This is my story about the first interactions I had with cryptocurrencies and what I learned along the way. Enjoy!
My first experience with cryptocurrency was none other than the heavyweight; Bitcoin. Initially, I downloaded coinbase and simply monitored the price of bitcoin for a few weeks. I was skeptical at first, I was scared by the volatility and the fear of the unknown. During those initial weeks, I delved into the technology behind Bitcoin, I didn't want to invest without doing some research. I discovered that Bitcoin is decentralized and therefore has no central point of failure. It is free from the risks of manipulation and censorship. Unlike traditional fiat currencies, bitcoin can be used anywhere in the world, it isn't restricted by borders. Furthermore, Bitcoin can be transferred almost instantly, without the need to rely on a third party. This is made possible by revolutionary blockchain technology.
A blockchain is a system that records transactions on a ledger. The ledger is distributed across all of the nodes in the network and can be accessed at any time by anyone on the network. The transactions recorded in the ledger are verified by general consensus, If the majority of the nodes on the network approve of a given transaction, then it is valid. This ensures that all of the ledgers on the network are exact copies of each other. If the data from a given node is lost, there is no need to worry, as there are exact copies of the same ledger on every other unaffected node. Furthermore, if a malicious attack is attempted from a given node - say the creation of a fake transaction - then the network will simply ignore this malicious attack. This is because every other ledger on the network contradicts the transaction on the malicious ledger; this is the power of general consensus and decentralization.
The result of decentralized blockchain technology is Bitcoin; a fast, cheap, un-hackable, and reliable way to transfer money which far exceeds the capability of any traditional fiat currency system.
After researching the technology behind Bitcoin I was convinced that blockchain technology is the future of transacting money and Bitcoin is the most successful embodiment of blockchain technology. Blockchain technology allows money to be accessed and transferred as easily as information. My attitude quickly changed from being skeptical about Bitcoin to wanting to invest every penny I could spare into Bitcoin. Consequently, I invested some money into Bitcoin and waited to reap the profits. Shortly after my investment, the price of Bitcoin plummeted by a significant amount and I started to panic. Through the panic, I sold all of my Bitcoin with significant losses. Not long afterward the price of bitcoin peaked yet again and then stabilized just above my initial buy-in value. I instantly regretted selling my Bitcoins.
I studied Bitcoin further and came to the conclusion that volatility is inevitable for such a new technology and is to be expected. However, since the advent of Bitcoin, it is easy to see that the long-term trend in Bitcoin price is an upward trend. The moral of the story is that bitcoin is not a get rich quick scheme, it is a long term investment and you should only invest if you truly believe in the technology. Invest and hold, even through price drops and heavy volatility!
I would also like to stress that you should never invest more than you can afford to lose. Yes, Bitcoin is promising but no one can predict the future and you could potentially end up losing all of your money. Furthermore, do your research! Only invest in a coin that you believe in.
Not long after my introduction to Bitcoin, I discovered the rich world of altcoins. Altcoins also use blockchain technology to transfer money just like Bitcoin. However, the most promising of the altcoins offer a unique feature or service which separates them from Bitcoin and other altcoins. An example is Ethereum, which is a platform based on blockchain technology that allows developers to build and deploy decentralized applications (dapps). These dapps are powered by Ether (ETH) which is the currency native to the Ethereum network. It turns out that blockchain technology can be used for more than just a peer to peer digital cash system such as Bitcoin. Blockchain technology can be used to deploy smart contracts, record property ownership, identity management... The list goes on.
I would like to point out that I am no expert in the cryptocurrency space. I am simply on a journey to learn as much as possible about this new technology and to make the most out of the opportunity that lies before me. Cryptocurrency has the potential to change lives if well-informed investments are made in cryptocurrencies that offer something valuable to the world. I would like to share what I learn with the Steem community and hopefully, you guys can share some of your knowledge and insights with me! We can all learn together.
I plan on posting more about blockchain technology and altcoins that I believe have great potential.
Thanks for reading and leave please a comment down below, peace.