From Ramsey 2017: Since I know there are some here who have been in crypto for years and many who ignore it
completely, I’ll try to appeal to both audiences with this post and hopefully everyone can say they learned something new.
It’s no secret bitcoin has been on an unstoppable bull run lately, but what you may not know is that virtually all other cryptocurrencies have not participated and are flat to down over the last few months. Prior to August/September, most cryptocurrencies followed bitcoin – so what’s going on? I would highlight two main factors – first, bitcoin is the most widely accepted, has the most liquidity, and can be bought/sold in more fiat currencies compared to any other crypto. Secondly, there is an upcoming hard fork in 10 days which will result in the creation of a new cryptocurrency called Bitcoin2x.
A hard fork is defined here. There have been two recent bitcoin forks – one at the end of July which created Bitcoin Cash, and one at the end of August which created Bitcoin Gold. If you held bitcoin at the time of those forks, you received the equivalent amount of the new crypto (i.e. you held 1 bitcoin, you received 1 bitcoin cash). Bitcoin Cash had a value around ~$500 at the time of the fork and currently trades at $630. Comparatively, Bitcoin2x seems to have much broader support and futures for the as yet unreleased coin are trading at $1500. Many are selling off other holdings to buy bitcoin so they receive these new coins automatically.
Ethereum had its own hard fork last month called Byzantium but since it was uncontested, it did not result in the creation of a new coin. While the price has remained around $300 for the last couple months, there is still a lot of development going on and many exciting projects are getting closer to becoming a reality. This is reflected in this chart showing ETH transactions vastly outnumber BTC transactions.
Devcon 3, the annual ethereum developer’s conference, just wrapped up a few days ago. One of the most important announcements was about the Dai stable coin, the first version of which will be released in December. This is a critical part of building up the ethereum ecosystem since it will allow crypto users to hold a token whose value does not fluctuate relative to fiat. When something like Augur comes out (also targeting year end 2017 release), instead of being paid in a wildly volatile crypto you can receive Dai. Think of a decentralized version of PredictIt and you can see the potential here.
I’ve only scratched the surface of what’s coming. I have little doubt that 2018 will see an explosion in size, scale, and utility of the ethereum ecosystem. While it is true, there is what looks like a pretty big pile of “free money” coming to bitcoin holders in 10 days, once that passes I think you’ll see a flood of money rush back into ethereum and ethereum tokens.
There is still a lot of opportunity in the crypto world, and I would strongly encourage everyone here to take a look at the space both from an investment and trading perspective. And yes, it is possible to buy fractions of a coin on Coinbase. If you’re looking to put larger amounts of money to work quickly, I’d suggest GDAX (sister exchange to Coinbase) wire transfer which has a $250k limit. Please be sure to enable 2 factor authentication via the Google Authenticator app, NOT through sms text – this will help ensure your account remains secure.
Happy to take questions in the comments section. I didn’t want to make this too long so understand I couldn’t cover everything. It can look very complex and difficult to understand on the surface, but taking the time to learn and figure it out will be more than worth the effort at the end of the day.
NOTE FROM TIM: Many thanks to the Rams-inator for this excellent post; as a side note, SlopeCharts has several crypto charts available, including Bitcoin, Ethereum, and LItecoin.
