I’m Nate from 99 Bitcoins and welcome to bitcoin whiteboard Tuesday. Every few weeks were going to send you a cool new video just like this one explaining some basic concepts around Bitcoin this way you can learn about Bitcoin yourself or forward these videos to friends or family members who have questions today’s topic is altcoins and icos in this episode. We’re going to go over some of the different cryptocurrencies out there and explain what our icos so let’s get started altcoins or alt for short are crypto currencies that are not Bitcoin. The word altcoin is an abbreviation for alternative coins. So Litecoin, triple Dash or any other non Bitcoin cryptocurrency all fall under the category of all coins. Now, you may ask yourself. Why do we even need all the coins in the first place? Well, the answer is simple Bitcoin is not perfect usually altcoins will try to create a better or different version of Bitcoin.
For example, Litecoin is an ALT that transactions faster than Bitcoin – and mineral are altcoins that focus on the anonymity aspect making transactions virtually impossible to trace each altcoin has its own unique thing. It does best altcoins can also vary for Bitcoin in the way. They are mind.
For example Bitcoins mining algorithm is called a sha-256 while Litecoins mining algorithm is called script different mining algorithms require different types of Hardware to my another NG to keep in mind is that if an old coin is relatively new or not that well-known it will probably be harder to buy and we’ll have fewer wallets that supported until today thousands of old coins have been introduced to the market but only a handful have managed to gain a significant following like Bitcoin has one way to figure out which altcoins are gaining popularity is by measuring their market cap. Market cap kept being short for capitalization means how much money or capital is invested in an asset?
Measured in dollars. It’s calculated by taking the number of coins in circulation and multiplying it by the dollar exchange rate. If for example There are 16 million Bitcoins in circulation, and the price of one Bitcoin is $2,500, then the market cap for Bitcoin would be forty billion dollars for a long time Bitcoins market cap accounted for 90% of the total crypto currency market cap today though, as more altcoins are gaining attention and appreciating in price Bitcoin shear. The market cap makes up less of the total crypto currency market cap, which has managed to surpass a hundred billion dollars in 2017. So how do you actually decide in which all Coy to invest first and foremost I suggest you read about the altcoin you’re interested in make sure you understand what makes it unique and see if it makes sense to you most importantly don’t invest in a coin just because of the buzz surrounding it many coins out their employee. What is known as a pump and dump scheme well,
It means that the coins creators generate a lot of hype about a specific coin in order to get people to invest in it and inflate the coins price. Once the coin appreciates in value the Creator sell all of their coins at a profit while crashing the price due to the massive sell-off. This leaves the majority of investors with a bunch of useless coins and no one to sell them to other stuff. You should look into include the coins market cap. This will give you an idea of how well this altcoin has been received in the community. I would also suggest getting a Involved in the coins Community usually most major coins have an official Forum a Facebook group a subreddit and other places of gathering where you can ask the developers of the coin specific questions a strong Community is an important predictor for a coin success. Now, you know, what altcoins are and we can move on to our next topic which is closely related ico’s. So what is an IC o IC o stands for initial Point offering the turn derives itself from the traditional
Nance term IPO or initial public offering an IPO is used to describe the launch of a new company on the stock exchange also known as going public. The purpose of an IPO is to sell stock in the company in order to raise capital from the public eye sales on the other hand sell coins also known as tokens as a way to fund a specific project. The general idea is that if you believe the project will succeed You by The Tokens that power the project beforehand at a discount and then you will be able to sell them later. I run at a profit once their project succeeds a let’s break this process. A little bit further when a cryptocurrency company wants to launch a new project through an icy. Oh, it creates a white paper. The white paper is a document that states what the project is about what needs the project will fulfill how much money is needed for the project and how long the Ico for this project will run form after the Ico is set up the public can start investing in the ICU by sending money to the project and receiving project tokens or coins in return if the money raised by the Ico does Does not meet the minimum funds required by the white paper. The money is returned to the backers and the Ico is deemed to be unsuccessful. If the funds requirements are met within the specified time frame. The founding team will now get to work and bring the project to life through the use of the funds raised to sum it up. I see o tzar like Kickstarter for crypto projects the best example of a highly lucrative I co was the pre-sale of etherium tokens in mid-2014 one either token also known as eat. Eh,
For around 40 US cents. If you bought a hundred dollars worth of e th back then you would have the equivalent of $75,000 in 2017 today more and more projects are trying to mimic the success of etherium. Zai CEO ico’s are conducted over the etherium platform. And that’s why you’ll need to buy the etherium token known as ether in order to participate in them. The recent high volume of ico’s caused a theorems price to spike and also overwhelmed the etherium network. Well, This cause delayed or failed transactions leading to the suspension of etherium trading on several exchanges and problems with I co-funding the worst example of a disastrous Ico is the Dow the Dow or decentralized autonomous organization project managed to raise a hundred and fifty million dollars worth of ethereum. However, shortly after the Ico ended a hacker managed to drain a third of the amount raised due to a bug in a therians code this crisis and the
Front opinions on how to handle it led to a split in the ethereum network and the creation of both ethereum and etherium classic altcoins just like with any other Financial instrument where there is the possibility for great reward. There is great risk as well. And I cos contain a huge amount of risk ico’s can be considered as high-risk Gamble’s on cryptocurrency Startup companies many people today invest in icos not because they believe in the project but because they just want to make a quick profit this Turn creates a general height before the project launches. But as the buzz Fades away project creators and early investors want to take the money off the table. So they start selling massive amounts of the token and this can cause the price to sharply drop. Another thing to consider. Is that the bar for creating an IC o—- today is pretty low while conducting an IPO requires to comply with a lot of Regulation Ico. Skip this entire burdensome procedure by raising money, exclusively in the cryptocurrency, which has yet to be regulated.
I want to create an IC o—- just create a shiny new website outlining your concept create a digital asset get some crypto celebs to say nice things about it and sell your projects assets directly to people around the web. You don’t even have to have a working product these low barriers to entry bring about a massive amount of low quality projects that will never see the light of day. This could be due to the fact that the founders lack the skills required to execute the project or that the Ico is just a plain scam to begin with as You can imagine this is a scammers dream come true with minimal investment of time and money. They can get tons of people to send them money without any legal exposure or liability to the public in order to emphasize the absurdity of how much dumb money is spent on icos one developer went so far as to create a site called useless ethereum token the website stays you’re literally giving your money to someone on the internet and getting completely useless tokens in return. There are no white papers. No products and no
It’s just you me and your hard-earned ether and my shopping list amazingly enough. Even the useless etherium token project managed to raise over 60,000 US dollars in some cases. You may lose money in an IC o—- not due to an intended scam but due to a hacker manipulation. For example, not long ago a hacker managed to hack in Ico website and change the etherium Ico deposit address to his own etherium address. This caused over seven million dollars to Be sent to him, of course that money is now. Lost forever to sum it up. I see o should be considered as risky as gambling due to the irreversible and unregulated nature of cryptocurrency. You have virtually no recourse if an IC o—- turns out to be a complete scam or goes bust. So how do you know if you should invest in Nico? Well, first of all, you need to know what you’re investing it. This means you should take the time to actually read the ico’s white paper research the project and Founders and get involved with the community around it. Also, make sure you understand how the tokens for the project will be distributed ico’s, which hold a Lion’s Share of tokens for the founders may end up selling these tokens in order to make a quick profit after the Ico ends. Another important question to ask is how much money is being raised and for what purpose if there’s no cap on the amount being raised the project me get overfunded getting more money than you need can also hinder project development as laziness and no clear Focus may arise as a result.
Millions of dollars before the first line of code was even written most importantly don’t ever invest in something. You don’t understand. To sum it up. I see o tzar a new form of crowd funding which very few people understand if you’re just getting started with cryptocurrencies, and I cos you probably should do a fair amount of additional research before committing your money to any project as exciting as it may sound that sums it up for today. I hope you’ve enjoyed this lesson of Bitcoin whiteboard Tuesday, and I’ll see you in a bit.