Is it a coin or is it a token?
A simple explaination is that crypto currencies (coin) have their own blockchain but tokens exist on the same blockchain as thier parent. For example, Ethereum (parent) has its own blockchain, it is a decentralised platform that has a programming language called solidity which developers can use to build smart contract applications (child). The child applications all sit on top of the the parent blockchain.
2017 has seen an explosion of new tokens coming onto the market, in the form of ICO’s (initial Coin Offering), these are much like a new company issuing shares in thier startup to gain funds for development, legal work, advertising etc. these are called IPO’s (Initial Public Offering). As with IPO’s, ICO’s can be extremely high risk / high reward.
Extreme caution should be taken when getting involved in an ICO, always carry out extensive research and do not assume that because they have a nice looking website and cleverly written whitepaper it means they are legitimate. There are many legitimate new tokens coming onto the maket but there are many that will raise millions of £’s but will probably not last the course. You will generally have to exchange either your Ether or bitcoin for the new token and each token will be priced differently.
Each developer will decide if they want to publish their token on a cryptocurrency exchange where it can be traded once the initial offering has ended, there are a number of exchanges which we will cover elsewhere. When buying into a new coin or token you should also check if there is a finite amount of the coins, how many coins or tokens are/will be availible and are they minable. As with fiat currency, when there is an unlimited amount or more currency is created from nowhere (printed) then inflation occurs and the currency decreases in value.
Probably the easiest route in to cryptocurrency. Sign up for an account here and you'll receive $10 of FREE Bitcoin with your first $100 purchase (or your equivalent currency value).
Connect your bank account, credit/debit card so you can exchange into and out of your local currency. Download the app on your mobile device to keep track of your Bitcoin, Ethereum & Litecoin on the move. Any digital currency stored on coinbase servers (in your coinbase wallet) is covered by insurance. Set up recurring buys to invest slowly over time, every day, week, month etc. or buy and sell at anytime.
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