Many investor circles have been buzzing over the talk of cryptocurrencies lately, but there are plenty of people asking, “Just what is a cryptocurrency?”. Broadly speaking, a cryptocurrency is a form of decentralized, anonymous currency that is created through processing power found in computer graphics cards. While the concept has been around for several years, a ton of speculation and attention in the past few months has really breathed new life into the concept, with many once small-time investors now owning millions of dollars’ worth of the currencies. Below, we will discuss four of the biggest cryptocurrencies right now for you to consider in your future investments.
There is no doubt that Bitcoin (BTC) was the first and so far, most successful cryptocurrency on the market. When it debuted in January 2009, one Bitcoin was worth approximately $0.001 (one tenth of a penny). As of today, the currency is trading between $100-150 – those who invested just a few hundred dollars into this project when it began would now be worth anywhere from millions to tens of millions of dollars. This cryptocurrency has seen highs of up to $260, giving hopes for future investors who think they may have already missed out on the investment. Fortunately, Bitcoin is no longer the only contender in the market. Currently, Bitcoins have a market cap of over $1 billion.
Litecoin (LTC) has often been referred to as the “silver” to Bitcoin’s “gold”, and has recently seen an explosion in value alongside Bitcoin. Much of Litecoin’s growth was fuelled by the recent speculation and panic investments caused by bank runs in countries such as Cyprus. As of early May 2013, Litecoin is trading between $3.50-4.00; just one month prior, it was trading under $1.00. The key advantage to Litecoin is the transfer rate – when moving coins between digital wallets, Bitcoins can take hours, whereas Litecoins usually only take a few minutes. There is not as sophisticated of a network for spending these coins, but the same problems plagued Bitcoins just a couple of years ago (when they were worth mere pennies on the dollar what they are today).
While this coin still is in the process of proving itself, it does have a very novel feature that no other coin in its category does. Namecoins (NMC) can be used to create specific domain names (.bit), at which point the coin is destroyed. This coin has not broken out like the others as of yet: in the past six months, its value has doubled, which is still an investor’s dream by normal forex or stock standards. Relatively free of controversy unlike some of its lower-tier competitors, Namecoin may be the third coin waiting to solidify its position as a strong cryptocurrency.
Those who made the choice to invest in this coin months’ prior have seen some of the best returns yet: since debuting on major cryptocurrency exchanges three months ago, Terracoin (TRC) has exploded in value and now is worth nearly 30 times as much as it was in February. Much like Namecoin, a large part of this boom has been fuelled by speculation, but it is worth pointing out that over the long run, this coin recovered much more nicely from the recent speculation bust than Bitcoin or Litecoin.
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- License: Royalty Free or iStock source: http://namecoin.info/
- License: Royalty Free or iStock source: http://terracoin.org/
Romeo Handley is a blogger, a geek and social media enthusiast. Romeo is a consultant with a market software company.