The first blockchain-based cryptocurrency was Bitcoin, which still remains the most popular and most valuable. Today, there are thousands of alternate cryptocurrencies with various functions and specifications. Some of these are clones or forks of Bitcoin, while others are new currencies that were built from scratch.
Bitcoin was launched in 2009 by an individual or group known by the pseudonym “Satoshi Nakamoto”. As of March 2021, there were over 18.6 million bitcoins in circulation with a total market cap of around $927 billion.
Some of the competing cryptocurrencies spawned by Bitcoin’s success, known as “altcoins”, include Litecoin, Dogecoin, and Binance Coins, as well as Ethereum, Cardano, and EOS. Today, the aggregate value of all the cryptocurrencies in existence is around $1.5 trillion—Bitcoin currently represents more than 60% of the total value.
Cryptocurrencies hold the promise of making it easier to transfer funds directly between two parties, without the need for a trusted third party like a bank or credit card company. These transfers are instead secured by the use of public keys and private keys and different forms of incentive systems, like Proof of Work or Proof of Stake.
In modern cryptocurrency systems, a user’s “wallet,” or account address, has a public key, while the private key is known only to the owner and is used to sign transactions. Fund transfers are completed with minimal processing fees, allowing users to avoid the steep fees charged by banks and financial institutions for wire transfers.
Cryptocurrencies allow for secure payments online which are denominated in terms of virtual “tokens,” which are represented by ledger entries internal to the system. Investors can make money with cryptocurrency by mining Bitcoin, or simply selling their Bitcoin at a profit.
Cryptocurrencies such as Bitcoin are digital currencies not backed by real assets or tangible securities. They are traded between consenting parties with no broker and tracked on digital ledgers.
There is no physical bitcoin, only balances kept on a public ledger that everyone has transparent access to. All bitcoin transactions are verified by a massive amount of computing power. Bitcoin is not issued or backed by any banks or governments, nor is an individual bitcoin valuable as a commodity. Despite it not being legal tender in most parts of the world, bitcoin is very popular and has triggered the launch of hundreds of other cryptocurrencies, collectively referred to as altcoins. Bitcoin is commonly abbreviated as “BTC”.
Bitcoin mining is the process by which bitcoin is released into circulation. Generally, mining requires solving computationally difficult puzzles to discover a new block, which is added to the blockchain.
Bitcoin mining adds and verifies transaction records across the network. Miners are rewarded with some bitcoin; the reward is halved every 210,000 blocks. The block reward was 50 new bitcoins in 2009. On May 11th, 2020, the third halving occurred, bringing the reward for each block discovery down to 6.25 bitcoins.
Many bitcoin supporters believe that digital currency is the future. Many individuals who endorse bitcoin believe it facilitates a much faster, low-fee payment system for transactions across the globe.
Although it is not backed by any government or central bank, bitcoin can be exchanged for traditional currencies; in fact, its exchange rate against the dollar attracts potential investors and traders interested in currency plays.
Indeed, one of the primary reasons for the growth of digital currencies like bitcoin is that they can act as an alternative to national fiat money and traditional commodities like gold.
Like any other asset, the principle of buying low and selling high applies to bitcoin. The most popular way of amassing the currency is through buying on a bitcoin exchange, but there are many other ways to earn and own bitcoin.
Dave stresses that even though you can make money, it would still be a gamble. He advises to invest in cryptocurrency when you have spare money to be kept there over the course of a few years (in a short period) for it to multiply.
He strongly advises against going all in into cryptocurrency because the risk of its valuation dropping for a few years at a time may be high. As such, Daves reiterates that when it comes to cryptocurrency, one should only invest the money they can afford to lose.
To wrap up, one should invest enough to keep your cash flow division functioning smoothly, and make decisions about how to spend the added income based on your overall priorities and goals.
Dave concluded that one should build their own system of generating wealth first for more efficient and lucrative decisions on investing your money.
The role that your cash cow plays in your overall business strategy will depend on your priorities. If you want to make as much money as possible, direct your resources and your energy toward maximizing its sales, using other products and services primarily to support it and flesh out your line. If you are interested in making the world a better place, use your cash cow as a way to earn enough income to do the work you love.