It’s not clear that the market for new currencies is large enough to support a large number of players. The “crypto currency guides” industry is hardly large enough to support even one site, much less a dozen or more. So the founders must have some self-interest in seeing their site succeed–which means they are susceptible to a kind of rent-seeking.
There’s no reason why a person who has learned how to trade in obscure markets shouldn’t be able to trade in cryptocurrencies as well. And if they are really good at it, they may make more money than they would on ordinary currency trading. But there will always be someone else who knows how to do it better and will charge more for doing so.
Only two workers are needed for the task: one who trades the cryptocurrency and another who thinks about it. The former can charge whatever he wants, but at some point he will run out of potential customers, because for every new person who wants to buy crypto currency, there is someone else who already owns it and doesn’t want to sell.
The difference between a good guide and a bad one depends on what you want to do. If you want to buy some cryptocurrency for the first time, then a good guide will tell you how to do it with minimum risk. If you want to sell some cryptocurrency then a good guide will tell you how to maximize your profit.
For both of these it is important to understand how the market works. The market consists of all the people who are buying or selling cryptocurrency at any given time. These two things are not the same thing, but most guides treat them as if they were: “buy low, sell high.”
The problem with this is that the market is full of noise—conflicting messages come from different sources, so there’s no guarantee that you’re getting good advice or even advice at all.
Crypto currency is an area where you can find a lot of smart people who are willing to share their knowledge. That’s one reason we decided to start this blog.
The other reason is that there are so many very smart people in the crypto world, and they are all talking to each other. There’s no central body that decides what gets published on this blog, but it is clear that things that get published on this blog tend to be talked about more widely inside the crypto community than things that don’t. As such, this blog has become a kind of clearinghouse for news and information from within crypto.
The crypto community has developed its own jargon, which can be difficult for outsiders to understand. We have tried to document as much of it as possible, so it will be easier for you to follow along with the blogs. We will not describe the cryptographic algorithms themselves (though those who know them well will recognize many of them).
Cryptocurrency is a way of moving wealth. It is money in a way that you can’t do with other kinds of money. If you want to make money by counterfeiting, or by scamming people, or by moving drugs, then you need a way to move wealth without being noticed.
In the past decade or so, several ways have emerged for doing this. One is via the Internet: You can use Bitcoin to send an email telling someone to send you money. The same thing goes for any kind of goods or services that are not physically attached to somebody in a particular place.
Another is via “crypto currency”: like Bitcoin, but much easier to use than Bitcoin itself. Like Bitcoin, every crypto currency operates on its own set of rules – in this case designed to keep the people who use it honest.
Finally there are currencies that are similar to crypto currencies but that are not quite like anything anyone has ever seen before: “tokens,” for example, which represent ownership rights on some kind of physical product or digital service. Tokens may eventually become a common way of moving wealth without being noticed by people who don’t understand them; but at present they have limited value and no established reputation.
Crypto currencies and tokens may seem like
By far the most common strategy for making money in crypto is to buy a bunch of coins, hold them for a while, and then sell them.
This is the strategy I recommend. The reason it works so well is that there are no other strategies. Every other strategy I can think of involves putting your money at risk, and if you’re not willing to put your money at risk, you shouldn’t be investing in crypto at all.
The alternative strategies are…
1. Buy a bunch of coins, hold them for a long time, and then sell one day before they go up in value. This sounds like a great idea but is so risky that it’s outside my comfort zone. It’s fine when you’re buying or selling very small amounts of coins; you can afford to lose the money in case it goes down in value over time. But what if you have a large amount? If it goes down by ten percent or twenty percent overnight, suddenly it’s gone and you’ve lost everything.
2. Buy some very cheap coins (say below $1 each) and hold them for a long time before selling them for 100 times their original price. This sounds like a good idea too but unfortunately the market price tends to be more stable than that…
What is crypto currency? It is a very simple idea: money is digital, but the best way to keep it safe is in a physical form. A coin or a note printed on paper, like all money, has value because people agree that it has value. But if you want to keep your money safe from thieves, you need to keep it from being stolen in the first place. If your computer gets hacked and someone steals all your money, you don’t need cash to spend. You just need to get more money. Which is easy: just buy more stuff with it.
If everyone thought of their currency as a payment system first and as a store of value second, it would be very hard for anyone to steal much of anything.
As I write this, Bitcoin is worth $668.40. That’s a lot of money, but it’s not a lot for Mark Karpeles; he holds about $60 million in bitcoins. His biggest competitor, the CTO of Mt. Gox, is bitcoin millionaire Willy Woo.
Mt. Gox is the world’s largest and most popular exchange for buying and selling bitcoins, mostly for speculation on the price of bitcoin itself. In April of last year it handled 80% of all bitcoin transactions worldwide; by May it was handling only 10%. The price of bitcoins fell from $266 to $50 in that month. And then Mt. Gox shut down and declared bankruptcy, admitting to 850,000 lost bitcoins-worth around $450 million at today’s prices-without explaining what had happened to them.
By itself this wouldn’t have been enough to bankrupt Mt. Gox: Bitcoin isn’t an electronic currency backed by any central bank or government; there were plenty of other exchanges that didn’t go bust after similarly large falls in bitcoin prices (and some even went up). But that was only one side of Mt. Gox’s story. Later it came out that the company had been systematically defrauding its customers for years and