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Digital Currency and Investing: Bitcoin, Litecoin, PPCoin, and The Others

Do you know where the craziest profits from market speculation were made this year? Not gold, not Forex. They were made by people speculating with Bitcoin. In a couple of weeks the Bitcoin price went from $50 to $300 and now it's back to around $100. Imagine how much profits some people made from it. Crazy stuff.

In this article I want to introduce you to the crypto-currencies: what are they, which are the most popular, what you can use them for, and what's their future. Let's go ahead.

What Is Digital Crypto-Currency?

This is virtual and unregulated money. Not that the other money is very real and backed with something, but the crypto-currencies don't even need paper notes. They are just bits floating around following a specific protocol definition. Bitcoins and most other digital currency types are just numbers associated with an electronic address. You can learn more about the technical side of the things here.

I won't go into much details and will focus more on the benefits that may be interesting to you as an user and investor:

  • It's encrypted and anonymous. This means no one knows who you are when spending or taking currency, no one knows how much you have. And no one can tax you :)
  • It's unregulated from any government - for the good and the bad.
  • There are very low fees or no fees on transactions.
  • Digital currencies are very volatile at least for the moment.
  • There are no storage fees in the common case.
  • They are not yet very popular.
  • Transactions can not be reversed.

Given these specifics, let's think how digital currencies might be useful for you.

Why You Need Those Coins

Digital currencies are great for people selling stuff online. You will never see a chargeback. You can avoid paying taxes if you wish. You will pay very low transaction fees. If you are selling anything online, I suggest you to start accepting Bitcoin or other digital currency right now. Even if most of your customers don't know about it, accepting digital currency gives you competitive advantage because of the users who would be searching for stores accepting them.

You can use them for high-risk and high-yield investing. Instead of playing with so called investment programs online you can trade Bitcoin and earn (or lose) a lot of money.

You can use them for safety storage. Dollar and euro are unstable and inflation is eating them. Gold is bubbled. Bitcoin has a lot of potential to grow. If nothing else, it's yet another place to diversify your savings.

You can use them to buy or sell stuff that's not accepted by Paypal or credit card companies. Adult stuff, drugs, gambling, you name it. I'm not encouraging anything here, just letting you know :)

You can also use them for micro-payments, reaching customers and partners from countries whose credit cards are unreliable, transferring very large amounts anonymously and who knows what else. I'm sure I'm missing something. The potential of digital currencies is huge.

Now, let's see what are the most popular ones and how you can use them:

The Most Popular Digital Currencies

Digital currencies are popping like mushrooms after rain. But let's focus on the few that already gained some traction:

Bitcoin

No doubt Bitcoin is the most popular digital currency at the moment. Created by anonymous Japanese hacker, it literally exploded and is now accepted in many online stores. (Still far away from the acceptance of Paypal and credit card but hopefully we'll see it there soon). The price of Bitcoin also exploded from $0.01 or so to over $100 per coin today. There are also many exchangers where you can switch other digital currencies and even e-bullions like Pecunix and Liberty reserve to Bitcoin and vice-versus. A reputable exchanger I have tried myself is AurumXchange.

Official URL: http://bitcoin.org/en/

Current price (as of May 2013): ~$120

Popularity: good

Volatility: high

Litecoin

Litecoin is a derivate from Bitcoin with different mining algo and faster transactions. It's still hard to talk about the future of this currency. It's very promising but on the other hand it's far away from Bitcoin's popularity. Its price is more stable than Bitcoin price. Finding a place to exchange or buy/sell litecoin is harder.

Official URL: http://litecoin.org/

Current price (as of May 2013): ~$3

Popularity: moderate

Volatility: moderate

PPCoin

This digital currency is third by poplarity / market cap with current total value of ~$4,700,000. Just like Litecoin however it's much harder to sell/trade/exchange this crypto-currency compared to Bitcoin. Not to mention using it to buy things online. One known exchanger is https://vircurex.com/.

Official URL: http://ppcoin.org/

Current price (as of May 2013): ~$0.29

Popularity: moderate

Volatility: moderate

Terracoin

We are starting to go really underground. Terracoin is similar to the others but even less known and used. The only known and reputable exchanger that works with Terracoin is again https://vircurex.com/. How reputable I don't know as I have not tried them myself!

Official URL: http://terracoin.org/

Current price (as of May 2013): ~$0.41

Popularity: low

Volatility: moderate

Devcoin

The biggest difference with the above digital currencies, is that 90% of the generated coins will go to the developers and only 10% to the miners. I have absolutely no idea how much this will encourage the miners.

Official URL: looks like there is no site??

Current price (as of May 2013): ~$0.0002

Popularity: very low

Volatility: low

There are also Freeicoin, Feathercoin, Ixcoin, Namecoin, and maybe others I am missing to add here. I am not sure it's worth to go that much underground. If you are interested you can research further on the subject - maybe you'll find a hidden gem. For now, from investor and entrepreneur perspective I would limit myself to the top 3 listed here.


Published at May, 09 '13 , Read 18477 times.



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