Sunday, 18 June 2017

Blockchain re-awakening.......and of course the crypto-currencies

If you have stumbled across this post, it is probably because you have been searching for something to do with blockchain or crypto-currency or more than likely, if you are new to it all, it will be Bitcoin that you would have heard most of all.

I remember when Bitcoin made its appearance or at least I noticed it in 2009, and spent a little bit of time looking at it, understanding what was going on underneath, then got bored and moved on. Getting bored and moving on is probably something I should have not done.

A few years later, 2014, I started looking again, and spent a few months mining Dogecoin. Dogecoin was release in late 2013 as a 'joke' currency, and over the course of the time I actually had my PC mining it, I generated around 100,000 Dogecoin. I remember at the time, the currency was 'valued' at about 25 USD.

At the time I started playing with mining Doge, Bitcoin had just been through its first bubble just after the price dropped from about 1100USD to around 600USD and thought I should maybe 'get in'. However, I didn't......

Over the next year the price of Bitcoin slowly fluctuated, but around the summer of 2015 it was hovering around the 250USD level.

In 2016, things started to heat up again, and Bitcoin was starting to steadily rise, and by the end of 2016 it was knocking on the door of 1000USD again. I started looking and reading again, and the price was now around 1300USD and I this time, I must get into the market. In something, and this is when I started reading about Ethereum, Another blockchain technology that had the ability to run 'smart contracts' on a de-centralised peer-to-peer global distributed 'computer'. This was a technology that has the ability to radically change everything, and even the major banks, investment houses, technology companies are all really now wakening up to what is going on.

I started to look at different exchanges, different wallet, and eventually settled on a couple just to get a feel for them and dip my toe with a couple of low key purchases.

This is where I hit my first snag......2FA, or 2 Factor Authentication. Having registered for the exchanges, and tried to make a purchase, both the exchange and the credit card clearing houses needed 2FA codes to authenticate and yep they wanted mobile phones which I did not have with me offshore as they are not permitted. So I had to wait until I got back onshore.
This was a painful 3 weeks wait, The price of Bitcoin rose and broke through the 2000USD barrier, then continue to rise to a peak of around 2900USD! Ethereum's underlying currency Ether was also doing the same thing, It had gone from 160USD to 400USD in the same time frame.

So, this is where there is a major RISK that everyone must recognise. Crypto-currency are notoriously unstable, and can have massive price swings and collapses over the space of hours. This isn't much good if you are shorting for profit, unless you catch up upward swing, like on a bounce. If however you look at what the underlying technology provides, how it works, its implications on society/consumerism and the general financial world then it should be the long term we are interested in.

In the last year, Bitcoin has increased by 240%, Ether by 2700%  and Litecoin by 670%. Where they are going.....well that is the mystique of it all!

So what about that lonely little Dogecoin that I mined back in 2014, well, I found that I still had them backed up on my PC. It turns out I actually have 139,000 Doge, and the value, well that has increased from 25USD to 440USD, should I decide to convert them to cash. Maybe I'll just hold at the moment! I do wonder what would be if I hadn't moved on back at the start! No point dwelling on it now....

There are numerous crypto-currencies now out there, some are already dead, others are starting to grow. Litecoin is one of those slowly growing in value, as individuals start to spread risk across multiple coins. In the last 3 days alone it has increased from 25USD to 40USD, but could just as easily turn to junk. Ethereum platform also allows companies to generate there own 'tokens' (or sub-currencies) that sit on the Ethereum blockchain and have been selling these to raise funds for new company startup financing. There has been a flurry of these lately and are know as ICOs or Initial Coin Offerings. Bancor is probably the most famous of these ICOs so far, as it raised 150,000,000 USD (value at time of offering) in the space of 2 hours. Institutions can also use the technology of Ethereum to create their own private blockchain for internal use. 

The most important thing however is to research. There is a lot, and I mean a lot of false information, speculation and general noise out there on the net. And if you do decide to invest/purchase/trade then do not play with anything you cannot afford to lose. The volatility is higher than the stock market, and with increased risk can carry increased reward......but take it on the chin if it all goes wrong!

If it is all new to you........here is Viltak Buterin, the inventor of Ethereum, explaining what Ethereum is;

Here is a primer on Bitcoin;


In the next post, I will take about the exchanges and wallets I have adopted so far, and a little about mining, especially cloud mining with Genesis-Mining.....