Guest Post By Jerry Banfield originally posted on Steemit .com
Top 10 Cryptocurrency Questions and Answers!
31
minutes ago
Learn and understand cryptocurrencies in just a few minutes from
the basic questions to advanced answers unlocked the hard way by experience!
Would you read this post for answers to the top 10 questions I see about
digital currencies like Bitcoin and Steem or watch the live video at https://www.youtube.com/jerrybanfield to
ask questions as I live stream this and answer more questions in addition to
these top ten which I see most frequently?
Top 10 Cryptocurrency Questions and Answers!
1. What are cryptocurrencies like Bitcoin,
Steem, Ethereum, and Litecoin? Digital currencies such as Bitcoin and Steem are like
electronic money issued and managed by users. Servers setup by entrepreneurs
and companies handle all the transactions while exchanges like Coinbase and
Bitstamp allow changing fiat currency like USD to cryptocurrencies like Bitcoin
which provides the real value. Bitcoin is currently accepted as payment for
goods and services on thousands if not millions of websites worldwide with
continuing adoption every day. Cryptocurrencies are also a popular choice for
the black market because of relative anonymity and ease of use compared to
using credit cards and bank accounts. Digital currencies are also very popular
in countries like China where moving wealth out of the national economy and
into the global market is difficult.
2. How is the value of a cryptocurrency
determined and where can I see it? https://coinmarketcap.com/ has a list of
cryptocurrencies ranked by the value of 1 unit of that currency times the cost
on an exchange to buy it which equals the market capitalization. For example, 1
Steem today is worth $1.56 on Poloniex and Bittrex as I write this. With
235,749,278 STEEM available, that means in theory to buy every Steem at the
market price today would cost $1.56 times 235,749,278 which equals a total
market capitalization of $368,544,488. As you can see these numbers are all
really fiction because the price moves all the time as does the quantity
available meaning no one is going to actually be able to buy all the Steem in
the world with $368 million. Still, the market capitalization gives a rough
estimate of the total value today of a digital currency.
3. What are the most exciting reasons to
become involved with digital currencies? With the ability to transfer money in just 3 seconds to
anyone in the world with a Steemit wallet without any fees, digital currencies
like Steem make sending and receiving money 10 times easier than using wire
transfers, PayPal, or Western Union. Digital currencies are just like cash
meaning for merchants receiving payments this way guarantees you actually get
the money whereas with processing credit cards using Stripe or PayPal there is
no guarantee the customer actually paid because of the ability to easily to a
chargeback with almost no chance for the merchant to win. I believe that money
in the future will be primarily transacted from user to user with digital
currencies meaning that buying even a little bit today may be the biggest
investment opportunity going forward and an ideal retirement plan!
4. Worst part about using cryptocurrencies? Lose your password or make a
mistake in the transaction and you lose it just the same as if you lost your
wallet or mailed cash to the wrong address. Cryptocurrencies can be extremely
unforgiving when it comes to making mistakes because many wallets are only
locked with a password with no hope of getting back in if the password is lost.
To make matters worse, they are relatively easy to steal compared to say
robbing a bank. For example if your wallet is unlocked on your computer or your
account is open, anyone that has physical access to your computer and knows how
to make the transaction could easily clean your whole wallet out with a few
clicks the same as they could taking the cash out of your wallet. Law
enforcement at less than the NSA level is not likely to be able to help out
either unless the thief is sloppy beyond belief because it is easy to move any
cryptocurrency through some kind of anonymous transaction that makes tracking
it nearly impossible to those without access to the real time global electronic
monitoring system which no one is going to allow use of to track down some stolen
cryptocurrency! Fortunately Steem has both account recovery and Steem Power
both of which make it significantly more difficult to instantly clean out an
entire account. That said, I have seen at least one Steemit user accidentally
send as much as $200,000 to the wrong account and thankfully the user that
received it is giving it back in exchange for a 5% fee offered by the sender!
Read more at https://steemit.com/steemit/@ravensw/steem-whale-accidentaly-send-a-lot-of-steem-by-mistake-to-no-name-user-ouch.
Ironically the ease of losing cryptocurrencies is also likely to drive the
value up!
5. Which cryptocurrency is best to buy today? The best cryptocurrency to buy is
one we are willing to hold onto even if it goes down. For example, I believe in
Steem enough that I am willing to hold it even if it goes down 99% and would
start buying more of it if the price dropped. I have no intention of selling
and am continuing to invest for the long term because of the supportive and
energized group of users we have on Steemit! One of the most expensive mistakes
I made starting out with buying Bitcoin, Ethereum, and other altcoins was to
buy with the belief that it should go up and therefore make me money. When it
actually went down, I got into fear and anger because the real reason I had
purchased was just to make money which obviously was not working out in the
short term as the price dropped. Naturally I could only take this pressure so
long and sold down low to "cut my losses" which also cut all my
profits when I sold over 30 Bitcoin at around $200 in 2015 after a year of
buying it and hoping to make money. Buying into any cryptocurrency with the
expectation it should make money quickly is a guaranteed way to be miserable
because even if it goes up, then the pressure is on as to when to sell? I am
currently only buying Steem and investing in Steem going forward because I
believe in the community of users of which I am a part. With fiat currencies,
the government issuing the money and the people using it determine the value.
Would it be a good idea to buy into whatever country's currency was hot today
or recently up or had the best features? Obviously that would be a huge risk.
The same with digital currencies. Just buying in on hype or to make money will
produce little joy even if the price goes up. Buying in with the intention to
become a long term user of that currency and to participate in its development
and growth is the best opportunity. Therefore, I suggest and am practicing only
investing in digital currencies where I am willing to go through the good times
and bad regardless of the price. Steem is where I am today and where I plan to stay
indefinitely!
6. When to sell a cryptocurrency? Before Steem I was all in an
another altcoin and really excited about it. When I first bought the price was
low and made payments to me every week just for holding it. As I tried to
participate in the community over the next several months, I was consistently
met with a mix of excitement and hostility. When I began talking openly about
this, the negative emotions won over in the community and in me. Originally I
had invested and been happy to hold no matter what the price which quickly went
up after I bought it. After months of frustration in trying to be of service in
helping that cryptocurrency grow, I suddenly found myself staring at the price
charts with fear. I was back to only seeing the currency as a way to make money
and I knew it was time to exit because I now no longer cared if I missed out on
the profits from a price increase while having the price go down had become
completely unacceptable. I sold everything just before the price doubled again
but still made 7 dollars for every dollar I invested. In other words, when the
digital currency became a means to an end of making money instead of an
investment I was excited about, I sold it because why have my money tied up in
something I no longer care about? I used about one third of what I sold to
invest in Steem and am extremely grateful for this experience today because I
learned how to make a graceful exit. Could I have made more money by holding
the other currency longer? Sure. Is the point of investing purely to make
money? No because the point of investing is to use money to do some good in the
world and if there is no joy from investing, there is no good in it either.
7. Where are the best websites to use for
changing fiat like USD and EUR to digital currencies like Bitcoin, Ethereum,
Litecoin, and Steem? I
use Coinbase.com with Bitstamp.net as my next best option for buying and
selling Bitcoin, Ethereum, and Litecoin to USD because I can make direct
transfers from my bank account and quickly move Litecoin into an exchange where
I can then buy anything else. If you would like to try Coinbase, would you sign
up with my link at https://www.coinbase.com/join/53f220834b1a7fd652000013 because
Coinbase will give us each $10 for you using my link?
8. What exchange is working the best today
to buy altcoins? Bittrex.com
is where I am buying and selling most of my Steem and Steem Dollars into
Bitcoin because the transactions complete in about half an hour total from
sending SBD to Bittrex to having USD in my Coinbase wallet. For buying into
Steem, the reverse is true where I can have my USD changed into Steem in my
wallet at the best rate in about thirty minutes. Poloniex is what I used
previously but many users have been unable to make withdrawals leaving me to
suspect a crash is coming.
9. When to invest? The ideal strategy to me seems to
be to invest consistently over time because this minimizes the impact of
volatile prices. For example, if you decide you want to invest in Steem but are
not sure if the price will be up or down later, buying in every month instead
of all at once is often an ideal way to go forward because if the price goes
down, you get a better deal next time. If the price goes up, you got a good
deal buying in initially. If you feel the price is absolutely a great deal
today, then buying in all at once can be a good strategy when combined with an
ongoing investment plan to continue buying more in the future. I bought into
Steem all at once to begin and then bought more as the price dropped right
after I bought it. Today the price is up more and I am grateful just by making
posts I am continuing to invest more as an author. If the price takes a serious
drop below a $1, I will begin buying in again with cash in addition to my
author rewards because I believe the price will be over $10 in a few months. In
summary, investing over time is ideal because it helps account for the up and
down prices more effectively.
10. How
about day trading crypto? While
profits are possible trading cryptocurrencies, so are losses. My first year
involved me spending hundreds of hours trading Bitcoin with a result of losing
over $5,000 with nothing to show for it. Simply trading digital currencies is
very similar to gambling because no one really knows what is going to happen
next although anyone can guess! While I was lucky to do nothing expect lose
money when I started, the worst thing that can happen is to get lucky right
away and get a big ego about what an amazing cryptocurrency trader we are. The
predictable result then is increasing the volume and risks in trades with
eventually losing everything with again nothing to prove to anyone that we
learned anything except a story. If you are not aware of how the very top
traders and companies rig the game to wipe out ordinary traders, then the odds
are stacked against winning just as much as going to the casino. I struggled
with a gambling addiction not because I lost all the time but because sometimes
I did win big but mostly lost. The night I turned $10 into almost a thousand in
college was followed by years of gambling compulsively with most nights
resulting in losing all my money and occasionally turning a few dollars into a
thousand. Cryptocurrency trading is the same. The systems are setup at the
highest level to capitalize on the ups and downs with almost no risk and are
great for consistently taking money from ordinary traders like me when I
thought I was smarter than everyone else while allowing just enough good things
to happen so the game continues to be played. Avoid trading on all levels or
risk the consequences of losing a lot of time and money overall even if
initially or occasionally big success comes.
Thank you for reading this and I hope it was helpful!
If you have more questions, would you please contact @jerrybanfield on http://steemit.com
If you would like me to make more posts like this, would
you please upvote this post because it will help me continue making
Steemit my "real job"?
Love,
Jerry Banfield
Jerry Banfield
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