurrency and where can I buy it in Canada?
2017 has seen a massive rally in demand for cryptocurrencies. Bitcoin, the world’s first cryptocurrency breached the 10k USD mark recently. Other cryptocurrencies like Ethereum have multiplied their value 36 times in a short span. People’s interest in owning cryptocurrencies is higher than ever before. In such a bullish phase, is it wise to invest? Which cryptocurrencies are the best to buy now? Read on to find out.
What is cryptocurrency?
A cryptocurrency is a form of digital money that is created and protected by cryptography. While the conventional currencies like Canadian dollars or US dollars are issued by their respective governments, Cryptocurrencies are produced by a process called competitive mining. A Miner uses computers to solve complex mathematical problems and is rewarded by new crypto coins.
Traditional money is secured from counterfeiting by using security threads, holograms and other measures. Cryptocurrencies like Bitcoins and Ethereumare protected by the mathematics of large numbers and cryptography.
Cryptocurrencies gained their popularity primarily due to the development of a new technology called Blockchain. A Blockchain can be imagined as a big public ledger which contains details of every transaction ever created using that particular currency.
For example, a BitcoinBlockchain will contain details of each and every Bitcoin movement. If a 0.0005 BTC moves from X wallet to Y Wallet, that transaction is recorded. These transactions are recorded and locked into irreversible blocks that make up the Blockchain.
How many cryptocurrencies are there?
Every day a new cryptocurrency is coming out with a new offering. Whether they have any value and if they will sustain is a big question. Like the dotcom boom and bust of 2000, at least a few cryptocurrencies will probably fail and lose value.
The value of a cryptocurrency is based on its acceptability. If more people accept it as a form of payment, more popular it gets. By this measure, there are a few cryptocurrencies that have gained the market traction and may sustain for a long time.
Different types of Cryptocurrency available in the market
Bitcoin: Bitcoin is the first and the most prominent cryptocurrencyup to now. It started in 2009 as a ‘proof of work’ for the cryptocurrency concept. The current market capitalisation of Bitcoin is 0.197 Trillion dollars. There are roughly16.72million coils in circulation, and the current exchange price for Bitcoin is $15,616.
Ethereum: Ethereum (ETH) is another cryptocurrency that is gaining ground every day. Apart from being a cryptocurrency, it is also an open software platform. It can be used to create decentralised applications and deploy them to solve real-world problems. Ethereum also runs on the same Blockchain technology as Bitcoin, but it has more applications such as smart contracts. There are approximately 96 million coins in circulation with acurrent market value of 43.2 Billion USD. Ether’s current price is $463.
Litecoin: Litecoinwas launched in 2011 under an MIT/X11license. The most significant advantage of this currency is that transaction confirmations are fast, and storage is more efficient than other Altcoins. Litecoin’s primary purpose is to be a peer-to-peer payment system. Litecoin (LTC) is now priced at $99.52 and had a market value of 2 Billion USD
Ripple: Working on the same crypto technology, Ripple (XRP)does not need any mining and has minimal computing power usage. Ripple can be used in tandem with banking systems for cross-border payments. Its design and implementation were done with banking systems in mind. Speed and precision are two of its greatest advantages over other cryptocurrencies. Ripple is priced at $0.231 and has a market cap of 9 Billion USD.
Dash: Dashwas known asDarkcoin and XCoin in the past. Apart from the typical advantages of cryptocurrencies, Dash is scalable, offers instant and private transactions. It operates on a self-governing and self-funding model.Individuals and businesses who perform activities that adds value to the Dash network are rewarded with coins. Dash has a current market cap of 5 Billion USD with a single coin priced at $728.
Where to buy cryptocurrencies?
There are three popular ways to get Cryptocurrencies. Depending on the value of the currency to be purchased some methods are better than others.
Sell Goods: The easiest way to get Bitcoins or Ether or Dash is to sell a product and offer the coins as a payment method. Setting up Bitcoin or Dash as a payment method is relatively straight forward. First, the seller needs to setup a wallet address to collect the coins. The buyers will scan the seller’s wallet address and send him the coins. Each coin has a specific confirmation process, after the confirmation, the coins will be available in the wallet.
Crypto Exchanges:Another way to get Bitcoins or the Altcoins (litecoin, ethereum, dash, ripple are all calledAltcoins) is to buy them from an Exchange. An Exchangeis typicallya trading platform which sets the price for conversion.For example,Coinsquare is a CanadianExchange that provides direct conversion from Canadian dollars to Bitcoin, Litecoin and Ethereum.
Bitcoins can also be purchased from Bitcoin ATMs operated by various Exchanges.CoinATMRadar is an excellent place to find the nearest Bitcoin ATM. Such ATMs are suitable for small value transactions as their markups are higher than other methods of buying coins.
There are hundreds of types of Altcoinsavailable in the market, but Bitcoin is the one which is accepted in most places for trade and services. It is important to research which one to buy and for what purpose it is being purchased. If a coin does not get sufficient acceptability, their value may go down to zero. So it is essential to investigate and choose the currency that works best for the buyer.