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10 Tips For Diversifying Your Cryptocurrency Portfolio

If you already own some Bitcoins and are seeking out a way to secure your investment, one of the best things you can do is diversify your cryptocurrency portfolio. Even if you are a firm believer in the bright future of Bitcoin, you can’t ignore a possible bad scenario – the bubble can burst at any time, and the price of Bitcoin can go down as abruptly as it went up last year. That’s why many financial advisers and experts recommend investing in alternative cryptocurrencies as well – be that Ethereum, Litecoin, Dash, or other altcoins.

But what is the best way to start diversifying your cryptocurrency portfolio if you don’t know anything about altcoins? Here are some tips:

1. For starters, do some in-depth research on the biggest altcoins out there. We’re sure you already know what they are: Ethereum, Litecoin, Dash, Zcash, Ripple, Monero, Start by finding out why the currency was created in the first place – as each cryptocurrency appeared as an alternative or a solution to an already existing problem. For instance, Dash was created with the intent of being the ultimate digital form of cash, which is easy to send and receive grace to its ‘Instant Send’ feature. Ethereum brings the novelty of ‘smart contracts’ to the table, while Zcash and Monero offer additional layers of privacy to its users.

2. Understand why the principle behind each altcoin is useful for the community. Then try to imagine which of these principles looks the most promising – and although this is mere speculation, it should at least stir you into the right direction as to what altcoins to invest in. There is no right or wrong currency to invest in, and anyone claiming to know that is no more of a speculator than you.

3. Get multiple crypto wallets. Although there are websites out there that offer multiple account wallets, it’s never a good idea to keep all your assets in one place, regardless of how safe it is. When dealing with multiple currencies, it’s probably best to get different kinds of wallets as well. For instance, you could finally put the money down for a hardware wallet, such as a Ledger or a Trezor, and keep your Bitcoin in there, and you could get a couple free software wallets for trying out different altcoins.

4. Try P2P exchanges for good deals. The great thing about P2P exchanges is that you can connect with various traders around the world, and usually get to buy the coins at a lower price than the market one. That’s a huge advantage if you’re starting to test the waters with various altcoins. Needless to say, be extra careful when choosing a P2P exchange site, as they’re the perfect spawning ground for scammers. We recommend LocalBitcoins, but you can also find other trusty websites out there.

5. Try altcoin mining to get some real passive income going. Now is a great time to get into altcoin mining, especially if we’re talking Dash or ZCash, that can still be mined using regular CPUs and GPUs. There’s a high chance that you can do that on the computer you’re reading this article on, so why not give it a try? However, if you’re not interested in that, you could still try cloud mining with a company like Hashflare, that offers both Dash and ZCash.

6. Start small. Diversifying your portfolio does not imply going out there and investing $10 in each novelty coin that looks good. Start by adding one, or at most two altcoins to your portfolio. Many people prefer to stick to the Bitcoin-Ether combo, or the Bitcoin-Ether-Litecoin one. These being the three currencies with the biggest growth potential in the year to come, it shouldn’t be a bad idea to start with them.

7. That being said, know your budget. If you want to make some decent profit, it’s always a good idea to invest more. So, if you’ve set your mind on a $100 budget for diversifying your cryptocurrency portfolio, better invest all of it in one well-researched coin than $30 in three different ones. If you bought 1 Ether in May 2017 for $100, you’d have around $750 as of the end of the same year, while if you invested $30, you would have $250. Identical growth rate, but pretty different profits, right?

8. Set up a plan. How much are you planning to invest in each currency you want to own? It’s best to keep a rating system and reserve the highest rate for the most stable currencies. Again, most people would recommend you keep at least 50% of your investment in Bitcoin and Ethereum, which seem to be the most reliable coins, and use your research to back up the rest of your investments.

9. Don’t bet too much money on ICOs. For those of you who don’t know, ICOs, or Initial Coin Offerings, are nothing else than new cryptocurrency fundraising projects. With over 500 altcoins on the crypto market right now, you can imagine how many of these ICOs keep appearing every day. And while some of them seem like real deals and may pay off, we don’t recommend them as a safe diversifying strategy. ICOs should be treated as nothing more than gambling, and you should never invest more than 10-20% of your diversifying capital in them.

10. Keep in touch with the news. The cryptocurrency niche has no tolerance for the uninformed. If you snooze, you lose – that’s why it’s important to keep in touch with the growth rates and the trends for the cryptocurrencies you’re planning to add to your portfolio.

There you have it – a list of 10 tips to help you diversify your cryptocurrency portfolio. It’s one of the best things you can do for securing your investment, as you will have not one, but several backup plans in case your main hedge lets you down. Keep in touch with Cloudminers for more cryptocurrency insights and guides.

What is Cryptocurrency? Everything You Need to Know

If you’ve stumbled upon this article, you’re probably one of the many people out there who has just awakened an interest for cryptocurrencies. The truth is that there are (way too) many sources out there that describe these dream-worthy scenarios of getting filthy rich overnight, with little to no financial knowledge, with the help of Bitcoin or other cryptocurrencies. However, in the financial world, if something sound too good to be true, it probably is – otherwise, everyone would be filthy rich and money would have no value! That’s why it’s crucial that you do a lot of research before investing in cryptocurrencies. Even if you don’t have a financial background, you can find lots of accessible information online.

It’s also important to start with the absolute basics, which is what we’re discussing in this article. Cryptocurrency 101 – what is a cryptocurrency, how does it work, what backs it up, and what can you do with it?

To put it in the simplest terms possible, cryptocurrency is nothing else than digital money. You’d think you can’t hold a Bitcoin in your hand as you would a one-dollar bill, and it’s a just a number somewhere on an online wallet. It’s better to think of cryptocurrencies as your bank account balance – yes, those are real, fiat money, but when you don’t have the cash on hand, they’re but numbers on your bank statement. The only way you can confirm the actual existence of that money is by purchasing something – be it goods or cash from an ATM. If the transaction goes through, the amount will be subtracted from your bank account, and the number on your statement will decrease. Cryptocurrencies work the same way – you can use them to purchase goods, exchange them for fiat money, or trade them.

So what is the difference between cryptocurrencies and ‘real’ money? Firstly, cryptocurrency is both a currency and a form of technology. A decentralized payment system, to be exact. In other words, cryptocurrencies do not depend on the economic fluctuation of a certain country and are not bound to a central server that processes and approves every transaction.

Let’s go back to your bank account for a second; when you make a purchase, it only goes through when 1) you have enough money on your account, and 2) your bank approves it. Cryptocurrencies remove the third party from the equation – there’s no bank or other authority that approves transactions. Instead, it has to be approved by each and every other person that uses that cryptocurrency in order to be considered valid. After that happens, the transaction will be included in an extensive list that covers each and every transaction made using that specific cryptocurrency ever.

But how can random people approve other random people’s transactions? This differs a bit from one cryptocurrency to the next, but the main principle that ties them all together is something called the blockchain technology. The blockchain is the official term you use to refer to that ‘list’ of transactions we mentioned above – which is literally a ‘chain’ of ‘blocks’ of information. Each block of information represents a transaction that has to be approved. Every such transaction is encrypted (hence the ‘crypto’ in cryptocurrency’) using a complex mathematical algorithm, which has to be decrypted in order to add the information to the blockchain. The code can only be decrypted using powerful computers, but as we’re talking about a decentralized payment system, the only computers that can do that belong to other people that use the cryptocurrency. Once one of the millions of computers in the world decrypts the code, the block can be added to the blockchain, which will be updated for you and everyone in real time.

If all that technical stuff was a bit too much for a beginner, let’s move on to something simpler – how can you get your hands on Bitcoins or other cryptocurrencies? The easiest way is to purchase them – there are lots of services online that will let you create an account and buy cryptocurrency with real money. The other, more complicated way, is to become a miner, which is what you call a person who contributes to solving the encrypted algorithms and finding the blocks. Anyone can become a miner – you can either invest in hardware and build your own rig, or you can pay a little fee and rent it from a company if you’re not that much of a computer geek. Miners are then rewarded with Bitcoins, or whatever other cryptocurrencies, for finding the block.

All good, say you have your hands on some cryptocurrency right now. What can you do with it? There’s a couple of possibilities. For once, you could use them to trade goods or services. The anonymous nature of Bitcoin transactions has made it the staple currency on the online black market, but nowadays, more and more businesses start to accept it. You can either send a payment directly from your wallet to another person’s wallet, or you can get a cryptocurrency credit or debit card. Those act like regular VISA or Mastercard, and you can use them anywhere that takes those payment methods. More and more gambling websites accept cryptocurrencies nowadays, so that’s another thing you can do with them. You can also exchange cryptocurrency into fiat money, using one of the many online exchanging services available. Lastly, you can store and trade them, but that can be very risky for beginners, so it’s best to learn and follow the trends for a while before doing that.

Lastly, cryptocurrency is more than just Bitcoin. Although Bitcoin is by far the most famous and most used cryptocurrency, there are much more that might be easier to work with for beginners. At a bit over $17,000 as of December 2017, Bitcoin certainly seems like that promised way to get rich overnight. However, if you’re a beginner, it’s probably best to start off with something else – consider Litecoin (Bitcoin’s younger sibling), Ethereum, or Dash.

Stick around for more insights on cryptocurrencies, trading tips, and trend reviews here on CryptoComparison.

10 Tips For Beginner Cryptocurrency Investors

So you’re thinking of finally investing in cryptocurrencies and put your money to work for you – but you don’t really know where to start. If that’s the case, congratulations, you’ve just stumbled upon the perfect article for you. Today, we have 10 tips for beginner cryptocurrency investors, put into actual simple English, and without anything that would require financial knowledge.

1. Never invest more than you can afford to lose

You’d better print this one out, frame it, and hang it on your wall if you want to become an investor. Much like gambling, cryptocurrency gains are very much the luck of the draw – the chance of getting absurdly rich overnight is almost null. It’s important to understand that, and it’s also crucial to be ready to lose everything you invested, so don’t put in a single cent more than what you know you can afford to lose.

2. Research, research, research

Cryptocurrency is still very much an underdog in the investment world. It has attracted a great deal of attention in 2017 due to Bitcoin prices rising so much, but it still is not as popular as, say, stocks. However, there’a ton of information about cryptocurrencies available online – from beginner guides too in-depth analyses of the market. With cryptocurrencies, the more you know, the greater your chance to gain something, or minimize losses.

3. Start small

This goes hand in hand with #1. Always start small, especially if it’s your first time investing in anything at all. Begin by investing a portion of your designed investing capital, and see how things work out. Cryptocurrencies are highly affected by market volatility, among other things, so don’t be discouraged if the price drops the next day after you’ve purchased coins – it’s perfectly normal.

4. Don’t keep all your eggs in one basket

Market volatility will never affect all cryptocurrencies equally. It might favor Bitcoin one day, and bring the price of Ethereum down quite a bit. And then you might wake up one day realizing that price of altcoins like Ripple has suddenly increased by tenfold. All that to say, it’s better to invest in several different cryptocurrencies than put all your money into one.

5. Store your coins in a wallet

Never store your coins on an exchange, as those are the easiest and most common target for hackers. Online and mobile wallets are also prone to attacks, but still much safer than exchanges. You can also invest in a hardware wallet like Trezor for higher security, or even get a paper wallet – which basically means all your data is printed directly on paper. Again, might be worth storing your crypto in more than one wallet for increased security.

6. Consider mining

There’s two way you can gain profits with cryptocurrency – either buy coins or become a miner. In terms of cryptocurrency, mining means contributing to the blockchain network, aka offering your computer’s power to help decrypt the information that makes up the block that is then added to the blockchain. In short, you can also try to invest in powerful hardware that would bring you coins as rewards.

7. Consider cloud mining

If you’re not a hardware geek, but you still think that mining is the way to go for that specific currency you want to invest in, try cloud mining. There are lots of companies that will let you rent a certain amount of computing power on their rig, and mine the coins without moving a finger. Of course, you have to pay them a small fee, but it spares you a lot of time, money, and effort. However, always do as much research as you can about the cloud mining company you’re looking to join – lots of them are just there to scam people who think they’re in for easy money.

8. Add up the fees

With cryptocurrencies, most investors start off by making small profits (in the best case scenario). However, even if it seems like you’ve gained quite a bit just by looking at the price of the coin, all the fees you’ll be paying might bring it down to zero. Transaction fees, exchange fees, payment method fees (especially if you’re buying coins using your bank account or credit card), wallet storage price, maintenance fees, and others can add up pretty quickly.

9. Keep an eye on the news

But just one eye, as the media is not as much of a cryptocurrency pro as they want you to believe they are. There are a number of cryptocurrency platforms, blogs, and YouTube channels out there that can give you great insights on all sorts of matters, but beware of big newspapers and magazines trying to get some clicks by putting the word ‘Bitcoin’ in their headlines.

10. Take everything with a grain of salt

When stepping into the investment world, always take everything with a grain of salt – the information you find online, the ‘trend predictions,’ the sincerity of the companies and people you’re dealing with, and the value of your money. As cryptocurrencies are such a booming, yet unexplored niche, there are a lot of scammers trying to break themselves a piece of the capital. Proceed with the uttermost care, and never, we repeat, never invest anything you can’t afford to lose, even if that ‘expert review’ you came across said Bitcoin prices would rise to 100k in the next year.

We hope this article helped you put your thoughts in order before starting to invest in cryptocurrencies. The bottom line is to perceive it as nothing more than a gamble, especially when you’re just starting out, and do as much research as humanly possible.

Bitcoin vs. Altcoins: What to buy in 2018

More and more people are becoming interested in cryptocurrencies as of lately. Be that pure curiosity or financial interest, it’s important to always be in touch with whatever’s going on in the cryptocurrency world. And most important of all, it’s crucial to be aware of the history and trends of the currency you plan on investing in – as that is the only ledge to knowing whether it can be profitable or not.

As 2017 is rounding up, more and more people will include ‘investing in cryptocurrencies’ in their New Years resolutions. If you’re one of them, you’ve stumbled upon the right article, as we’ll be reviewing the trends for the main cryptocurrencies in 2018. Should you finally buy Bitcoins in 2018, or are altcoins more worth it? Let’s take a look.

1. Bitcoin

Bitcoin is at an all-time high right now – over $17,000 as of December 2017. However, the predictions for its fate in 2018 are really controversial – some say it might hit $30k to $40k by the end of next year, and others claim that the bubble can burst at any time due to hyperinflation. The most reasonable thing we’ve come across is Perry Woodin’s opinion: he thinks Bitcoin will continue to maintain value as a ‘digital gold,’ while the role of digital currency will be replaced by altcoins, such as Dash.

2. Dash

Let’s go ahead and look at Dash here for a second. Dash has also witnessed a spectacular growth in 2017 and is worth over $1400 as of December 2017. It also has a couple of advantages compared to Bitcoin – the main thing being the (much) lower fees without sacrificing fast processing times, and the extra privacy offered by the ‘Private Send’ feature. It also has a smaller and more functional community than Bitcoin, which makes us trust Dash as a good investment in 2018.

3. Litecoin

Litecoin is known as the silver to Bitcoin’s gold. Supposedly created by the same developer team, Litecoin had a couple purposed: lowering the fees, the processing time, and simplifying the mining process so that everyone could participate. If you’re looking to start at a slower pace, Litecoin might be exactly what you’re looking for. As of December 2017, Litecoin is worth over $250.

4. Ripple

Ripple is a very promising project. Not only is it a cryptocurrency, but it’s also a system that allows you to exchange and trade any currency, including Bitcoin. Ripple has started serving countless banks and businesses as of the last trimester of 2017, and analysts have predicted a bright future for it. It’s currently worth a bit over $1, but we foresee a significant growth for Ripple in 2018.

5. Monero

Monero’s appeal is in its uttermost privacy. If you’re looking to keep your transactions as hidden from the public eye as possible, you might want to invest in Monero in 2018. Another advantage of Monero is that, unlike Bitcoin or most other currencies, it doesn’t have a limited coin supply. Growth trend predicts that Monero will keep growing in 2018 – slowly, yet steadily.

6. IOTA

IOTA is another promising cryptocurrency. The concept of the project is to eliminate the concept of mining and all the extra costs that go into it. IOTA uses the processing power your computer puts out when you make a transaction to validate other two transactions. The project is definitely interesting, and the price has been spiking up quite a bit in the last months of 2017.

7. Ethereum

Ethereum is what most analysts predict will become the next big thing in 2018. It’s already the second biggest thing after Bitcoins on the cryptocurrency scene, but the smart contract technology is becoming increasingly popular due to its flexibility. Ethereum price is currently approaching $700.

If you are planning to start investing in cryptocurrencies, please note that all the information you’ve just read here, or anywhere on the Internet, should be perceived as mere speculation. You cannot say for sure how well a certain currency will do the next day, let alone a whole year in advance. However, make sure you make a good choice by researching the founders of the currency, the community,  what backs it up, what technology is behind it, and how well the currency is doing for the last couple of months.

Proof of Work vs Proof of Stake: What’s the Difference?

To reach consensus is a central idea in the world of cryptocurrencies, and both proof of work and proof of stake target it. However, the difference is in their operational method that impacts the workflow of the transactions in the blockchain.

When the white paper of Bitcoin was released by the unknown Satoshi Nakamoto, it had depicted the blockchain idea that applied the proof of work concept. The concept existed before that and was firstly mentioned in a publication by Ari Juels and Markus Jakobsson in 1999.

The Bitcoin runs on proof of work algorithm, validating a state of a transaction and of the blockchain itself, without the need of users’ trust. The idea behind the algorithm is to reach the consensus without the need to trust in any third-parties. This was a problem that was often challenged until Bitcoin appeared.

Until Bitcoin’s launch, all of the transactions had to go through a trusted third party as for example banks and PayPal. Let’s take PayPal as an example – if somebody sends you money through PayPal, the transaction has to be first validated by them – the central trust figure. In the result, PayPal validates the whole transaction, while the users have no other choice than to completely rely on it. Such bodies function based on the idea of a centralized network.

Opposed to PayPal and banks, Bitcoin transactions are executed through the distributed consensus system. This means that the transactions are stored publicly and everybody could check their validity, so there is no need for the interference of any other party.

The Proof of Work

In the world of cryptocurrencies, the proof of work algorithm is used to make a lot of complex calculations that would create a block of transactions in the blockchain. This is done through powerful hardware, which is involved in mining to successfully complete the process.

Basically, mining is the process itself that validates the correctness of transactions, with the help of powerful hardware. As you might know, anybody with a powerful computer enough can mine virtual currencies, and it results in form of a reward for the users – where a new cryptocurrency is created.

One problem with mining consists in its high-energy consumption, as a lot of computational power is required to solve the encrypted blocks. The whole mining process requires a lot of real resources, and those resources are paid out with the value of the newly created cryptocurrencies. The whole operation has to be executed despite the interferences and considering the potential losses in the hacks, the money should still flow how it is agreed. So the need for high computing power is from the other side a good thing because the probability of a dominative centralized party with the most power is very low.

The proof of work concept is used by the Bitcoin network and many others of altcoins, however, addressing the possible problems, another currency, Ethereum, will most likely switch to the proof of stake, which is less energy consuming and in the views of many might prove to be more efficient in reaching the consensus.

The Proof of Stake

The proof of stake algorithm was first implemented in 2012 by Peercoin, which was then adopted by others. Though it still faces some problems, Vitalik Buterin – the one who published the white paper on Ethereum, is addressing its deficiencies with other developers.

The focus lies in a different approach in validating the transactions. Here a transaction is validated by a person, who is chosen based on more criteria. The wealth and the age of the cryptocurrency amount held by that person are the determinative factors. The ones who put at “stake” the most, became the validators of the transactions, better said – their cryptocurrencies are the creators of new blocks that make the agreement with the blockchain. So, the stake of such persons decides their trust potential, which is then used to expand the blockchain.

The miners don’t receive rewards in form of new cryptocurrencies with such algorithm, as these currencies must not be mineable for it to work. This means, there should be a finite number of them. Consequently, the mining process is different, and the reward is also. In proof of stake, the miners are known as the forgers, who get their rewards from the transaction fees.

Proof of stake has its strengths in a much lighter energy consumption potential as it doesn’t rely on computing power. Another aspect is that it might prove to be much harder to hack. The problem that persists lies in the low number of forgers – who have the actual amounts at stake. However, the developers are already addressing the problem with a new contract, Casper, that will allow for more people to become miners, but also reduce their number if there are too many.

Buterin is already developing security measures in the Casper algorithm to reduce the risk of harm if any attacks would succeed. The idea is to have more set of rules, and while the forgers should follow a specific protocol, they could lose all their deposits in case they break a law.

Proof of work was a good introduction in the world of cryptocurrencies, but with the tremendous power consumption and increased risk of a centralized mining pool existence, it could become inefficient in the near future. Much of the hope lies in the hands of developers – to successfully introduce an improved form of power of stake algorithm and revolutionize the crypto world again.

Cryptocurrency Explained: How Bitcoin Resists Inflation

One of the main reasons why so many people are interested in cryptocurrencies is their ability to resist inflation. In other words, cryptocurrencies like Bitcoin and Ethereum have very low inflation rates grace to the controlled and strictly limited amount of coins that can exist in the world. Although inflation is a fairly complex notion for someone with little to no financial knowledge, we’ll try to explain it in the simplest way possible, using Bitcoin as an example.

In 2011, Bitcoin’s inflation rate was around 30-50%, because very few businesses and merchants accepted it as a method of payment. In other words, it had a very limited buying power, and there were just so many goods you could purchase using Bitcoin. However, as more and more markets around the world have started to accept Bitcoin as a means of payment, its inflation rate dropped down to 4,30% as of December 2017. That’s why many financial experts define Bitcoin as a deflationary currency. Deflation is the opposite of inflation – a process when the purchasing power of money increases instead of dropping. With cryptocurrencies, the more markets accept them as means of payment, the more real value goods back up the currency, causing it to be worth more.

Although the rate can fluctuate quite a bit, Bitcoin is still pretty resistant to inflation, as it never went over the 7% landmark in all of 2017. Considering its spectacular growth this year, its stability only encouraged more people to invest in Bitcoin, and use it as a hedge against inflation.

This brings us to the next point – using Bitcoin, or any other cryptocurrency, as a hedge against inflation. A hedge is an investment that simply holds more value than government-issued money. Precious metals, stocks, and real estate are all financial hedges, which people use to somewhat secure the value of their money. And while all of them can be worthwhile investments if done right, and at the right time, gold and real estate have a few drawbacks. For one, you cannot take your gold coins to the store and use them to pay for your groceries. You cannot use gold bullion to buy a car, or even a house – you have to convert them into fiat money before doing that.

However, Bitcoin and other cryptocurrencies are different. Yes, they are virtual money, and you can’t hold them in your hand as you would a 10-dollar bill. However, you can very well use your crypto wallet to shop online – which is what the vast majority of people do anyway. You can also get a crypto debit or credit card, which acts just like a regular VISA or Mastercard, and can be used at any store that takes those payment methods. In other words, your hedge against inflation can be used to purchase goods and pay bills right away, without the need to sell it – with the condition that the merchant or service provider accepts it.

Nonetheless, Bitcoin and cryptocurrencies are still very much terra incognita. Although they have been doing pretty well resisting inflation in the past year, it’s hard to predict whether they are going to keep the trend going. However, one thing is certain – investing in Bitcoins, or other cryptocurrencies, is a great financial hedge, in that it is accessible to just about anyone. You got to have a decent amount of money on hand if you want to buy gold or real estate, but cryptocurrencies are different. You can buy any amount of Bitcoins or altcoins you can afford at the current market price, and use them to pay for goods or services without converting them back to fiat money.

As a conclusion to all above said – Bitcoin’s resistance to inflation is mainly caused by markets accepting it as a payment method. As long as you can pay for a wide variety of valuables using Bitcoin, it’s a safe hedge against inflation that anyone in the world can use.

Can You Mine Ripple?

Ripple is revolutionizing the cryptocurrency world. It has recently overthrown Ethereum in terms of market capitalization, becoming the second most valuable cryptocurrency after Bitcoin. Right now, Ripple’s market cap is at $76bn, and its market price has grown by 50% in the last days of 2017.

What is Ripple?

First of all, you need to understand what Ripple is. The very concept of cryptocurrency is a decentralized monetary system, one that allows money to function independently from government and bank regulations. Cryptocurrencies like Bitcoin have made it this far by creating P2P payment networks, where transactions are not controlled by a centralized server, but instead approved by each and every single person in the network. However, Ripple is different. Ripple is both a payment system and a cryptocurrency. The payment network connects banks, businesses, and other institutions, allowing them to send and receive money through their system, and thus cut on long waiting times and exorbitant fees. All the transactions that go through this network use the token currency XRP. It sounds like the opposite of what a cryptocurrency should be – that’s why many people were and still are skeptic towards Ripple.

Why does Ripple have so many haters?

Another reason why some people don’t like Ripple is that the system is not completely decentralized. The company released the whole supply of XRP (100,000,000,000 XRP) before its launch and is still in possession of more than half of the coins. That’s is why the only way you can get your hands on some Ripple tokens is to buy them – be it from the official company, or from a P2P exchange. If you decide to buy from the company, you will be asked to buy 20 XRP at the current market value just to register your account. You can probably find better deals at a P2P exchange – but beware of scammers.

Can you mine Ripple?

You cannot mine ripple – the only coins that can be mined are those that do not exist apriori. Bitcoin, Ether, Dash, Litecoin are all limited-supply cryptocurrencies, but they have not been released by the developers themselves. Each Bitcoin that exists in the world has been ‘mined’ by someone who helped decrypt the information on a block, and added it to the blockchain. As all the Ripple tokens that can exist in the world are already in circulation, you cannot mine more of them – you can just purchase and trade the existing ones. You might come across websites that offer Ripple cloud mining contracts, and if you do, run as fast as you can – they’re just trying to rip you off.

But is Ripple profitable? As of the end of 2017, its growth is pretty promising. It went from $0.005 to $1 in just a couple of months, and while that is nowhere near the price of Ether of Bitcoin, the growth rate is still pretty impressive. The trends for 2018 seem promising as well, and there still seems to be room for growth in the year to come.

A Beginners Guide to the Blockchain Technology

As a newbie to cryptocurrencies, there’s one thing that most people seem to struggle to understand – and that is the blockchain technology. Let us put this out there before you proceed: not everyone who buys and trades bitcoins needs to know how the blockchain technology works. Not even all miners out there know how it works – and they are directly contributing to the creation of the blockchain. However, understanding the principles behind the blockchain technology gives you that extra layer of analytical prowess that is indispensable in the financial world, especially if you’re after making big money.

The blockchain technology is the backbone of any cryptocurrency. It is a complex system consisting of three different technologies: 1) private key cryptography, 2) P2P networks and 3) a network servicing protocol. Might sound like a bunch of big complicated words, but it’s much easier if you put it in other words. Let’s examine.

First of all, it’s important to understand that all cryptocurrencies out there are based on the blockchain technology – with some differences here and there depending on the currency. However, for convenience, we’ll use Bitcoin as an example.

Let’s say A wants to transfer a number of Bitcoins to B. They would need to have the following: a private key and a public key of their own (which are just long arrays of numbers and letters) that create A’s digital signature, as well as the public key of the recipient. That is the essence of the private key cryptography system. In other words, it means that every transaction in the Bitcoin network has an encrypted identity, defined by the public and private key of the receiver and sender, the time stamp, the hash history of the money, and the written description. All of those elements make up a block that has to be included in the blockchain – but how do we trust that a block contains real information that can be trusted?

That’s where the P2P (peer-to-peer) system kicks in. Many like the analogy of a tree falling in the forest – the fact that other cameras witnessed the event serves as a proof that the tree has actually fallen, despite there not being a third party to monitor it. Similarly, the P2P technology serves as a ‘camera’ that ensures that every block contains veridic information and thus can be added to the blockchain. The ‘camera’ in this case are all the other people who use Bitcoin. However, instead of visual proof, the P2P technology has to prove that the information in the block is veridic using mathematics.

That’s where the third and last technology comes in – the protocol. A protocol is the means you use to ‘prove that the tree has actually fallen,’ if we were to stick to the same analogy. In the case of Bitcoin, for example, transactions are encrypted using an algorithm called SHA 256. You don’t need to understand how the algorithm works in order to solve it – all you need is a powerful computer and decrypting software, which is both widely available nowadays. And because there are so many people in the Bitcoin network, the combined power of their computers allows them to decrypt the information on a block in less than 10 minutes. Naturally, not all computers in the network are equally powerful – some can decrypt much faster, and thus bring a bigger contribution to the P2P system.

But how did Bitcoin attract 1) so many people willing to help find the blocks, and 2) so much computing power? The answer is simple – whoever is the first to decrypt a block of information gets to add it to the blockchain, and is rewarded with Bitcoins for it. Seems like a very easy way to make money, right? Not really anymore. With so much computing power in the Bitcoin network nowadays, it’s pretty much impossible for an individual to decrypt a block on their own, no matter how powerful of a rig they have. That’s why the notion of ‘pools’ has appeared in the P2P system – the concept of pool means more people create a community and join their computing prowess to increase their chance of decrypting a block, and thus get the reward. The reward is them split among the pool members.

This is a general outline of how the blockchain technology works. Whichever cryptocurrency you might be interested in, they all employ the same three technologies to keep them going – the private key cryptography, the P2P networks, and protocol. Keep in touch with Cloudminers for currency-specific blockchain guides.

 

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What is Bitcoin? All You Need To Know

Bitcoin is the most popular cryptocurrency in the world right now. Its price hit an all-time high of $20,000 in December 2017 and spiked a lot of people’s interest in the cryptocurrency niche. You might be one of them – and if you’re a complete newbie, you need to understand what Bitcoin is and how does it work before anything else. In this article, we’re going to give you a short run-down on everything you need to know about Bitcoin, from who developed it to what backs it up.

Bitcoin is a digital currency. It was developed by a certain Satoshi Nakamoto, whose real identity remains unknown to this day. That’s why the smallest divisible amount of Bitcoin (0.00000001) is called a ‘Satoshi’.

Much like US dollars or Euros, Bitcoin can be used in exchange for goods in services in the digital space. However, it is not printed on paper, like fiat money – it only exists in electronic format. Another defining characteristic of Bitcoin is that it is a decentralized payment system, meaning no bank or government institution can control it. No one can ‘print’ or ‘create’ more Bitcoins from thin air to cover national debt or whatnot – which is what often leads to currency devaluation. This last point is the reason why Bitcoin became so popular, as people all over the world liked the idea of a currency that is not influenced by a country’s economy.

As mentioned above, Bitcoin is a decentralized payment system – but there must be a way to keep track of all the transactions, right? Absolutely, and that is what we call the blockchain, which is a growing system of records that contains information about every Bitcoin transaction that ever happened. The blockchain is literally a chain of blocks of information, where each block contains data about one Bitcoin transaction. In the case of fiat money, a bank would have to approve of the transaction in order for it to be considered valid. However, the Bitcoin network requires that other people in the network validate the transaction. In other words, Bitcoin is a peer-to-peer payment system (P2P), where there is no third party controlling and monitoring the transactions.

Everyone in the Bitcoin network has access to the latest copy of the blockchain record. In other words, anyone can check and see every transaction ever made using Bitcoins. You’d think transparency is good and all, but how you protect your privacy in such a system?

The Bitcoin network does not require any of your personal information. A Bitcoin user can have multiple Bitcoin addresses, but none of them are linked to their real name. All you need in order to send or receive Bitcoins are a private and a public key, which demonstrate your ownership of the funds. Here’s where the ‘crypto’ part in ‘cryptocurrency’ becomes relevant. Bitcoin was the first successful attempt at creating a currency based on a mathematical algorithm, that generates unique signatures for every transaction. The signatures have to be decrypted in order for the transaction to be added to the blockchain.

But who takes on the responsibility of deciphering the blocks of information in order for them to be added to the blockchain? As mentioned before, other people in the Bitcoin network have to decrypt the information in order to validate it. It takes quite a bit of computing power in order to decrypt each signature, so in order to attract more people into doing it, the network awards a number of Bitcoins to the first person/computer that finds a block. That is also how Bitcoins are brought into existence – as a reward for the computing power used to contribute to the blockchain.

There’s also a limited number of Bitcoin that can exist in the world, and that is 21 million. Once all 21 million Bitcoins have been ‘mined’ by validating transactions, the whole supply will be in circulation. By then, the only way to obtain Bitcoins will be to buy them from an exchange, or another person.

There are a number of other reasons why people prefer Bitcoin over fiat money. For one, Bitcoin is now widely accepted as a payment method for both online and offline businesses. You can use Bitcoin to purchase goods and services, or you can put your funds on ice and use them as a hedge against inflation. The processing time and fees of Bitcoin transactions are very low compared to those of banks and credit card issuers, and they’re also anonymous. Lastly, all you need in order to use Bitcoin is a Bitcoin address, which requires none of your personal information, and can be done in seconds, so it’s also accessible to pretty much anyone.

 

 

How To Diversify Your Cryptocurrency Portfolio – Top 10 Tips

If you already own some Bitcoins are are seeking out a way to secure your investment, one of the best things you can do is diversify your cryptocurrency portfolio. Even if you are a firm believer in the bright future of Bitcoin, you can’t ignore a possible bad scenario – the bubble can burst at any time, and the price of Bitcoin can go down as abruptly as it went up last year. That’s why many financial advisers and experts recommend investing in alternative cryptocurrencies as well – be that Ethereum, Litecoin, Dash, or other altcoins.

But what is the best way to start diversifying your cryptocurrency portfolio if you don’t know anything about altcoins? Here are some tips:

  1. For starters, do some in-depth research on the biggest altcoins out there. We’re sure you already know what they are: Ethereum, Litecoin, Dash, Zcash, Ripple, Monero, Start by finding out why the currency was created in the first place – as each cryptocurrency appeared as an alternative or a solution to an already existing problem. For instance, Dash was created with the intent of being the ultimate digital form of cash, which is easy to send and receive grace to its ‘Instant Send’ feature. Ethereum brings the novelty of ‘smart contracts’ to the table, while Zcash and Monero offer additional layers of privacy to its users.
  2. Understand why the principle behind each altcoin is useful for the community. Then try to imagine which of these principles looks the most promising – and although this is mere speculation, it should at least stir you into the right direction as to what altcoins to invest in. There is no right or wrong currency to invest in, and anyone claiming to know that is no more of a speculator than you.
  3. Get multiple crypto wallets. Although there are websites out there that offer multiple account wallets, it’s never a good idea to keep all your assets in one place, regardless of how safe it is. When dealing with multiple currencies, it’s probably best to get different kinds of wallets as well. For instance, you could finally put the money down for a hardware wallet, such as a Ledger or a Trezor, and keep your Bitcoin in there, and you could get a couple free software wallets for trying out different altcoins.
  4. Try P2P exchanges for good deals. The great thing about P2P exchanges is that you can connect with various traders around the world, and usually get to buy the coins at a lower price than the market one. That’s a huge advantage if you’re starting to test the waters with various altcoins. Needless to say, be extra careful when choosing a P2P exchange site, as they’re the perfect spawning ground for scammers. We recommend LocalBitcoins, but you can also find other trusty websites out there.
  5. Try altcoin mining to get some real passive income going. Now is a great time to get into altcoin mining, especially if we’re talking Dash or ZCash, that can still be mined using regular CPUs and GPUs. There’s a high chance that you can do that on the computer you’re reading this article on, so why not give it a try? However, if you’re not interested in that, you could still try cloud mining with a company like Hashflare, that offers both Dash and ZCash
  6. Start small. Diversifying your portfolio does not imply going out there and investing $10 in each novelty coin that looks Start by adding one, or at most two altcoins to your portfolio. Many people prefer to stick to the Bitcoin-Ether combo, or the Bitcoin-Ether-Litecoin one. These being the three currencies with the biggest growth potential in the year to come, it shouldn’t be a bad idea to start with them.
  7. That being said, know your budget. If you want to make some decent profit, it’s always a good idea to invest more. So, if you’ve set your mind on a $100 budget for diversifying your cryptocurrency portfolio, better invest all of it in one well-researched coin than $30 in three different ones. If you bought 1 Ether in May 2017 for $100, you’d have around $750 as of the end of the same year, while if you invested $30, you would have $250. Identical growth rate, but pretty different profits, right?
  8. Set up a plan. How much are you planning to invest in each currency you want to own? It’s best to keep a rate system and reserve the highest rate for the most stable currencies. Again, most people would recommend you keep at least 50% of your investment in Bitcoin and Ethereum, which seem to be the most reliable coins, and use your research to back up the rest of your investments.
  9. Don’t bet too much money on ICOs. For those of you who don’t know, ICOs, or Initial Coin Offerings, are nothing else than new cryptocurrency fundraising projects. With over 500 altcoins on the crypto market right now, you can imagine how many of these ICOs keep appearing every day. And while some of them seem like real deals and may pay off, we don’t recommend them as a safe diversifying strategy. ICOs should be treated as nothing more than gambling, and you should never invest more than 10-20% of your diversifying capital in them.
  10. Keep in touch with the news. The cryptocurrency niche has no tolerance for the uninformed. If you snooze, you lose – that’s why it’s important to keep in touch with the growth rates and the trends for the cryptocurrencies you’re planning to add to your portfolio.

There you have it – a list of 10 tips to help you diversify your cryptocurrency portfolio. It’s one of the best things you can do for securing your investment, as you will have not one, but several backup plans in case your main hedge lets you down. Keep in touch with Cloudminers for more cryptocurrency insights and guides.