If you are looking at investing or buying any cryptocurrency, chances are high that you have noticed that there are a surprising number of options both in what you can buy and how you can buy them. You may also have noticed that there are two Ethereum’s – Ethereum (ETH) and Ethereum Classic (ETC), which is surprising if you are unaware of the circumstances that lead up to the establishment of these two cryptocurrencies.
A Crash Course In Ethereum & Ethereum Classic
Way back in 2016 Ethereum launched a Decentralized Autonomous Organization (DAO) system with the idea that they would be creating a democratic financial system, which would allow for automated contracts. Unfortunately, there was a loophole in the system, and $50,000,000 of currency was ‘hacked’. In order to have the currency returned investors of Ethereum decided to ‘fork’ Ethereum – essentially stop the blockchain code and restart it. https://www.wired.com/2016/06/50-million-hack-just-showed-dao-human/
One of the key ideas around cryptocurrency and blockchain is that code is code and it shouldn’t be altered. Which is a noble idea, but in this instance one that the majority of investors decided to ignore. However, a few felt that allowing the secure code of the blockchain to be changed set up a dreadful precedence and wanted nothing to do with this answer.
So, the currency was reclaimed, and the Ether community was split. With Ethereum Classic (ETC) being the original company which wanted to maintain the integrity of Ether, and Ethereum (ETH) being the new company that grew out of the restarted code.
Why Would I Invest In Cryptocurrencies?
Although the technology has been around longer, the first cryptocurrency, Bitcoin, started to be actively used in around 2010. Early users could purchase a single Bitcoin for $0.30. By 2017 a single unit of Bitcoin cryptocurrency could be purchased for $19,783.
Of course, like any stock exchange investment cryptocurrencies are subject to fluctuations based on a wide range of conditions, from developing technology through to law changes – and many people they don’t understand how they can actually invest in a cryptocurrency.
How To Invest In Cryptocurrencies
There are a range of different options, but if you are looking to invest in currency technology that has been build on a blockchain system there are separate ‘stock exchanges’ that are secure and work in a very similar manner to any of the more mainstream stock exchanges around the world. Exchanges such as rubix.io allow investors to buy, sell and invest in Ethereum Classic as they would invest in Apple or Google on the NASDAQ.
Although regulated by national and international money laws, stock exchanges are generally not run by a government entity, and the same holds true for any company that facilitates the exchange of cryptocurrencies. However, they are not in business if their systems are not infallible – and this is even more so for an exchange that is working solely in the cloud.
What Is an AltCoin?
One of the difficult things for anyone new to investing in this area is coming to terms with the language and technology. Although, in fairness, this is true when investing in any niche market, few people understand a geological report for a gold mine or interest rates of bonds from birth. So, investing well in any market requires at least a basic understanding of these terms.
Altcoin is thankfully one of the simpler terms to understand. You will have heard of Bitcoin; Altcoin is simply any cryptocurrencies that is NOT based on the original Bitcoin blockchain (read more about it here). Of course, there is some debate as to whether this term includes Bitcoin derivates like Bitcoin Cash, as these were generally created by soft forks in the blockchain but are usually still backwards compatible with the original Bitcoin blockchain.
The easiest way to think of these is to think of them as being an online wallet, in a similar way to how you likely store your photos, email or music. However, they are significantly more secure and are set up to specifically interact with a certain type of currency – in much the same way that your bank account generally only holds one specific type of currency.