INTELLIGENT BITCOIN INVESTOR

Iman Shafiei
Table of Contents
INTRODUCTION
What are the Advantages of Bitcoins?
How Do Bitcoins Work?
Whу Should You Use Bitcoins?
How Do You Acquire Bitcoins?
How Do You Store and Save Bitcoins?
Bitcoin Wallets: Which One Is Better?
THE QUESTION OF LEGITIMACY: IS BITCOIN LEGAL?
Anonymity as a Feature of Criminal Activities
Digital Currency Laws across Countries
BITCOIN REGULATING AGENCIES
WHAT THIS MAY MEAN TO YOU
IS BITCOIN SAFE?
Bitcoin as Risky Currency
Thе Immunе Struсturе of Blосkсhаіn
Hacking Probabilities
The 51 Percent Attасk
Cryptocurrency Cyber Theft
WAYS TО KЕЕР BІTСОІNЅ SAFE
A CLOSER LOOK AT BITCOIN MINING
THE PROFITABILITY AND ACCEPTABILITY OF BITCOINS
HOW IS BITCOIN POISED FOR GROWTH?
BRАNDS AND BUSINESSES THAT ACCEPT BІTСОІN
Why are other businesses not accepting Bitcoin?
ARE THERE BITCOIN ALTERNATIVES?
TRADING AND INVESTING IN ALTCOINS: A CLOSER LOOK
The Trading and Investing Benefits of Altcoins
Some Altcoin Drawbacks
The Bitcoin Advantage over Altcoins
INITIAL COIN OFFERINGS
Getting the Most Out of ICOs
INTRODUCTION
Bitcoin is a digital currency that first came out in 2009. Since it is a digital or virtual currency, it
may be sent or exchanged through the internet. It is one of the first digital currencies to be
decentralized, with its creation attributed to an individual known as Satoshi Nakamoto. Bitcoin
today is considered to be the future of online currency, and it’s easy to see why.

What are the Advantages of Bitcoins?

As a type of online currency, Bitcoin offers a wide range of benefits. The following are some of
its strongest advantages:

 Fast, internet-based transaction. When you use bitcoins, you don’t have to make any
bank transactions or employ a middleman for facilitation. Instead, you can perform any
transaction through the Internet, making the process more efficient.

 Reduced transaction fees. The nature of direct and straightforward transfers eliminates
the need for expensive transaction payments, specifically as it is done over the Internet.

 Global circulation. Bitcoins, unlike traditional currencies, are accepted across countries
all over the world.

 Growing market. Various businesses and brands, such as Microsoft and Paypal, accept
bitcoins as currencies. The list of businesses that allow for purchases to be made
through bitcoins is steadily growing.

 Buyer ease. With their ease in making payments and the rising number of merchants
that accept them as currency, bitcoins are considered as a favorable means of doing
financial transactions online.

How Do Bitcoins Work?

Whether you have dollars, euros, or any other type of currency, you can exchange them for
bitcoin. Digital wallets are necessary to store bitcoins properly, and these ‘wallets’ may be
located on your own PC, mobile device, or via a third-party website. Once you have bitcoins,
you can purchase anything in any currency without the lengthy transactions associated with
banks and other financial websites.

Whу Should You Use Bitcoins?

Now, you might want to ask ---- if I can use my traditional currency in order to buy goods and
services, why would I want to use bitcoins instead?

The answer is simple. They’re easier and less expensive to use, no matter where in the world
you are.
Since bitcoins are not tied to any country, it does not come with strict regulations. This makes it
easier and faster to make international payments. Even small to medium enterprises can stand
to benefit from bitcoin payments, as there are no fees and other charges involved. It is also
possible to buy any kind of merchandise through bitcoin and still maintain your anonymity as a
buyer. Due to the promising future of bitcoins, many people are already buying them for
investment.

How Do You Acquire Bitcoins?

There are several ways by which you can acquire bitcoins, and these include purchases or
exchanges, transferring, and mining.

 Buy through an exchange. If you plan to buy or sell bitcoins, you can do so through
sites known as bitcoin exchanges. You may use any currency you prefer when
purchasing bitcoins.
 Transfers. Sending bitcoins to another party is as easy as accessing your mobile
phone, personal computer, or accessing online platforms. It works in the same way as
making digital money transfers
 Mining. You may also acquire bitcoins through mining, which is essentially competing to
mine bitcoins by investing in computer hardware and solving complex mathematical
equations. Mining is a way to secure the network, and miners are regularly rewarded for
newly verified transactions. These transactions, in turn, are recorded in a publicly
transparent ledger. Recently, cloud mining has made it possible for miners to continue
their efforts without having to invest in costly infrastructure. Through cloud mining,
miners simply invest in third-party websites which will take care of infrastructure and
hardware requirements.

How Do You Store and Save Bitcoins?

Bitcoins are stored in digital wallets which may be downloaded to your computer, secured in
your mobile device, or saved in the cloud. A digital wallet works in the same way as a virtual
bank account. Through these wallets, you can make any transaction such as sending or
receiving bitcoins, paying for purchases or simply saving your bitcoins for future investing.
Unlike money saved in bank accounts, bitcoins stored in digital wallets are not insured by the
FDIC or the Federal Deposit Insurance Corporation.

Bitcoin Wallets: Which One Is Better?

 Wallet in the cloud. One of the biggest advantages of storing your bitcoins in the cloud
is doing away with computer wallet installations. Sometimes, installing in a PC will
require long syncing processes. However, it is easier to hack and compromise a wallet in
the cloud compared to one installed on a PC. The good thing about cloud bitcoin wallets
is that most of them are highly secure.
  Wallet in your computer. If you are someone who doesn’t want to take Internet-related
risks, storing your bitcoins in a PC-installed wallet is a good option. Nonetheless, the risk
of compromising your coins is still possible, especially if you reformat your computer
without storing the bitcoins in another wallet first, or if the PC is compromised by a virus
attack.

On Bitcoin Anоnуmіtу and Innovation

One of the biggest advantages of using bitcoin is that there is no need to provide your real
name during a transaction. Although bitcoin transactions are recorded in a public log, this log
registers only wallet IDs, and not the owner’s names. This ensures that every purchase or sale
that you do through bitcoin is kept private and not available for tracking.

In addition to its benefit of anonymity, bitcoins are also highly innovative. In fact, its effect on
financial transactions is comparable to the effect digital, or web publishing has had on print
publishing. In simple terms, bitcoin is changing the financial landscape. Anyone can easily
review its processes, due to bitcoin’s open source software. It allows for the fostering of new
ideas and concepts. And with minimized fees and no chargebacks, it’s easier for new
businesses to flourish.
THE QUESTION OF LEGITIMACY: IS BITCOIN LEGAL?
The questions on legality that surround Bitcoin are not surprising. Crucial to these questions is
the fact that bitcoins are not subject to regulations. To those who are used to transacting only
through fiat currency, bitcoin’s unregulated operations can be questionable.

Nonetheless, Bitcoin is far from being a counterfeit or illegal digital currency. First of all, it is not
fake money. Businesses have been accepting bitcoins as payments just like they would accept
any other existing currency. Secondly, the lack of regulations governing bitcoins does not
necessarily point to its illegitimacy. Since bitcoins provide an entirely new way of making
payments, no concrete rules have been made as of yet in order to regulate its use in a wider
market.

Finally, bitcoins do not violate any laws; hence it is a mistake to refer to it as an illegal means of
transacting financially. In fact, the IRS considers Bitcoin as properties similar to stocks and
bonds. Thus, federal law mandates that the sale and purchase of bitcoins must be treated as
the transactions of any other stock property.

In 2013, the Financial Crimes Enforcement Network of the U.S Treasury Department did not
consider the purchase of well-natured products and services through bitcoin as an illegal
activity. Mining bitcoins, however, may be subject to specific laws that regulate its operations
and use. Bitcoin miners typically fall into the category of money transmitters. This means that
miners must follow certain laws. Up to the present time, however, none of those laws have been
employed as means to subvert the use of bitcoins.

Anonymity as a Feature of Criminal Activities

One of the events that led to speculations on bitcoins’ illegitimacy is Silk Road’s duplicitous
activity. Silk Road used to be a digital marketplace for illegal goods, where bitcoins were
considered as the only acceptable payment. The primary reason for using bitcoins is its
anonymity since buyer identities will remain undisclosed during and after the sale. This makes it
difficult for authorities to track down the persons involved in such illicit transactions.

Thus, authorities in the United States and other countries are concerned with the possibility that
bitcoins will be used to facilitate more illegal transactions, such as money laundering and the
exchange of illegal goods. In 2012, the FBI published a document that tackled the issues
surrounding bitcoins and its distinction against other digital currencies, such as eGold and
WebMoney. One major cause of concern raised by the FBI was the possible lack of regulations
in offshore services and overseas exchanges. Tracking illicit activities beyond U.S. borders may
be more taxing, if not near impossible.

While the FBI has already successfully shut down Silk Road in October 2013, especially after
US Senator Charles Schumer’s called bitcoin a “surrogate currency,” the connection between
this notorious site and bitcoin as its sole payment mode has nevertheless lingered. This has
engendered an erroneous label on bitcoin as a dubious digital currency. In another case, the US
Drug Enforcement Administration seized bitcoins from a US resident in June 2013 after finding
out that the individual has used them in acquiring a controlled substance.

While its features of anonymity may render bitcoin as an attractive type of virtual currency for
illicit transactions, this does not qualify bitcoin as an illegal currency. Countless illicit
transactions all over the globe are being made through cash, gold, and bitcoin payments.

Nonetheless, the lack of proper regulations regarding the use of bitcoins makes it a complex
currency to use, especially during exchanges and mining activities.

Digital Currency Laws across Countries

The use of bitcoins is viewed differently across countries all over the world. In Iceland, for
example, bitcoin is automatically classified as illegal. Many countries have released statements
classifying digital currencies, including bitcoin, as non-regulated currencies. However, bitcoin is
generally considered a legitimate currency for legal transactions. As long as bitcoin is not used
for illegal means or the exchange of illicit goods and services, it does not translate to any law
violation.

If you are using bitcoins or planning to invest in bitcoins, it is important to consider your location.
You need to understand which regulations govern bitcoins in your country. The laws regarding
digital currencies, including bitcoins, continue to shift and change. Bitcoins will continue to grow
in popularity and use. Given these factors, it is understandable how bitcoins will continue to
generate questions in the months or years to come.
BITCOIN REGULATING AGENCIES
Different countries regulate bitcoins through various agencies. In the US, various national and
state agencies serve as bitcoin regulators. The following are agencies which have already
initiated regulations or have expressed intentions to draft regulations in the future:

 FinCEN

FinCEN or the Financial Crimes Enforcement Network, an agency within the US Treasury
Department has published guidelines on virtual currencies and their use. Published on
March 18, 2013, these guidelines aim to define the circumstances which will categorize
virtual currency users as money transmitting businesses (MTBs) or money services
businesses. MTBs must strictly follow the mandate on Anti-Money Laundering (AML), which
prohibits financial laundering practices and Know Your Client (KYC) measures, which
requires businesses to identify the individuals or other businesses they are transacting with.

 CFTC

CFTC or the Commodity Futures Trading Commission takes care of financial derivatives in
the U.S. Although they have not made any regulations as of present time, it has already
announced that it would do so when necessary.

 SEC

The SEC or the Securities and Exchange Commission has not issued any concrete
regulation on virtual currencies. However, it has published pertinent investor alerts through
its Office of Investor Education and Advocacy. These alerts have specifically focused on
dishonest investment schemes, such as Ponzi schemes and other schemes that use bitcoin
payments. These alerts were made after the case of Trendon T. Shavers (also known as
‘pirateat40’), a Texas resident who was criminally charged after founding and operating the
Bitcoin Savings and Trust. This fraudulent company aimed to raise 70,000 bitcoins by
promising up to 7% in weekly interest to investors.

According to the SEC, virtual currencies are considered as securities and should abide by
guidelines governing securities.

 THE LEGISLATIVE BRANCH

It was in August 2013 that the US Senate sent a letter of inquiry regarding the risks of virtual
currencies to law enforcement agencies across the country. One of these agencies was the
Department of Homeland Security. The letter included a request for policies and guidelines
pertaining to the treatment of virtual currencies. One major concern was the lack of paper
trail that could be used by regulating agencies to examine digital currency transactions.

By November 2013, the agencies have sent in their reply to the Senate. The Department of
Homeland Security expressed concerns about the possibility of criminal activities instigated
by the anonymity inherent in bitcoin use. Nonetheless, the Department of Justice and the
Federal Reserve have acknowledged the legitimate use and value of virtual currencies.
Due to the case instigated by SEC, the legislative branch of the U.S. government has
determined Bitcoin’s legal classification. In the Shaver case of Texas, the accused
attempted to declassify bitcoin as money. Judge Amos Mazzant, however, responded to
Shaver’s claims by issuing a memorandum classifying Bitcoin as legitimate money or
currency.

 U.S. STATES

Bitcoin follows specific regulations and guidelines that tend to vary from one state to
another. In California and New York, efforts have been made to relentlessly pursue Bitcoin-
related organizations. In New Mexico, South Carolina, and Montana, however, there are no
specific regulations that govern MTBs or money transmitting businesses.

A brief history of state government approaches on bitcoin use began in May 2013 through a
letter from the state financial regulator of California to the non-profit Bitcoin promotional
entity, Bitcoin Foundation. The letter warned the organization that it may be operating as a
non-licensed money transmission business and could face possible fines and imprisonment.
In August 2013, the Department of Financial Services in New York did the same, although
the letters were addressed to 22 bitcoin companies by means of subpoenas. The
communication, however, was more conciliatory than accusatory in nature, as it simply
contained a request to develop the necessary regulatory guidelines for digital currencies.
This resulted in a more positive approach to the virtual currency industry. Specifically, this
led to the consent for digital currency exchanges starting 2014, after the announcement of
state Superintendent of Financial Services Mr. Benjamin M. Lasky in New York.

In June 2015, the New York State Department of Financial Services put up BitLicense, the
first virtual licensing agency to address concerns on bitcoin and other digital currencies in
the United States. The regulations found in BitLicense are different to the financial
regulations on technology put up by other states such as Texas and Vermont, and the prior
legislation amendments done by California.

 PRIVATE SECTOR COMPANIES (BANKS)

Some banks have suspended the accounts of depositors who were found to have operated
at bitcoin exchanges. In some of these cases, the reason for closing the accounts was the
failure of the owners to open a money transmitting account instead.

Nonetheless, the US Senate has already answered these questions on banking and federal
regulations regarding bitcoin exchanges. While there is no certainty for legislation as a result
of these Senate hearings, agencies have released positive feedbacks from these hearings,
specifically on the legitimacy of bitcoin as a digital currency.
WHAT THIS MAY MEAN TO YOU
In a nutshell, the legality of bitcoins depends on where you are located, who you are, and what
you are doing with the coins. As a bitcoin stakeholder, you may fall into one or more than one
categories. You must understand that each category comes with its own legal considerations.

 Users. Users refer to individuals who use bitcoins whether for spending or hoarding. Per
FinCEN rules, it is legal to use bitcoins as long as you simply do it for the purchase of
goods and services. As a user, you will not be regulated under the category of a money
transmitter.

 Miners. If you obtain bitcoins through mining, you may be considered as a money
transmitter and, therefore, subject to money transmitting rules. A money transmitter,
according to FinCEN, is an individual that reproduces units of virtual money and sells
those units to another entity for traditional currency.

If you are a miner, you will be declassified from simple bitcoin user to money transmitter.
As a result, you will have to abide by rules on money transmitting businesses.
Nonetheless, bitcoin miners continue to request for clarificatory information from FinCEN
regarding their status. As of present time, this issue has not yet reached any court
process.

 Exchangers. FinCEN defines exchangers or those that exchange their currencies for
bitcoins, as money transmitting businesses. The agency furthermore defines an
exchanger and money transmitter as someone who accepts bitcoins from one entity and
transmits this virtual currency to another for the same purpose as transmitting any
currency or funding.
IS BITCOIN SAFE?
Clearly, Bitcoin is beyond mainstream. In fact, it may be reasonable to expect that bitcoins will
never be considered mainstream for a long time. However, to ignore the value of bitcoins may
be a hasty route to take.

As of January 2017, $14.9 billion worth of bitcoins have already been circulating. Blockchain,
the technology supporting bitcoin, has steadily grown in popularity. The blockchain infrastructure
may eventually challenge certain processes of traditional trading, banking, and other types of
financial transactions.

Still, the question remains: how safe are bitcoins?

Bitcoin as Risky Currency

As cryptocurrency, bitcoins cannot be without some considerable risk. In a report made by the
Global Markets Research Department of Credit Suisse, the value of cryptocurrency is three
times more volatile than the value of oil and eleven times more unstable than the exchange rate
between the dollar and the British pound.

During transfers, bitcoin amounts are irreversible. Thus, there should be no room for errors
when typing amounts during purchases or transfers. Also, the password that users employ to
access their bitcoin accounts is private and non-resettable. In cases where the user forgets the
private key, or someone else hacks into it, the bitcoins become irretrievable.

Thе Immunе Struсturе of Blосkсhаіn

Despite the risky consequences of potential hacking, the blockchain technology supporting the
exchanges of bitcoins is considered to be immune to hacking possibilities.

Instead of recording individual accounts, what the architecture does is to compile all past
transactions done through bitcoins. During an individual transfer, all computers that run on
bitcoin software will process the public signature of the sender. This signature will be verified
along with the encoded transactions in the blockchain to identify whether it was the actual owner
of the account that has sent the bitcoins.

There are other computers involved in the blockchain that validate the process further. Once the
transaction is done, it is collected into a record of all previous transactions. Miners then start
competing on a mathematical puzzle meant to authenticate the blockchain. Before a miner can
be declared a winner, other miners will have to verify first the validity of all transactions. The
winning miner gets newly-minted bitcoins as a reward for an accurately solved blockchain
puzzle. This is a good way to increase the supply of bitcoin currency and to ensure the accuracy
of each bitcoin exchange or transaction.
Hacking Probabilities
Nonetheless, questions on the probability of hacking still surround the bitcoin industry. Is it
possible for a hacker to manipulate the blockchain and transfer money to his or her own
account? The answer is yes, but only if the hacker possesses superior computing capabilities.
This is because a current bitcoin exchange transaction can be validated only by viewing all past
transactions. This means a computer will have to solve not only a present blockchain but also all
blocks related to it. The blockchain is so complex and intricate that Credit Suisse has compared
it to a geological layer, with the recent blocks as the soft soil and the previous blocks as hard,
sedimented rocks. The deeper the blockchain goes, the more complex it becomes. This makes
the blockchain more difficult to hack and manipulate.

The 51 Percent Attасk

There is also considerable risk that occurs when bitcoin miners concentrate bitcoin value shares
among themselves. There is the possibility of risking new transactions or deleting previous
transactions in the event that a single party is able to gain control of more than 51 percent of the
entire network. Credit Suisse estimates that even a 30 percent control of the network will allow a
malicious miner to interfere with recent transactions. Thus, a 51 percent control attack could
potentially result in the collapse of all bitcoin value. An attack of this scale will affect not only
those of the malicious miners themselves but also the assets that they are hacking. It is
possible, thus, for any malicious attacker to be a miner himself, to begin with, someone
extensively familiar with the process needed to ensure the legitimacy and accuracy of the entire
ledger.

Cryptocurrency Cyber Theft

There is no question that the unique design of the blockchain technology has the ability to deter
hacking attempts. However, online exchanges and digital wallets can fall victim to cyber attacks.

On Bitfilnex exchange in August 2016, hackers compromised 119, 756 bitcoins with a total
value of $82 million. One of the biggest instances of cyber attacks took place in 2014 through
the Mt. Gox bitcoin exchange, which eventually filed for bankruptcy after hackers were able to
steal 850,000 bitcoins valued at $590 million. Recovery efforts were made, but the number of
reclaimed coins amounted only to 24 percent of the total sum. After various reports revealed the
unscrupulous business practices from within the company, Japanese prosecutors charged Mt.
Gox CEO Mark Karpeles with embezzlement.

In conclusion, blockchain technology is a highly secure architecture for digital currency trading
and exchanges. However, it is when a malicious entity attempts to manipulate the structure that
the system --- just like any other --- runs the risk of a compromise.
WAYS TО KЕЕР BІTСОІNЅ SAFE
Given the increasing value and growing popularity of bitcoins, one of the biggest concerns for
investors would be where and how to keep them safe.

Bitcoins, unlike tangible coins, cannot be stored in a physical location. As a digital currency,
bitcoins are stored and accessed through bitcoin addresses. These addresses need digital keys
or passwords for access.

To fully secure your bitcoins, you need to make sure that these digital keys are protected at all
times.

There are two keys for every Bitcoin address, and these are the public key and the private key.
The Bitcoin address, which is visible to the public, is derived from the public keys. This address
is similar to any email address that you will share with contacts. The private key, on the other
hand, functions like your email password. You use it to access your digital wallet so you can
send bitcoins for purchases or exchanges. To protect your bitcoins in the digital wallet, you must
keep the private keys secure at all times.

When it comes to protecting your private keys, using a private password is just one step. You
can also opt to keep your bitcoin access offline, such as in another database, in order to protect
your bitcoins from Internet threats such as hackers.

You may also utilize multisignature addresses. These addresses allow several parties to hold a
part of the address as a key. In order to access the bitcoins, you will have to get the approval of
the other users of the address. In these multisignature addresses, it is possible to choose how
many user signatures are needed. Also, it is possible to choose a variety of devices for multiple
verifications, making the account more secure from hackers.

When choosing the best way to secure your bitcoins, it is best to evaluate each option according
to their advantages and disadvantages. Accessibility is important, but you also have to make
sure that your bitcoins are not accessible to malicious individuals and bad actors both online
and offline
A CLOSER LOOK AT BITCOIN MINING
As digital currency, bitcoin money is not printed. Unlike traditional fiat money systems that allow
governments around the world to print new money, bitcoin is discovered and mined. All over the
globe, computers mine bitcoins by way of competition.

 Hоw dоеѕ mіnіng take рlасе?

When people send bitcoins over the network, these transactions are recorded into a ledger.
This is done to keep track of payments, including the senders, receivers, and the kinds of
transaction that took place. The transactions are collated into a list, also known as a block.
When a transaction takes place, the miners verify and confirm the transactions and record
them into a public ledger. This long list of blocks is called a blockchain.

The blockchain is used to identify, evaluate, and confirm any transaction done between
bitcoin addresses. A new list is added to the blockchain after a single transaction. However,
the ledger is available only digitally. This raises the question of security and accuracy. To
ensure that the blockchain is continually updated and verified, the miners involve
themselves and subject each update into a process. With information derived from the
block, the miners apply a mathematical formula to arrive at a hash. The hash is composed of
randomly sequenced letters and numbers, which is compiled along with the block. The hash
can be found at the end of a blockchain within a specific period.

 What are other features of the hash?

A hash is a unique combination of letters and numbers that play a role in keeping a
blockchain intact. Although data from a block can be used to generate a hash, it will be
impossible to identify the data used from which block just by simply looking at a hash. Each
hash is unique so that altering any character in the bitcoin block will also alter the resulting
hash.

Furthermore, miners do not generate a hash simply by sifting through transactions in the
blockchain. The hash of the last block stored in the blockchain is also needed in order to
create a new hash. This makes the blockchain more secure and easier to identify if and
when tampering occurs. A fake transaction may involve altering a stored block, which will
then result in a change in the block’s hash. Once a hashing function is run, and the hash is
found to be dissimilar to the one stored in the blockchain, the transaction will be classified as
fake.

 How do miners compete for coins?

Using software specifically designed for mining blocks, miners compete among themselves
to seal a block and create a correct hash. Once a miner is able to do this, he or she gets
rewarded with 25 bitcoins. This has provided a solid incentive for mining to continually take
place as well as for the blockchain to be constantly updated and secured.
Nonetheless, computers may find it too easy to generate a hash from available block data. It
is important for the bitcoin network to make the process more complex in order to prevent
the generating of hashes in just a matter of seconds. To establish a sort of protocol, Bitcoin
requires proof of work. The hash has to appear in a certain way, such as having the required
number of zeroes. To create a different hash, miners have to use a nonce. The nonce is
altered every time a hash fails to follow a specific format, and the hashing process
recommences. It is important to find a nonce that generates a hash in the required format.
Miners earn bitcoins once this correct hash is created.
THE PROFITABILITY AND ACCEPTABILITY OF BITCOINS
In a Bitcoin network, you can find a unique set of players who do not trust everybody else, so
that verification takes top priority. It also helps that participants are given incentives to take part
in verification. Bitcoin miners are the ones responsible for keeping the entire infrastructure safe
and secure. In return, their work is paid for through new bitcoins and network fees paid for by
Bitcoin users. Despite the bitcoin network’s bi-weekly update on the difficulty involved in mining,
the number of bitcoin mining participants shows no signs of slowing down.

HOW IS BITCOIN POISED FOR GROWTH?

Recent media mileage has placed bitcoins and other cryptocurrencies in the spotlight, especially
with their market performance in investment value. The fact that the U.S. dollar continues to
weaken has also helped catapult bitcoins into a bigger share of the currency market. Afterall,
U.S. consumers are not interested in investments that involve a weak currency.

Another characteristic of bitcoins is that it is an investment opportunity capped only at 21 million.

Compared to the infinite monetary base of the dollar, bitcoin is a limited resource. To some
investors, this could point to the bitcoin’s capacity for preserving and improving wealth over a
period of time.

Furthermore, the number of countries and industries that accept bitcoin for legal transactions
has grown over the years. One of these countries is Japan, which is known for its robust
economy. In the marijuana industry, bitcoins provide an efficient way for consumers to procure
marijuana since banks do not allow transactions with pot-based businesses.
BRАNDS AND BUSINESSES THAT ACCEPT BІTСОІN
Presently, many renowned brands and businesses accept bitcoins as payment for goods and
services that they offer. Five of these companies or businesses are listed below:

 Overstock.com

Overstock is one of the first online companies to accept bitcoin as payments, starting in
2014. In January 2014, Overstock partnered with Coinbase to facilitate transactions
using bitcoins. The amount that CEO Patrick Byrne allowed to be reserved as bitcoin at
Overstock is only around 5% to 10%, a small but nevertheless promising cryptocurrency
investment.

 DISH Nеtwоrk

DISH network, a satellite television company, announced in May 2014 that they would
start accepting bitcoins as payments. DISH also partners with Coinbase. According to
COO Bernie Han at the time of the announcement for bitcoin payments, the decision
was based primarily on customers’ clamor to allow them the option and flexibility of
paying through bitcoins.

 Microsoft

As early as 2014, Microsoft has allowed their customers to purchase Windows content
and Xbox store products through bitcoins. In addition, Microsoft supported the Azure
Blockchain service platform for large-scale businesses, which was used in the
processing of financial data. Recently, Microsoft announced an adaptation of Excel
2017, allowing users to calculate and format bitcoin through their platform.

 Intuit

Intuit, the software company behind Turbo Tax and Quickbooks, has also allowed for the
payment of bitcoins. Intuit and BitPay announced in 2014 that they are integrating bitcoin
payments into the QuickBooks PayByCoin service. This service ensured better efficiency
when paying through bitcoins, especially for B2B clients who have had to deal with bank
transfer delays and charges.

 PayPal

In September 2014, Paypal began accepting bitcoins through its integration with
Braintree. In addition, it has also partnered with CoinBase, GoCoin, and BitPay at the
same time. Senior Director Scott Ellison clarified, however, that the role of Paypal in
these bitcoin transactions will simply be that of an intermediary.

Why are other businesses not accepting Bitcoin?

Given Bitcoin’s rising popularity and legitimacy as evidenced by its partnerships with stable
businesses, you may be asking why some businesses still do not accept bitcoin.

To answer this, it is necessary to consider two crucial factors — volatility and lack of regulation.

The value of bitcoin is still considered to be highly volatile so that businesses could suffer
through massive losses overnight. A concrete illustration: Within a single day, from June 25 to
June 36, bitcoin prices plummeted to more than $200. For businesses, this could mean
depletion in deal values anywhere from 7% to 10% in just a few hours. In these instances,
Bitcoin’s lack of governmental backing works more against it than for it.

Regulating bitcoin is also a tricky path to tread. U.S. lawmakers have threatened to impose strict
regulations on the currency especially since it is being used for marijuana-related transactions.
ARE THERE BITCOIN ALTERNATIVES?
Bitcoin is just one kind of cryptocurrency, which means that there are other cryptocurrencies
that you can use for your investment. These are known as altcoins or alternative coins. The
following are some bitcoin alternatives that you can look into.

 Ethеr

Owning up to 30 percent of market share, Ether is the second-largest participant in the

cryptocurrency market, next to Bitcoin. Although Ether first started out as a network
(then known as Ethereum) for betting and ride-sharing, it eventually evolved into a
currency meant for daily transactions. However, Ether has not been on the market for as
long Bitcoin has, which means that it could pose serious security threats due to its lack
of sufficient testing.

 Rіррlе XRP

Ripple XRP was primarily used for banks to efficiently transfer funds between
currencies. One of the biggest advantages of Ripple XRP over Bitcoin is that the former
can process as many as a thousand transactions in a span of a mere second. By
contrast, Bitcoin can manage only seven per second. Investing in XRP could also bring
in benefits as regulators are supporting the use of XRP in banking transactions. One
caveat, though, Ripple only owns 60 percent of its coins, which means they are
significantly dependent on the actions of their shareholders.

 PоtCоіn

As a way to help facilitate transactions in the growing cannabis industry, PotCoin was
generated. There are no middle banks required in a Potcoin transaction, as the coins are
facilitated directly between buyer and seller. Available for use globally, PotCoin
increased its value recently when it sponsored a North Korea trip for Dennis Rodman in
June 2017.

 Lіtесоіn

Litecoin employs almost the same programming structure with Bitcoin, although the
former is designed for more widespread use. Bitcoin miners require specifically designed
computers, whereas Litecoin miners only need home PCs. In May 2017, Coinbase
added Litecoin to its trading platform, increasing its value in the market and attracting
more users and investors.

 Zсаѕh

One of the competitive advantages of Zcash over Bitcoin is that it claims to employ a
more intricate blockchain technology to ensure better user privacy and encryption of
transactions. With Zcash, two parties can participate in an exchange without knowing the
 identities of those involved in the transaction. Despite the promise that Zcash has
manifested, it is still a new player in the cryptocurrency market. Some security concerns
have cropped up as a result. If these setbacks are managed well, Zcash could easily
become a good investment catch.

 Dаѕh

Dash, which used to be known as Darkcoin, has already partnered with a gift card
company and a payments gateway website. In addition, it has started working with a
digital currency exchanged based in Venezuela. A huge component of Dash’s potential
staying power in the market is its peer-to-peer network, which it claims to foster
improved capacity and better security.

 Siacoin

Siacoin is no small player in the cryptocurrency market, as it was born out of MIT in
2013. It is the virtual currency used in renting cloud storage and in data transmitting and
encrypting on the Sia cloud platform. Transactions are done via Siacoin, including
mining and trading, employ what is known as smart contracts. This altcoin is considered
to be a sleeping giant due to its huge potential as an emerging major player in the
market. However, Siacoin is still in its early stages. Like any alternative currency, it could
decline in value overnight due to volatility and other factors.
TRADING AND INVESTING IN ALTCOINS: A CLOSER LOOK
Altcoins come from two words – ‘alt’ and ‘coins.’ These words roughly translate to alternative
coins or alternative currencies. After the launch and the success of Bitcoin, other
cryptocurrencies have begun to enter the market. Many of these cryptocurrencies highlight their
advantages over the more established Bitcoin, especially when it comes to security and
flexibility. Other features that altcoins tend to improve on are privacy or confidentiality, DNS
resolution, transaction speeds, and many others.

Although these altcoins attempt to present themselves as more distinct and more beneficial than
bitcoins, the reality is that many of them are still patterned heavily on the framework of bitcoins.

The Trading and Investing Benefits of Altcoins

There is no denying the potential of altcoins in the cryptocurrency market. Some altcoins, such
as Ether, are performing exceptionally well in the market. Some of the factors that could be
attributed to this are the availability of cheaper transactions and the accessibility of blockchains
that could accommodate high-volume transactions. One of the comments regarding Bitcoin is
that the high fees do not necessarily correspond to its less-than-ideal speeds. Furthermore,
altcoins are viewed to be more flexible when it comes to managing risks as some of them could
provide more diverse trading and investing alternatives.

Some Altcoin Drawbacks

Not all altcoins are ripe for investing, however. Many altcoins in the market may appear to be
distinctive, offering a host of interesting benefits. However, some of them are simply weak
spinoffs of Bitcoin or other better-established cryptocurrencies.

Thus, it is important to look first before you leap, as far as investing in altcoins go. It is also
crucial to see whether the benefits marketed by these altcoins are ‘actual’ benefits or empty
promises. For instance, an altcoin that boasts of a high number of coins could mean that each
coin has a lesser value compared to other digital currencies.

The Bitcoin Advantage over Altcoins

As already mentioned, many alternative currencies appear to be promising and have fared
exceptionally well in the market. However, not all of them can outperform the market presence
and performance longevity shown by Bitcoin. Some of these altcoins have exchange rates that
are several times more volatile than bitcoins, making them a high-risk investment.

Bitcoin’s strongest benefits over altcoins are on security and testing. For the past eight years,
Bitcoin has not had any major security breach that has risked any investment to a considerable
degree. One of the reasons is that Bitcoin has undergone and continues to undergo strict and
consistent testing throughout all these years in operation.
The accessibility of Bitcoin is also one of its clear benefits. The fact that major companies such
as Microsoft and Paypal have partnered with it is already proof of its legitimacy and staying
power. Thus, although altcoins may be ideal for smaller investments and transactions, any
large-scale cryptocurrency investing will stand to benefit better from Bitcoin.
INITIAL COIN OFFERINGS
Also known as Initial Coin Offering, ICO is a fund-raising venture meant to help cryptocurrency
startups obtain capital. It is largely unregulated, which means that this process is typically done
to evade the tough and heavily-regulated process of raising capital through banks and venture
capitalists.

An ICO works through the same principle of an IPO (Initial Price Offering), which you will have
to look into prior to buying stocks. In an ICO, you purchase cryptocurrency instead. Usually, you
purchase these cryptocurrencies from a startup, which makes the promise that you will own
some its assets relative to the investment value you have made into the company. In an ICO,
you will own assets in the form of digital coins. In an IPO, buying stock can provide you with
voting rights or even equity. When you purchase coins in an ICO, you do not have any equity
rights. The value of the coins is heavily influenced by the value of the digital currency company
issuing them.

In an ICO procedure, its developers will first declare its plans for the project or currency startup,
and after which they will create a white paper to explain important details about the offering.
They will also procure the support of advisors in the industry and decide on the tokens for
offering. The ICO will then be advertised and held to interested entities.

Getting the Most Out of ICOs

Although many ICOs are legitimate, not all of them are worthy of your time or money. ICOs are
unregulated, and this could open the process to scammers who do not intend to return any of
your investment. Thus, it is important to exercise caution when planning to invest in an Initial
Coin Offering.

An important guideline is to see whether the published white paper has clearly established the
details of the offering. The agenda should be crisp and clear. It is also important for the
identities of the developers to be readily available and accessible. One red flag is for the
developers to hide under aliases or not have their location and contact details visible to
interested parties.

Investing in ICOs comes with solid advantages such as being able to support worthwhile
cryptocurrency projects. Also, ICOs do not require strict and rigorous paperwork, making it a
relatively easy investment scheme compared to IPOs. Nonetheless, its unregulated
environment can make it an attractive playground for scammers. There is also the worry that the
investment is being made only through pure speculation. Network congestion could also result
in failed transactions.

Nonetheless, ICOs continue to open new opportunities for innovative projects and valuable
cryptocurrency technologies. Also, it provides incentives to those who have the skill and the
resources to foster pioneering solutions to new and expected problems in cryptocurrency
transactions. The important step in any investment, whether in an IPO or ICO, is to be cautious
and to study each investment scheme as much as possible. This helps to track down ICO
scams and to channel funds into projects that provide real and long-term digital currency
benefits.
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