Investing in Digital Currencies
Last summer, I got interested in a growing trend: Bitcoins. Bitcoin had its ups and downs since then, but now I start hearing about other digital currencies. I’m aware that more people use Bitcoin, the more it will become a feasible currency we can rely on. 6 months later, especially after I started seeing Bitcoin ATMs around, I’m looking into ways of investing in digital currencies. Let’s take a look at the most popular alternatives.
Bitcoin is the first digital currency has a market cap of about $8 billion. Sold for around $656.73 as of now.
Litecoin is the fastest and second most popular with a market cap of ~$420 million. Sold for around $17.32 as of now.
Peercoin is known as the environmentally friendly alternative which has a market cap of ~$70 million. Sold for around $3.28 as of now.
Namecoin is a cryptocurrency which has has a market cap of ~$31 million. Sold for around $4.10 as of now.
If you are interested to know more about other less popular alternatives, you can check out this page.
Ways to Invest
1. Mine
The way all these decentralized digital currencies work is that there is no single machine that generates the coins. Instead, people are awarded for running a software on their computers – the process as known as mining – to power the digital economy to generate digital money.
When I was first considering mining Bitcoins about 12 months ago, you could generate digital money worth 20$ a day investing about $300 in mining hardware. Then this summer that amount dropped to $10 a day. Still not bad. However, the reason I didn’t buy it was that at the time, there was one company called Butterfly Labs which sold Bitcoin mining hardware for starting from as low as $279. However, when you excitingly navigated to the checkout page, it said “Your order can take up to 12 months to ship.” This sounded like a scam to me, but thinking about the Bitcoin craze at the time, it all made sense. The company couldn’t meet the demand, whereas today they seem to ship most orders right away. I guess their orders have slowed down while they have reached efficiency in their supply chains. Doesn’t matter for them though, they make big money anyways – regardless of Bitcoin’s success! They’ve also started to face some competition from other mining hardware producers.
Another alternative was to build my own rig, which I was too lazy to even consider. Today, due to its reputation in faster transactions, I’m considering mining Litecoins instead, because mining Litecoins is more profitable as it’s still in its earlier stages compared to Bitcoin. Also it is the up and coming digital currency, thus has a high probability of success. You can check the profitability of mining Bitcoins or any other digital currency by altering the variables here.
2. Buy/Sell
You can always buy/sell digital currencies using platforms like Mt.Gox, BTC-E, Bitstamp, etc.
Keep in mind that these platforms charge a minimal fee for each transaction.
Also, recently these companies have required verification of identity due to increasing fraud. So you might need to upload your passport or some other legit ID.