I originally wrote a post called: 7 Top Privacy Cryptocurrencies. But as I started doing more research, I realized that most of the coins on that list were not really private. So I deleted that post and wrote this update.

In reality, there are only 2 privacy coins worth looking at, in my opinion. The top privacy coins at the moment are Monero and Pirate Chain. 

But before I get into why, let's take a look at what the best anonymous cryptocurrencies have in common.

The Characteristics of the Best Private Cryptocurrencies

I could get into every little detail of how privacy technology works and the elements of a good project, but that would be a 500 page blog post and you would probably fall asleep before you got any useful information out of it.

So I'll boil it down to the basics and give you only what matters most.

Every Transaction Must be Private

The first characteristic of a true privacy coin is that all transactions are private by default. 

There are many projects out there where there is a separate private wallet that you have to transfer coins into to have a private transaction, or you have to select the “private transaction checkbox,” when sending money.

Most people are lazy and won't use the private wallet or check that box. Even worse, some third-party wallets don't even give you the option of sending a private transaction, even if the cryptocurrency has that capability.

Because of these two issues, most transactions on these blockchains get transmitted publicly and are just as transparent as Bitcoin and Ethereum.

Active Development and Promotion

The second important characteristic of a privacy coin is the culture of the community involved with the cryptocurrency. 

• Does the community really care about privacy, or are they just out to make a quick buck?
• Does the development team make decisions that are good for the currency and their users, or are they out to stroke their own egos?
• Are there rockstar players on the core team (developers, marketers, etc.), or is the product full of bugs?

Fortunately, it's easy to follow a lot of these projects because most of them provide updates via platforms like Telegram, Twitter or Discord.

It's generally best to steer clear of projects that don't provide regular updates on their progress. Putting money into these projects is like throwing your money into a deep, dark hole.

You never know if you will get it back again.

Superior Technology

Next, the way that the technology keeps transactions private has to make sense. If you aren't too technically inclined, then ask people to explain it to you.

Someone should be able to explain the technology in a way that you can understand. However, if you ask several people and they cannot describe the tech to you in plain English, then it might not be as good as the creators say it is.

There are a lot of projects out there that tell you all the amazing things that their cryptocurrency is supposed to do. But most projects don't even come close to delivering.

Even if you are convinced by the technology, it helps to try out a few transactions for yourself. How easy is it to use? Is it something that people will find useful?

Number of Network Participants

Finally, take a look at how many people are participating in the network. The way to measure this will vary by cryptocurrency.

For Proof of Work (PoW) cryptocurrencies like Bitcoin and Litecoin, look at the number of miners and the hashpower on the network.

Hashpower is simply the amount of computer power that is being used to verify transactions. The higher the hashrate, the more popular, and secure the network is.

If you're looking at a Proof of Stake (PoS) cryptocurrency, then look at how many wallets are staking and the total amount of cryptocurrency being staked.

These are all important questions to ask yourself, when considering which privacy coins to trust.

There are obviously many more details to take into account, but those are the most important ones.

Now that you understand what to look for, let's take a look at the top 2 cryptocurrencies that focus on privacy.

Monero (XMR)

This is one of the OG privacy coins. A lot of so-called “privacy” coins have come and gone over the years, but Monero is still going strong.

There are many privacy coins that claim to be the most private cryptocurrencies, but there are very few that can live up to that claim. Monero is one of the coins that has true privacy protection.

Monero Hashpower

Since Monero is a proof of work (PoW) cryptocurrency, we are going to look at how many miners there are in mining pools, and the collective hashrate of the participants.

You can find this information by going to a website like Mining Pool Stats.

Let's look at Bitcoin first. Bitcoin is the undisputed leader in network participation and is the most secure cryptocurrency network, by far.

In this screenshot, Bitcoin has a hashrate of 165.63 EH/s. A hash is essentially a mathematical calculation. These calculations verify transactions on the blockchain.

If you aren't familiar with hashrates, here's a breakdown of how they are measured:

• 1 kH/s (kilo) = 1,000 hashes per second
• 1 MH/s (mega) = 1,000,000 hashes per second
• 1 GH/s (giga) = 1,000,000,000 hashes per second
• 1 TH/s (tera) = 1,000,000,000,000 hashes per second
• 1 PH/s (peta) = 1,000,000,000,000,000 hashes per second
• 1 EH/s (exa) = 1,000,000,000,000,000,000 hashes per second

So the Bitcoin network has a collective computational power of 165.63 Exahash per second.

That's a mind-blowing number.

In comparison, Monero only has a 2.1 Gigahash network. nothing to laugh at, but significantly less than Bitcoin.

Wallet Support

There are several well-established cryptocurrency wallets that support Monero. The top ones are Cake Wallet and Edge, but there are others.

You can find all of the currently recommended wallets for Monero here.

Being supported in major wallets is a huge boost for a cryptocurrency because it makes it more likely that people will use that currency for everyday transactions.

Exchange Listings

Monero is listed on a lot of exchanges, including several major ones. You can see their current list here.

To purchase Monero, you'll have to buy Bitcoin or Litecoin, then send it to an exchange that trades XMR. Exchange the Litecoin for Bitcoin, or just trade the Bitcoin directly for XMR.

I've made arrangements so you can get started with $10 in free Bitcoin, click the link to get the details.

Monero Benefits

The biggest benefit of Monero is its first mover advantage. It was launched in 2014 and is currently the most popular privacy coin.

On top of that, it has a passionate community and the core developers are continually working to make it better.

Monero Downsides

In spite of its popularity, widespread adoption and proven tech, there are 2 big potential issues with Monero.

First, RingCT privacy technology has worked well enough until now, but it could be vulnerable to blockchain analysis in the future.

Monero is working on upgrading their privacy technology, so this shouldn't be an issue after the changes are implemented.

Second, the supply of Monero is infinite. The reason that cryptocurrencies like Bitcoin have become a good store of value is because there's a limited supply.

But cryptocurrencies like Monero have chosen to go another route by allowing the supply the be infinite. There is a cap on how many XMR can be mined per day, but there's no limit to how many can be created.

According to the Monero team, they did this because they want to reward the miners for verifying transactions. Miners only mine because there's financial incentive to do so and this should keep miners happy in the future.

Creating new XMR every year also helps replace lost XMR and can potentially help to reduce price volatility.

The downside of this is that XMR is inflationary and could suffer from some of the same issues that we see with fiat currencies.

Pirate Chain (ARRR)

Pirate Chain claims that it's the most anonymous cryptocurrency in the world. It's a fairly new project that was launched in 2018.

The Pirate crew wanted to solve the issues that they saw with Bitcoin and Monero, namely:

• Completely private transactions (Bitcoin is not private)
• Bulletproof transaction privacy (Monero's RingCT technology has questionable privacy)
• Lower transaction costs (Bitcoin transaction fees get really expensive when there are a lot of transactions)
• Fast transactions (Bitcoin transactions can take a long time when network traffic is high)
• Limited supply (Monero has an unlimited supply)

It borrows its technology primarily from Zcash and Komodo. Zcash uses zk-snarks technology to make transactions private, which is currently the most anonymous protocol.

But Zcash suffers from one major flaw…all transactions are public by default.

As I mentioned before, all transactions on the network have to be private in order for you to have a completely private currency.

So Pirate Chain borrows the already amazing security of Zcash and takes it to the next level.

Pirate Hashpower

The hashrate in Pirate is measured in solutions per second, which you can think of as the same as hashes per second. It's not exactly the same, but it's close enough for the purposes of this post.

As you can see, there is one major mining pool and 2 very minor pools. So network participation is not high.

But these are still early days for Pirate, and this profile is typical of newer cryptocurrencies that have not been widely adopted yet.

The good news is that the collective hashrate is pretty close to Monero. 

Wallet Support

Unlike many new projects out there, Pirate has wallets for both mobile and desktop devices.

There are currently wallets for Android, Windows, macOS and Linux. They are working on a wallet for iOS and they recently launched a version for Linux ARM.

If you want to create paper wallets, they have those too.

They are good for burying your treasure.

ARR.

Exchange Listings

Again, ARRR is a fairly new crypto, so they are working on getting listed on the big exchanges.

Being a privacy coin also makes it difficult because a lot of exchanges don't like to deal with the headache of the additional regulations that can come with with privacy coins.

But if they can get on the same exchanges as Monero, that will be a huge boost to their visibility and use.

The most successful cryptocurrencies are the ones that not only have the best technology, but also have the widest adoption.

To get some free ARRR, sign up for Coinbase, then trade for ARRR. Get the details at that link.

You would have to purchase Bitcoin or Litecoin, then transfer it to an exchange that has ARRR. Then trade Bitcoin for ARRR. If you choose to use Litecoin (which saves you money on transaction fees), then you would send Litecoin, trade it for Bitcoin, then trade the Bitcoin for ARRR.

Pirate Benefits

The biggest benefit is that Pirate appears to have the best privacy technology of any cryptocurrency available today. It also has wallet solutions that work and an active community that appears to be working hard to make the most private coin in the world.

Here's a graphic that compares the top privacy cryptocurrencies.

Pirate Downsides

The obvious downside is that this is still a fairly young project. There are still minor issues with the wallets and there is a small concern with how Pirate was launched.

Why Privacy Coins Matter

Some people will say that they have nothing to hide, when it comes to their financial transactions.

Fair enough.

But even if you have nothing to hide, would you want to live in a glass house where everyone can see everything you're doing from the outside?

Of course not. 

If you have a business, do you want other companies knowing how much you're paying for your inventory or who your suppliers are? As an individual, do you want everyone to know how much you sold your house for, or how much you get paid at work?

Probably not. 

The bottom line is that we should all have the option to disclose our personal information our not. As the world becomes more surveillance oriented, privacy coins are one way to help us maintain our privacy. 

Final Thoughts on Privacy Coins

There are different niches in cryptocurrency and privacy coins are one area that has a real-world use case, with legitimate solutions like Monero and Pirate Chain.

However, technology is constantly changing, so coins that are private now, might not be private in the future.

Bitcoin is a good example.

When Bitcoin first became popular, fans bragged about its privacy. However, blockchain analytics came along and has made it possible to connect identities to specific Bitcoin wallet addresses.

The companies that do this type of analytics have gotten quite good at this. 

So there is the possibility that these 2 cryptocurrencies may not be private in the future. That's why it's important to stay on top of these projects and find out how they are coming along.

But if you value privacy, these coins are the ones to research right now. As always, do your own research and find out if they make sense for you.

They aren't for everyone.

The post The 2 Top Privacy Cryptocurrencies appeared first on Trading Heroes.

Non-Fungible Tokens (NFTs) have exploded onto the scene with astronomical market values. But you might be wondering what they even are and if you should get involved.

NFTs are digital assets that are stored on a cryptocurrency blockchain. They are like cryptocurrency wallets, but instead of storing a wallet balance, they store a unique asset. The asset could be digital art, music or anything that can be linked to or stored on a blockchain. 

This opens exciting possibilities for artists in particular because they can make money directly from their fans, instead of having to go through middlemen.

So let's dig into this exciting market and find out why they are an amazing invention, how they work, and how you can get started in NFTs.

The Most Valuable NFTs

If you haven't seen how valuable NFTs currently are, I'll show you a couple of examples first. The sales prices might surprise you.

Everydays: The First 5000 Days by Beeple

Perhaps the hottest NFT artist at the moment is Beeple, the artist name of Mike Winkelmann. He makes short films, VJ loops and digital artwork.

His NFT went for a record $69.3 million. It's a digital collage of his daily artwork from his first 5,000 days of creating one piece a day.

This is a mind-blowing amount of money, but it's also a really cool work of art. I could see this going up in value in the future because of the sheer amount of work that went into each picture and because it's the first purely digital artwork sold at Christie's.

CryptoPunk #3100

I don't understand this one.

Cryptopunks are a set of 10,000 randomly generated pixelated characters that are stored on the Ethereum blockchain. These characters were invented by Larva Labs.

The highest sale to date has been the Cryptopunk with a headband, going for $7.58M, according to the Larva Labs website.

These digital artworks were given away for free initially, but soon started to trade for large sums of money.

I think this is a fad, but I could certainly be wrong.

Other NFT Projects to Watch

Kings of Leon are the first band to release an album as a NFT. They actually launched 3 separate NFTs.

• A unique album package
• Lifetime show perks
• Exclusive audiovisual art

Rarible is a marketplace for buying and selling NFTs. There are many new marketplaces popping up, but this website makes the process of creating and selling a NFT accessible to the general public.

Fungible vs Non-Fungible Explained

Now that you have some background on the current state of the NFT market and some of the possibilities, let's get into the nuts and bolts of how they work.

The key term in NFT is “non-fungible,” so let's take a minute to  explain what this means. You probably understand what fungibility means on an intuitive level, but never knew there was a word for it.

When an item is fungible, all items of that type have equal value and can be exchanged for one another.

For example, a $10 bill is fungible. Your $10 bill is equal to my $10 bill, and both will buy the same amount of goods at a store.

This is the key component of currencies, it's what makes cryptocurrencies an effective medium of exchange. 

However, when something is non-fungible, it has its own unique value and cannot be traded for another similar item.

So non-fungible tokens can't be used as currency, but they are good for one thing…identifying unique assets. The obvious application is they can be used to identify collectibles such as digital artwork.

I'll get into the details of how this works later on in this post, but for now, understand that NFTs are used to identify unique objects.

What's the Difference Between a Coin and a Token?

If you're new to cryptocurrencies, you might think that a coin and a token are the same thing.

They are not.

In order to completely understand a NFT, it's important to understand the difference.

A coin is the native cryptocurrency of a blockchain. For example, these are native coins.

• Bitcoin
• Litecoin
• Ether
• XRP

Tokens are cryptocurrencies that are created on top of another blockchain. Blockchains like Ethereum allow developers to build applications on top of the blockchain with programs called smart contracts.

For example, these are just a few tokens created on the the Ethereum blockchain:

• Basic Attention Token
• Tether
• Dai
• Chainlink

So Ether is the native coin of the Ethereum blockchain, but other tokens can be created on top of the Ethereum blockchain. Each token has its own unique characteristics and value.

In order to transfer these tokens to another wallet on the Ethereum blockchain, it requires that you pay a gas fee in Ether, which is basically a transaction fee.

Other examples of blockchains that allow other tokens to be built on them are:

• NEM
• Waves
• NEO

Smart contracts basically enforce the rules of the application or ecosystem. They are like real life contracts except they cannot be broken because they are programmed into the blockchain.

For example, let's say that you want to buy a car from a shady seller on Craigslist. You meet up in person and you like the car,  so you hand over the cash. The seller could take your cash, then run away without giving you the title to car.

Not likely, but it could happen. 

However, if the title to the car and the cryptocurrency were both on a blockchain, the smart contract could be written such that both parties would have to sign off on the transaction in order for it to go through.

Once both parties sign, ownership of the title and the crypto would be simultaneously swapped. The smart contract would handle the escrow process. If only one party signs off, then after a time limit, the crypto and the title would go back to their original owners.

So in reality, smart contracts aren't really that smart. They are actually quite dumb because they enforce some very simple if-this, then-that rules.

But they are fantastic for automating routine tasks, like managing the ownership and sale of digital assets.

How do Non-Fungible Tokens Work?

Alright, now that you've seen how far NFTs have come and understand the terms, let's get into the nuts and bolts of NFTs.

Different Types of NFTs

Right now, there is one main type of NFT on the Ethereum blockchain: ERC721.

There are several different types out there, but this is the one most people are currently using.

You can think of these types of NFTs as spreadsheets, where each type of NFT has different column headings, depending on what the NFT will be used for.

Royalties on Future Sales

One huge benefit of NFTs is that the original artist gets a cut of all future sales. In the past, if an artist sold his painting for $10,000, that's all he got.

But with NFTs, if a piece of digital art first sells for $3,000, but later sells for $200,000, then the artist will get a portion of the second sale too.

It's a great way to reward artists for their work and helps them create more art.

How to Make a Non-Fungible Token

So you're probably wondering how you can get in on the action.

First of all, let's get real. You aren't going to draw up some crappy picture in Microsoft Paint and sell for millions of dollars on your first try.

However, if you can create something of real value and you want to do a fun experiment, then this is a fantastic little project for you to do in your spare time.

You can start to learn the market and potentially launch a very profitable NFT in the future. Creating NFTs can also help you identify the best NFTs to invest in.

Step 1: Decide What You Want to Create

Are you good at drawing? Or maybe you love photography.

Start with something you love.

If you make another me-too pixel character, you'll get lost in the sea of crazy characters and memes that are already out there. But if you create something unique, you're more likely to fail, but you could also blaze a new trail and create something very valuable.

Remember that this is a very new market, so something novel could do extremely well.

Use your creativity. 

Step 2: Find a Marketplace to Sell Your Item

Next, find a marketplace to list and sell your item. Marketplaces have different procedures and requirements to list your NFT. I can't possibly go into them all here.

So if you're interested, you can research that information on your own.

But you can start with this list of marketplaces:

• Rarible: A platform that's open to new artists and existing artwork.
• Opensea: Peer-to-peer NFT marketplace.
• Falcon NFT: Create anonymous ownership NFTs for real-world items.
• The Sandbox : Create and sell in-game items.
• HashMarks: Own a custom designed mask from a variety of artists.
• SoRare: Sports memorabilia NFTs and fantasy football platform.
• Aloha DeFi: Earn tokens by sharing your mobile data connection.
• Art Blocks: The network creates a unique NFT, based on what you're looking for.
• SuperRare: High-end NFT marketplace. There's some pretty cool artwork on this platform.

Step 3: Upload Your Art and Keep Optimizing

Your first piece might not sell. But keep at it.

Study what is selling in the marketplace and how you can put your own spin on it.

You'll probably have to try a few different things before you start to see sales. But have fun and keep at it.

Promising Future Uses of NFTs

A couple of areas that I could see the average person creating potentially valuable NFTs are in music and videos.

For example, an amazing interview with someone who rarely does interviews, could be a great video NFT.

People could pay to watch the video and they owner(s) of the video would get the royalty, minus any transaction costs. Ownership of the video could also be easily transferred. Yes, the video could be pirated, but that could happen to any video.

Music downloads could be paid for on the the blockchain and there could be music players that would only play a song that was purchased through a linked wallet.

Later on down the line, NFTs might be a good way to also prove ownership of physical collectibles, like what Falcon NFT is doing.

The Downsides of NFTs

We are in the very early days of NFTs, so there are still some downsides.

The biggest one is that a majority of NFTs are hosted on the Ethereum blockchain. I'm not a fan of the Ethereum project because it suffers from many of the issues that Bitcoin does, high transaction fees and slow transaction speed.

But my biases aside, there's already a ton of NFT volume being traded on Ethereum, so it's the place for NFTs, at least for now. I'm keeping my eye out for better platforms though.

Final Thoughts on the Future of NFTs

The NFT market is still young, so we are seeing a mad rush to purchase NFT collectibles that are generally of very low quality…at least in my opinion.

It's like the rush that we saw at the start of the internet bubble, where investors were throwing mind-numbing amounts of money at companies that had absolutely no business plan.

That said, I feel that the Beeple piece is a legitimate digital artwork and it gives us a glimpse into what is possible with the future of NFTs. 

I'm not a fan of creating NFTs on the Ethereum blockchain because of the high fees associated with transactions. If the Ethereum developers can figure out a way to dramatically lower the gas fees and increase transaction speeds, then it can truly be used for its intended purpose of Distributed Apps (DApps) and by extension, NFTs.

Until then, I'm going to be on the lookout for other NFT solutions that can help this market realize its full potential.

But most revolutionary ideas have a not-ready-for-prime-time first version, and this is no exception. I look forward to seeing where this will go and how it can be used by investors and traders to exchange valuable digital and real world assets.

The post Non-Fungible Tokens Explained: How They are Changing the Face of Trading appeared first on Trading Heroes.

Bitcoin can be a great way to store your money in times of uncertainty. But your Bitcoin is only as safe as the method that you use to store it.

The best way to store Bitcoin, or any cryptocurrency, is a hardware wallet. It provides the perfect balance of convenience and security because you are in control of your private keys, but you can still pay through apps. 

If you don't know what some of those things mean, don't worry. I'll explain the key concepts, how Bitcoin storage works and my pick for the best storage solution.

What is Bitcoin?

Bitcoin was the first digital currency to solve the biggest issues with decentralized currencies. 

In previous attempts to create a decentralized currency, the primary roadblock was that account balances were stored in files. These files could simply be duplicated to multiply an account balance and create new money out of thin air.

Obviously not a good thing.

The designers of Bitcoin came up with a better solution. They used “mining” or making computers solve complex mathematical problems as a way to “unlock” Bitcoin in the system.

Mining also helped to verify transactions and create a ledger that could not be duplicated or hacked.

If you are new to Bitcoin and cryptocurrencies, then be sure to read this cryptocurrency guide. It will explain the differences between the various types of cryptocurrencies and go more detail on how they work.

There will only ever be 21 million Bitcoins in existence, so there's a limited supply.

This is what makes Bitcoin much more valuable than other cryptocurrencies that have a larger maximum supply, or have no maximum supply.

You don't have to buy whole Bitcoins, you can use very small fractions of a Bitcoin to do transactions.

So even if Bitcoin goes to $50,000, you can still buy that $15 t-shirt you've been wanting.

How Do I Buy Bitcoin?

You'll need to buy some Bitcoin before you store it, so let's start there.

The process of buying Bitcoin is very simple.

You buy Bitcoin by going to an exchange like Coinbase. Setup an account and purchase some Bitcoin with your credit card or bank account.

The Bitcoin you buy will be held in your Coinbase wallet until you're ready transfer it to your own wallet.

Get the complete step-by-step guide to buying Bitcoin for the first time here.

How is Bitcoin Stored?

Before we get into storing Bitcoin, there are a few key concepts that you should understand.

Bitcoin is stored in a wallet.

These wallets come in different forms, each type of wallet has benefits and drawbacks. I'll get more into specific wallet solutions, later in this post.

The important thing to understand is that a wallet is basically a database entry on the Bitcoin blockchain and is made up of a private key and a public key.

• Public key: This is the code that you give to others so they can send you Bitcoin. It's like the physical address of your home or your bank account number, it tells people where to send your packages or send your fiat money. You also use this code to check your wallet balance.
• Private key: This is the “password” for your wallet. Do not give this away to anyone! Once you use the private key, it's generally best to withdraw all of the money out of the wallet and use a new wallet, especially if you're using cold storage. If you use another solution, then you don't have to worry about withdrawing all your money because the software will take care of it for you.

It's important that you control your private keys. Some storage solutions don't give you the private keys to your wallet, so you should not keep a large amount of money in those wallets.

Where Can I Store My Bitcoin?

There are many different solutions to store Bitcoin, but there are 2 primary types of storage.

1. Cold storage
2. Hot wallets

Let's take a look at each of these solutions individually.

Cold Storage

Cold storage is a method of storing Bitcoin offline. It's called cold storage because the private keys are stored offline. It's like that long-term chest freezer that people have in their garage. 

Deep freeze baby. 

One cold storage method is a paper wallet.

But wait?

You might be wondering: How can a digital currency be stored on a piece of paper?

Well, you aren't actually storing the currency on a piece of paper, you're only storing the public and private keys. It's like storing your website passwords in a notebook. 

The benefit of this storage method is that you don't need any electricity to store your Bitcoin, it's can't be hacked online and it's very portable.

On the downside, the paper can get damaged or lost easily. If you don't use the right type of paper and ink, it's also prone to smudging or fading.

You can learn the best practices for creating a paper wallet for Ethereum in this tutorial.

The process is similar for Bitcoin.

What is a Bitcoin Hardware Wallet?

A hardware wallet is a type of cold storage.

The private keys are kept offline on a dedicated hardware device such as a Ledger, which looks like a USB stick. Here are a couple of examples, next to a phone, for size comparison.

These types of devices generally provide multiple layers of security and allow you to recover your wallet, even if you lose your device.

So hardware wallets provide the best of both hot and cold wallets. They allow you to safely control your private keys, but also make it fairly easy to create transactions.

Hot Wallets

A hot wallet is a wallet where the private key can potentially be exposed to the internet. The wallet is password or security protected obviously, but there is always the chance that a hacker could crack the password and get access to the private key of the wallet.

Therefore, you don't want to store large amounts of Bitcoin in a hot wallet for a long period of time. 

The benefit of this type of wallet is that it's easy to log into a website and create a transaction. It's very user friendly.

So if you're doing transactions it's fine.

But it's not a viable storage solution. This applies to:

• Web wallets
• Exchange wallets
• Desktop/mobile wallets

What is the Best and Safest Bitcoin Wallet?

In my experience, the Ledger line of hardware wallets is the best way to store cryptocurrency like Bitcoin.

I have the Ledger X and I love it.

I did a lot of research before I bought a Ledger and it really is the best solution out there. 

They use a custom hardware solution that includes a custom secure chip and super secure operating system to store your cryptocurrencies. You definitely don't want to trust your money to an operating system like Windows.

It supports over 1,500 different cryptocurrencies, including Bitcoin, so you're covered. If there's a currency that they don't support, it's probably not worth having.

The device has an ingenious 2-button system for entering data and navigating through the menus.

A Ledger X does cost a fair amount of money, a little over $100 at the time that this was first written. But it's totally worth the cost.

Think of it this way…you can basically open a bank for $100.

Where else can you do that? 

The Ledger X solves some of the shortcomings of the previous version, the Ledger S.

I like that the X now has a battery and gives you an option to connect via Bluetooth on your mobile device. The buttons are also easier to use on the X.

But the most important difference between the X and the S is that the X can hold way more information. Each cryptocurrency on the Ledger has to have an app installed.

The S can only hold about 4 apps, while the X can hold up to 100 apps. This is a huge difference! 

That was my only complaint about the S, the small storage size.

It was otherwise a fantastic device and if you're only going to store a couple of cryptocurrencies anyway, it's more than enough.

It's also about half the price of the X, so that's also something to consider. 

You can't go wrong either way, but I prefer the Ledger X.

How Do I Check My Bitcoin Wallet Balance?

Hardware wallets like the Ledger X come with software that allows you to easily check your wallet balances. Ledger makes this easy and adds another layer of privacy to your cryptocurrency storage because you aren't logging on to a website (which could be tracked) to get your balance.

Here's an example of the Ledger Live screen.

Hot/web wallets also allow you to login to your account and check your balance.

But if you're using another cold storage solution like a paper wallet, then the balance of any Bitcoin wallet is available online. That might freak you out a bit, but it's not as bad as you think.

I'll get more into why that is in the next section. But for now, let's just focus on how to check the balance of a wallet.

Here are a few websites that you can use to check your wallet:

• Blockchain
• Bitcoin

To check your balance, simply copy and paste your public key into the search bar at the top of the page and hit enter.

Do NOT enter your private key! If you do, you're basically giving your money away.

From there, you'll see the balance of your wallet.

Wallets are Not Like Bank Accounts

One thing that you have to understand about Bitcoin wallets is that they are not like bank accounts. With a bank account, you get one account number and you keep that number for the entire time that you own that account.

But with a Bitcoin wallet, the “account number” or the private and public key combination is essentially “disposable.”

The wallet can receive multiple payments, but once you withdraw from the wallet, you should with draw the entire balance and use a new wallet. Whenever the private key is exposed online, you should assume that someone can get access to it.

You can just get another wallet by creating a new one, or using a hardware wallet like the Ledger to do it for you.

This is another reason why I like using Ledger. It streamlines the process of working with wallets and makes it almost seamless.

Is Coinbase Safe to Store Bitcoin?

Coinbase is reasonably safe.

But just like any other hot wallet, you should get your cryptocurrency out of your Coinbase wallet as soon as possible and put it into a wallet where you control the private keys. 

If you really must store some crypto there to do a few transactions, make sure that it's an amount that you're willing to lose.

As I mentioned in the hot wallets section above, you do not own your private keys at Coinbase and you never know if they get hacked…until it's too late.

They are a solid company, but should be cautious when using any web wallet.

To get $10 of free Bitcoin when you buy at least $100 of cryptocurrency at Coinbase, click here.

Conclusion

Bitcoin and other cryptocurrencies have given us the ability to take control of our money and become our own bank. But by reclaiming our power, we also have to accept the responsibility that comes with it.

This means keeping our private keys safe and using wallets that give us control of our Bitcoin.

In my opinion, the Ledger X is the best storage option out there. But don't take my word for it, do your own research and find out for yourself.

Disclaimer: Some links on this page are affiliate links. We do make a commission if you purchase through these links, but it does not cost you anything extra and we only promote products and services that we wholeheartedly believe in. TradingHeroes.com is a participant in the Amazon Services LLC Associates Program, an affiliate advertising program designed to provide a means for sites to earn advertising fees by advertising and linking to Amazon.com.

The post Best Way to Store Bitcoin in 2020 appeared first on Trading Heroes.

As traders, we make money by identifying potentially profitable situations in the markets. This might be identifying chart patterns, playing a certain type of news event or understanding the fundamental dynamics behind price movements.

So when it comes to cryptocurrencies, it is helpful to think two steps ahead and imagine what the cryptocurrency landscape will look like, 5 years from now.

Sure, all your buddies are making 400% returns on those crapcoins now. But will they still have those profits in a year?

Will Bitcoin still be king?

Or will there be many cryptocurrencies happily sitting around the campfire, singing Kumbaya?

Nobody really knows and I'm the last person who you should be listening to, when it comes to making predictions about the technology behind cryptocurrencies.

However, I would like to give you some ideas to think about before you make your next investment or trade. This is based on my current understanding, personal experience and research on the cryptocurrency markets.

As you know, things change quickly in the cryptocurrency world, so what I think today, might change tomorrow. But if we stay informed and keep an eye on the big picture, then we should be able to see changes coming, much sooner than the general public.

This is one of those big picture ideas:

The cryptocurrency markets will consolidate dramatically.

Here's how that might happen…

Bridging the Gap Between Fiat and Digital Currency

Money as we know it, or fiat currency, has been masquerading as digital currency for quite awhile. Systems like Fedwire, PayPal and ACH have allowed you to transmit fiat currency digitally.

But even though it's digital, there are still so many rules when it comes to when and were you can send that money. If you are in the US, have you ever tried to send money to someone in Nigeria, via PayPal?

Good luck with that.

The promise of Bitcoin and other cryptocurrencies is to give anyone the ability to send money to anyone they choose, regardless of location, nationality or bank affiliation. But having so many different cryptocurrencies available can cause a problem, because you will have to exchange the currency you own for the currency that your counterparty wants to get paid in.

For example, let's say that you own $1,200 worth of DASH right now. But you want to by a new pair of pants from a website that only accepts Ripple.

On most exchanges right now, you will have to exchange your DASH for Bitcoin or Ethereum, then trade the Bitcoin/Ethereum for Ripple. That's two additional transactions and that can make your pants pretty damn expensive.

The Need for Seamless Currency Exchanges

This is where Interledger-type solutions come in. This protocol would make the exchange of digital and fiat currencies completely transparent to the two parties involved. I recently went to an Interledger Meetup in San Francisco and it made me realize that this type of solution is necessary and will probably be available very soon. Interledger has a working prototype and similar projects probably do too.

It was a fun event.

…and the fact that they had wine didn't hurt.

A post shared by Hugh Kimura ?? (@tradingheroes) on Nov 9, 2017 at 7:33pm PST

I also realized that when this becomes available, then there should be a fairly rapid consolidation of cryptocurrencies, leading to most people in the general public only holding 2-3 primary currencies to pay for things in real life.

Here's why…

Take a very specific use case token like Storj. You will only have it if you want to store data on the Storj network, or you want to make money by renting out your drive space to people on the network. Right now, people are buying it for pure speculation. But they will need to sell it at some point because you can't buy a new TV on Amazon with Storj.

Something like Interledger should make the process of turning Storj into US dollars, fast and easy.

Therefore, the value of these types of coins will probably drop in value very quickly when something like Interledger goes online: 

• Coins tied to very specific services like: Sia, Storj and Civic
• Coins that have very high transaction costs
• Coins that have very slow transaction speeds

Which brings me to Bitcoin…

Have You Actually Used It? Bitcoin Fails as a Real World Currency

With all the hype surrounding Bitcoin at the moment, not many people have actually stopped to try and buy something with it.

Let me tell you, it's pretty shit. 

I tried to buy a Ledger Nano S from the Ledger website and the transaction timed out. But I was still charged for the transaction.

…and it cost me 15% more than if I bought with Paypal…which I will never get back, even after the refund.

I'm not the only one who believes this. The founder of Bitcoin.com has sold all of his Bitcoin and says that it is useless.

It's important to understand the shortcomings of Bitcoin and other cryptocurrencies because it is the reason why an Interledger-like solution might lead to a consolidation of the cryptocurrency markets. 

Why Something Like Interledger Could Lead to Cryptocurrency Consolidation

In a nutshell, Interledger works by creating a network of trusted dealers who do currency exchanges. Transactions run through this network, when an acceptable “path” is found. It may take multiple “hops” to finally exchange the source currency for the destination currency.

For example, let's say that you want to spend your Monero to buy a new M6 straight from the factory, in Euros. 

The transaction might look something like this:

• Dealer A: Accepts Monero from you and coverts it to Ripple
• Dealer B: Accepts Dealer A's Ripple and converts it to USD
• Dealer C: Accepts Dealer B's USD and coverts it into EUR and sends it to BMW

Obviously, the more dealers the transaction has to go through, the more transaction costs there are and the more expensive the transaction gets.

Therefore, these networks will probably start to rely on a select few currencies to keep the transaction costs low. On the customer side, people will probably want to keep the same currencies on hand because they know that it will lower their transaction costs, through the network and person to person.

So the coins that will probably win out are the coins with the fastest transaction time and the lowest transaction cost. 

Hint: It's not Bitcoin.

But it could be, if the Lightning Network can create a solid product.

So many possibilities

Conclusion

Interledger is not the only group that is trying to do this. There are other teams working on similar solutions.

It's not important to know all of the details, but it is important to understand how these solutions will affect the overall cryptocurrency landscape. The ICOs that survive may not be as valuable as you think they will be, simply because it will be so easy to exchange for them, only when you need them.

The real winners in the cryptocurrency world should be the solutions that actually deliver on the promises that Bitcoin was supposed to provide…cheap, fast, monetary transactions to anyone in the world.

Which cryptocurrencies do you think will be the ultimate winners? 

The post Why the Future of Cryptocurrency is in Consolidation appeared first on Trading Heroes.

Cryptocurrencies are becoming more popular by the day, and many new investors want to know:

What's the best cryptocurrency to invest in?

If you have decided that you want to jump into this rapidly growing market, then there are some very important things that you need to understand.

In this guide, you will learn how to choose the best cryptocurrency investment for you. We will also analyze a few hot currencies, to kickstart your research.

Keep in mind that this guide focuses on long-term investing strategies and NOT active trading.

If you want to get started with active cryptocurrency trading, you should read this post.

The Best Cryptocurrency to Invest in is…

Anyone who tries to tell you that the “X” cryptocurrency is the absolute best cryptocurrency to invest in, probably has a very large vested interest in it.

In reality, there are will mostly likely be several big winners in cryptocurrency. It's like the dot com boom, where companies like Microsoft, Oracle and Google ultimately became blockbuster investments.

But you only made money in those investments, if you understood why they were good investments AND you had a reason to keep those investments for the long term.

Otherwise there would have been a big temptation to sell them as soon as you made a little bit of profit.

If you don't understand what a cryptocurrency does or why it's valuable, then don't invest in it. Many of these cryptocurrencies are going to be a passing fad.

Like these things…

There will be a select few cryptocurrencies that will be great investments. Bitcoin has already shown us the potential.

But the majority of coins will fade into obscurity.

Since nobody knows which ones will be huge winners and which ones will be epic fails, we believe that the best investment strategy is to have a portfolio of currencies.

Putting all of your eggs into one basket is a recipe for disaster.

You don't have to understand every single technical detail of each currency. However, you should read a lot about a currency that you want to invest in and make a very informed decision.   

That is the only way to find the best cryptocurrency investments. We will give you a few examples of the research that we have done, at the end of this post.

…so stick around.

How to Buy Cryptocurrency

Where you buy your cryptocurrency will depend on which cryptocurrencies you want to invest in. If you are only interested in the big three, then you don't have to open a trading account.

The big three cryptocurrencies are:

• Bitcoin
• Ether
• Litecoin

A site like Coinbase is all you need. They don't offer any trading capabilities, but they do make it easy to purchase these coins with a credit card or bank account.

If you want to buy smaller cryptocurrencies, then that is when things get a little more complex. Some cryptocurrencies are only listed on select exchanges.

So you will have to do your research to see where you can buy that cryptocurrency. For example, if you want to buy IOTA, you will need to open a trading account at Bitfinex because that is the only exchange where it is currently traded.

However, Bitfinex does not allow US customers to purchase cryptocurrencies with US Dollars. If you are a US customer, you would need to first buy Bitcoins from a site like Coinbase.

Then you have to transfer those Bitcoins to your Bitfinex account. Once those coins have been transferred, you can use that balance to purchase IOTA.

Other websites like ShapeShift and Changelly can help you trade Bitcoins to another type of currency, without setting up an account. The coin options are limited, but if a coin is available, they can save you the hassle of setting up an account.

Alright, now that you have purchased some cryptocurrency, it's time to store it somewhere safe.

How to Store Cryptocurrency for a Long-Term Hold (Cold Storage)

Before we get into actual investing strategies, let's talk about keeping your investment safe. You should NOT hold cryptocurrencies at an exchange or in an online wallet for an extended period of time.

If you are actively trading cryptocurrencies, then you will probably have to keep at least some of your coin at an exchange, so you can get in and out quickly.

But exchanges and online wallets can be hacked and poorly run exchanges can even fold. So whenever humanly possible, get your coins into a wallet that you control.

These options are called “cold” storage because they can be taken offline and therefore aren't “hot.”

Here are your four cold storage options: 

1. PC Wallet

In our opinion, a wallet on your computer at home is not a good option for cold storage. This is because your computer can get a virus, your hard drive can crash or your computer can get fried by a power spike.

If you are going to store a significant amount of your cryptocurrency on a home computer, it is a good idea to only use that PC for cryptocurrency storage. You can get a cheap laptop from eBay and use that as your storage computer.

This is safer because that computer won't be connected to the internet all the time and you won't install any other programs that could contain viruses.

Unfortunately, some cryptocurrencies can only be stored in a PC wallet, so you don't have a choice in those situations.

But if you do have an option, we would highly recommend that you pick one of the following two options…

2. Hardware Wallets

This is the best balance between convenience and security. A hardware wallet is a device that has the bare minimum of software that provides security and allows the device to store cryptocurrency.

Many of these devices look like a memory stick.

A hardware wallet that is very popular right now is the Ledger Wallet. It has a tiny screen that allows you to control the device.

As this post is being written, they are currently out of stock because it is very popular. So you may need to look at several different online retailers before you can find a place to purchase it.

There are other wallets like the Trezor.

The wallet you use will depend on the currency you want to store. Wallets are only designed to hold specific currencies, so be sure to do your research before you purchase.

The Upsides to Hardware Wallets

Hardware wallets can be plugged into your computer and your funds can be quickly accessed with a PIN or security phrase. Even if someone gets ahold of your wallet, they can't access your funds without the code.

Since hardware wallets only have software related to storing cryptocurrencies, the risk of hacking is low. Some wallets also give you the ability to backup your wallets to an online account.

The Downsides to Hardware Wallets

Like all electronic devices, hardware wallets are susceptible to power spikes, water and hacking. If you do use cloud backup, that can also be another account that could be hacked.

Also be sure to use a wallet that is water resistant. You don't want to cry over spilled milk…literally.

3. Paper Wallets

This is a secure option because it is totally offline.

Paper wallets are created by software and printed on paper. They give you an easy way to store your public and private keys.

You can think of it as a fancy way of writing down your password.

These wallets usually have QR codes that you can easily scan to get the public and private keys. If you had to type in those keys, it would take too long and you would probably make a mistake.

That could cost you a lot of money.

Many wallet designs also give you a way to hide your private key. You can also buy tamper resistant tape so you know if someone has peeked at your key (pictured above).

There are several solutions out there for the more popular currencies.

Here are links to a few examples:

• Ether
• Others

Always check the security of a paper wallet generator before using it. Read below for details.

The Upsides to Paper Wallets

Paper wallets cannot be hacked or lost to a power spike. Since they are totally offline, they cannot be compromised by a virus.

You can also easily create multiple wallets, so all of your money is not in the same wallet. They are easy to transport and one wallet can store as much money as you care to keep on it.

The Downsides to Paper Wallets

There are a few downsides to all of this security.

First, these wallets are essentially bearer bonds. So whoever has possession of the wallets is the owner of the currency in those wallets.

This is because the private key (or password) that is required to access the funds in the wallet is also printed on the wallet. So if you do create paper wallets, keep them in a secure place, like a safety deposit box.

Next, if you print your paper wallet on regular paper, with inkjet ink, then prepare to lose your investment. 

Seriously, that is the worst idea ever.

It may be tempting because it is a very cheap solution. But liquid, a small child and fading are all enemies of this el cheapo approach.

If you are going to store your currency on paper, be sure to use a laser printer because the ink is waterproof.

Be sure to buy as “dumb” a printer as possible.

That means that it cannot be WiFi connected and does not have a large internal memory. Both of these things can potentially be hacked, so it is best to keep it as low tech as possible.

Also use high-quality synthetic paper like this, which is compatible with laser printers. These “papers” are essentially made of plastic and cannot be torn with your bare hands.

Yeah, I didn't believe it at first either.

But it's legit! I couldn't rip the paper.

Obviously, the paper can be burned though.

Finally, you have to be careful how you create paper wallets. A shady coder could create a wallet generator that secretly transmits the private key of the wallet back to the creat0r.

This would allow them to steal your funds as soon as you transfer money into the wallet. Do some research online to find out which wallets are safe.

Not all cryptocurrencies have an option to store your wallet on paper. So if you really want this capability, be sure to research your storage options before buying a currency.

4. Brain Wallets

A “brain wallet” refers to the technique of memorizing a mnemonic recovery phrase that will give you access to your cryptocurrency wallet. This phrase is not written down (in a true brain wallet), so you are the only one who can access your funds.

The passcode usually consists of a long list of short, random words.

Here's an example:

Not all cryptocurrencies give users the ability to do this.

While this is probably the most secure option on this list, it is also the easiest to “lose.” If you forget your passcode, your money is gone forever.

Brain wallets might be a good short-term solution, but I would not recommend them for cryptocurrency investing. Imagine trying to remember your passcode when you are 80 years old.

Not gonna happen

There is also a solution called Cryptosteel, which allows you to create a physical backup of your phrase. Since it is made of metal, it's waterproof, fireproof and lockable.

Fundamental Analysis of Cryptocurrencies

Since there are still a lot of unknowns when it comes to the use cases of cryptocurrencies, it is very important to really understand every cryptocurrency you invest in.

So let's take a look at the major fundamental factors that you absolutely must understand about any currency you buy.

What Problem is the Cryptocurrency Solving?

This is the most important factor in determining if a cryptocurrency will have long-term value or not. I always tell people that they should think about cryptocurrencies as tech stocks.

What problems does the company (cryptocurrency) solve? Is this something that has real-world value, or is it just a nice idea?

Also consider the development team and who is running the show. Do they have a long-term vision for the currency? What do users think about the currency?

By asking these simple questions, you will start to uncover which currencies may be valuable in the future and which ones will crash and burn.

But that's just the beginning. Here are some other things that you have to consider.

What is a Blockchain?

As you do your research into the different types of currencies out there, you should understand the basics of how a blockchain works and why it is so revolutionary. Almost all cryptocurrencies are based on the blockchain technology that has made Bitcoin popular.

It is basically a database that is downloaded to every computer on the network. So if you are a miner or you have a PC wallet, you will have a copy of the blockchain for that currency.

This database stores all of the transactions that have ever happened in the currency. Therefore, even if one copy of the database is hacked, it won't match up with the other copies and the change will be ignored.

What's the Advantage of The Cryptocurrency?

Even if a cryptocurrency does solve a problem, there might be other cryptocurrencies out there that solve the same problem.

…and they might do it better.

So before you invest in a currency, research the competition. It can be tempting to think that the currency you have found will be the solution that disrupts an entire industry.

But it might actually be the worst solution available.

Some things to look for:

• Go through the website, does it look professional? Does it make sense?
• Is the team experienced?
• Try out the software, if possible, to see how well it works
• Read the whitepaper on the currency
• Are there potential security issues?
• And more

Total Float and Maximum Supply

Just like with stocks, you have to take the float and maximum supply into account, when making long-term cryptocurrency investments.

One thing that makes Bitcoin such a valuable commodity is the fact that only 21 million coins will ever be created. Once it’s all mined, there will be no more supply and demand will determine price.

The supply of Ripple is also limited. However, the maximum number is 100 billion coins! That is one of the biggest reasons that price has stayed so low.

Ether on the other hand, will have an unlimited supply. The same amount of Ether will be produced every year. As time goes by, that amount will become a smaller percentage of the total outstanding supply of Ether.

But this ever-increasing supply should keep the price fairly low, especially in relation to a currency like Bitcoin.

These are the types of supply dynamics that you have to understand about each currency.

Purchase Availability

How hard is it to buy this currency?

If a currency is available on big exchanges that many people have access to, then it has much more potential to increase in value. The easier a currency is to buy, the more likely it will benefit from hype or favorable news.

However, just because a currency is not widely available, does not mean that you should avoid it. That might actually be a really good thing. 

When a currency is hard to get, that also means that it might be undervalued. So if you have done your research and you really like a currency, figure out a way to get some.

The extra work might be worth it.

Wallet and Storage Options

Another characteristic of a cryptocurrency to consider the options for storing the currency. Are they easy to use?

…or are there multiple solutions that work well?

Remember that the average person is not technically savvy enough to do a lot of crazy command line steps that were required to store and move many currencies in the past. So the more options the public has to easily store a currency, the more likely they are to buy it.

Marketing

Why would a decentralized and community-owned cryptocurrency need marketing? Well, the same reason why Apple still needs to market their high-quality products.

There are countless cases of great ideas that lost out to lower quality ideas, simply because of bad marketing.

Before you invest in a currency, take a look at how well the team is marketing it. Check their Twitter account and any other social media channel.

Also find out if key online influencers are promoting the currency.

Good marketing can make all the difference in the success of a cryptocurrency.

Technical Analysis of Cryptocurrencies

Once you have a few currencies that you want to invest in, it's time to find a good place to get in. Since you are looking for a longer-term investment, you are only looking for good spots to buy.

Luckily, cryptocurrencies are currently heavily long-biased at the moment.

So it can pay to look for this…

The Only Chart Pattern You Need to Know (For Now)

On a cryptocurrency chart, you are simply looking for a point where price appears to be forming a support level. It's even better if price consolidates for a period of time.

I call the ideal pattern a Baseball Cap.

Here's an example of a chart that is currently showing this pattern. As you can see, it looks like a pointy cap with a bill on the right.

I'm not recommending this specific cryptocurrency, but it does have a sweet Baseball Cap pattern.

The reason that this formation happens is because of the pump and dump nature of cryptocurrencies right now. Many of these price moves are unsustainable, so price has to come down to a level that makes sense.

When you start to see price finding a “floor,” this can be a clue that it could be gearing up for another sharp rise. Here's another example on the Bitcoin chart.

Obviously, there will be different variations of this pattern, but it is something that you should look out for. This video will explain it in more detail.

Of course, there are no guarantees in trading.

Even if price makes this formation, it could still head lower. But by waiting for price to fall back down to a reasonable support level, you save yourself some money by not having to sit through a major drawdown.

Now that you know the pattern to look out for, here are portfolio building strategies that you can use to increase your holdings.

Cryptocurrency Investing Strategies

Here are the investing strategies that we will go over in this section:

• Dollar cost averaging
• Balanced portfolio
• Unbalanced portfolio
• Profit reinvesting

Dollar Cost Averaging

Some people on the interwebs promote this type of strategy heavily.

…and it's not the worst idea that we have ever seen.

But I personally think that it's an incredibly lazy approach and even a small amount of additional work can greatly increase your returns.

Dollar cost averaging is when you buy a fixed amount of cryptocurrency at regular intervals. You don't even look at the price, you just buy to accumulate it for investment purposes.

For example, let's say that you like the long-term prospects of Litecoin. On Coinbase, it's easy to setup a schedule to buy a certain amount of Litecoin every month.

You could setup a schedule where you purchase $50 of Litecoin on the first day of every month. Here's what it would look like.

Who this Strategy is For

If you are extremely busy and want to participate in cryptocurrencies passively, then this could be the strategy for you. You may forget to check the charts and want it all automated.

But quite frankly, that's just being lazy.

Yes, dollar cost averaging would have worked very well over the past year. But that is only because we saw a historical jump in prices, across almost all cryptocurrencies.

As currencies become more actively traded, dollar cost averaging becomes much more risky. 

Here's why…

Downsides to this Strategy

For the small amount of time that Litecoin has been actively traded, we have seen huge percentage drops in price. One example is the drop marked here with the arrow.

It went from $38.95 to $19.36, a drop of about 50%!

If you had bought $500 worth of Litecoin and saw it drop to $250 in a matter of a few weeks, would you still stay in?

Maybe.

But most people I know would freak out, and rightfully so. That's not good risk management.

It's a much better investment to try to get in near $19.36 because that minimizes your downside. Could it drop more?

Of course.

However, you just eliminated about $20 of downside, simply by waiting for a better place to get in.

Balanced Portfolio

In this strategy, you would purchase the same dollar amount of each currency that you are investing in.

So if you are investing in:

• Bitcoin
• Monero
• XRP (Ripple)
• Dash

…and you have $1,000 to invest, you would allocate $250 to each currency. Any subsequent investment would be divided equally between the four currencies.

You would wait for the price to form a Baseball Cap (as described above), before you buy each one.

Who this Strategy is For

If you want to build a diversified portfolio of coins, but you aren't sure which ones will do well, then this is the strategy is for you. It gives you exposure to a few currencies that have the best chance of succeeding…at a good price.

Downsides to this Strategy

With this buying strategy, you would fail to maximize your investment in the currencies that will outperform the rest. But since you can't be absolutely sure of which ones will be successful, this strategy gives you good diversification.

Unbalanced Portfolio

To take advantage of the currencies that you think will do the best, you could use the Unbalanced Portfolio Strategy. In this strategy, you would allocate every investment by how well you think each currency will perform.

For example, if we use the same portfolio as above, you might have the following allocations:

• Bitcoin (60%)
• Monero (25%)
• XRP (10%)
• Dash (5%)

If you think that Bitcoin will perform the best over time, then it would make sense to invest a majority of your money in it.

Each subsequent investment would be distributed according to these predetermined percentages.

…and of course, you would not buy each currency until you see a Baseball Cap.

Who this Strategy is For

This is for investors who have done extensive research into currencies and have a very good idea of which ones will perform well. The preset percentage allocation to each currency can change over time, but be sure that you have a very good reason to make the change.

Downsides to this Strategy

The only downside is that you could get the allocation wrong and invest too little in the best performing currency. So only use this strategy if you are reasonably sure of your predictions.

If not, then the Balanced Portfolio Strategy would be best. 

Profit Reinvesting

Once you have a solid portfolio of currencies and you are in profit, you can start to branch out to other currencies that have good potential.

For example, let's say that you bought 3 Ether coins for $52 each. As I write this, Ether is at $368.

So your total profit is:

3 x $52 = $156

3 x $386 = $1,158

$1,158 – $156 = $1,002

Now, let's say that you really like the potential of the Ripple Network. You could take half of that $1,002 profit and invest it in XRP.

By using this strategy, you can leverage your gains to make higher returns and diversify your portfolio.

In order to get the most out of your current profits, you should look for times when price goes parabolic. This type of price action is unsustainable, so it's best to cash out some of these gains, before price drops again.

Remember to lock in your profits, so you can keep your money readily available to take the next trade.

…and look for the Baseball Cap.

Who this Strategy is For

Reinvesting your profits is a great strategy for investors who only want to make a very limited investment in cryptocurrencies. If you are skeptical that cryptocurrencies will actually survive, then only expanding your portfolio when you see results, is a great way to grow your initial investment.

Downsides to this Strategy

You might miss out on great investments if you have to wait for your current portfolio to show you a profit. In addition, you are taking money away from currencies that are actually showing a profit.

The next investment may not be as good, so don't spread yourself too thin!

Cryptocurrencies Analysis Examples

Alright, enough theory…let's take a look at some specific examples. Here's our analysis of a handful of the most popular coins out there.

This is not a complete list, but my intent is to give you an idea of some of the characteristics that you should research in cryptocurrencies. Keep in mind that this analysis was valid at the time this article was first written, but things may change by the time you read this. 

Use this analysis as template for doing your own research. It should not be considered timely analysis.

Ether Analysis

(Yes, I personally own Ether)

At the time that this guide was first written, we consider Ether the most “stable” altcoin investment. Of course, this is totally relative and completely our opinion.

The entire cryptocurrency market is very volatile and Ether can still have it's ups and downs. But overall, we like the prospects of Ether.

Fundamental Analysis

Ether is the currency that is used on the Ethereum Network. The network hosts applications for crowdfunding to completely democratic autonomous organizations.

This function alone sets Ethereum apart from many of the cryptocurrency projects out there.

Transaction time with Ether is fast and the amount of Ether produced every year will remain the same. So the value of the network will have to increase over time, in order for the currency to appreciate.

One thing that could cause the value of Ether to drop is if there are a lot of shady ICOs that launch on the network. Since it's easy to build a token on top of the Ethereum blockchain, it can be tempting for companies to raise money by creating a coin that has no real value.

The Ethereum team is solid, but they do have total control of what happens to the project. Other cryptocurrencies require a democratic vote from users to determine future actions.

This total control could be a good thing or a bad thing. It just depends on how you see it.

Technical Analysis

There is heavy resistance at the $400 level and major support at $150. Everything in between is not so obvious. There is a support level forming at $280, but I wouldn't consider it a great level to buy.

Either a drop down to near $150 or a breakout and retest of $400 would probably be the best buys, given the current information available on the chart.

Monero Analysis

(No, I don't personally own Monero)

Monero is a private financial transaction currency that has recently seen a huge spike in price.

But don't go chasing the train.

Again, wait for the dip.

Fundamental Analysis

Although Bitcoin transactions were originally thought to be private, detailed analysis of the blockchain can trace some transactions.

Totally private transactions can give a currency a much desired characteristic, fungibility. This simply means that one coin is has the exact same value as every other coin.

Huh?

Doesn't all money have the same value?

Not if people know where that money came from.

What if the government found out that you deposited a $100 bill into your bank account that were from a drug deal? Well, on top of being investigated for your involvement in the crime, the money would be confiscated.

…essentially making the bills worth zero.

So the $100 bill in your account is worth much less than any other $100 bill in circulation.

But if all transactions were private and nobody knew where that $100 came from, then it is still worth $100. Exactly the same as any other bill.

On the surface, private transactions seem like a great idea.

Until you think about the primary use case.

What group of people would benefit the most from private transactions? People doing illegal shit, of course.

Dark web, Silk Road, Alpha Bay, type stuff.

So if governments are going to target cryptocurrencies to ban, which ones would they go after? Our guess would be the private transaction currencies. 

That's just our opinion, of course.

It might not come to that.

But we see that as the biggest risk to investing in these currencies. Other private currencies include:

• Dash
• Zcash

Among these private coins however, Monero does have an advantage. The developers have provided a way for users to give a third party a way to view a transaction, without giving away the private key.

So if you believe that a private transaction currency has a future, then Monero might be the best bet. But we personally feel that potential government regulation is too big of a risk to take.

Technical Analysis

The big figure of $100 seems like it will be a good support level to buy, but it is too soon to tell. If price can base around that level, like it did at around $30, it might be a good place to get in.

IOTA Analysis

(Yes, I personally own IOTA)

IOTA is still largely unproven. It's use case is still probably about 5 years from being practical.

But it does have one big thing going for it, the database it uses to store transactions. Every other coin out there uses some version of blockchain technology or are built on top of the blockchain of another cryptocurrency.

IOTA uses an entirely different database structure.

Instead of using a blockchain, they use something called The Tangle. This type of database is different in that it is able to verify transactions faster, it can facilitate nano transactions and it can do zero-cost transactions.

Fundamental Analysis

The use case for IOTA is payment transactions between Internet of Things (IoT) devices. Developers of this currency want to enable IoT devices to make micropayments to each other, as well as to traditional bank accounts.

An example of where this might be useful in the future is pizza delivery. Suppose that you are sitting in your car at the park, with some friends.

Everyone is hungry, but nobody feels like leaving the park, since it is such a beautiful day. If Amazon has their way, drone delivery will work for packages and it will also work for ordering pizza to remote locations.

So you use your phone to place an order and in 30 minutes your piping hot pizza arrives. The great part is that you only get charged when the drone verifies delivery to the right person.

This scenario sounds great, right?!

But there are some big technology challenges associated with making this happen. First of all, transactions with Bitcoin can take 30 minutes, or more.

This is because multiple participants on the network have to verify the transaction. Would a drone be able to hover for 30 minutes before delivering the pizza?

Of course not. The pizza would get cold and the drone would probably run out of batteries.

A drone also would not be able to store the entire Bitcoin blockchain. The storage device would be too heavy.

This goes for any other IoT device.

On top of all this, there might not be an internet connection available.

IOTA technology could solve this. The drone could communicate with nearby IoT devices to verify an IOTA transaction. The verification process would be fast and very cheap to process.

To learn more, visit the IOTA website.

Technical Analysis

After a huge run up, price has cooled down and we are starting to see a level of support form at about $0.50. Since this currency has only been around for a little while, it's tough to say where the best buy level will be.

But if price consolidates at this level, it could signal a good basing pattern that we would need for another Baseball Cap pattern.

Bitcoin Analysis

(I own BTC, but only when I have to exchange it for other coins)

What about Bitcoin?

Almost everyone has heard of Bitcoin.

…and the price is still going up. At least when this article was first written.

But the big question is: Will Bitcoin be a good future investment?

Nobody knows for sure. However, if you are looking for a high return on your money, this probably isn't the currency for you.

Sure, price will probably go up a lot more from here. But on a percentage basis, the potential return gets lower by the day.

Even if Bitcoin gets to $10,000, like some people predict, that would “only” be a 107% gain (based on today's price). Meanwhile, coins like Ether have the potential to go up 3 to 5 times the current price.

Smaller coins can go up much more.

That is why I'm currently not an investor in Bitcoin. We believe that there is much more opportunity elsewhere.

Fundamental Analysis

Bitcoin has two big things going for it…

One is first-mover advantage.

Since Bitcoin was the first cryptocurrency to gain widespread popularity, it has been used for many cryptocurrency payment solutions. Everything from international remittance to online gambling sites.

While there have been complaints of slow transaction times, the fact that so many people are using it, means that it will not go away any time soon.

The other advantage is a very limited supply of coins.

There will only be 21 million coins ever made. Simple supply and demand tells you that limited supply means it will only get more valuable, as time goes by. Of course, this is assuming that there is still a demand for it.

Technical Analysis

BTC/USD is currently showing a steady trend and there doesn't seem to be a reason to believe that price will drop anytime soon. There is a strong support level at about $2,000 and minor support levels at $3,800 and $4,380.

Conclusion

The cryptocurrency landscape can change quickly, so be sure to do your homework before investing money in a cryptocurrency. However, we hope that this guide has helped you understand what to look for in a long-term investment.

Remember, never risk money that you cannot afford to lose. It can be easy to get caught up in the cryptocurrency hype. 

…and there is a lot more hype to come!

If you have any cryptocurrency investing questions, leave them below…

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