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Top Cryptocurrency Trends You Need to Know to Invest Wisely in 2018

In December 2017, Bitcoin reached just over $19,000 per coin, its highest all time value. After a brief, precipitous decline to $7,000, the world’s most popular cryptocurrency is now making its way up around $10,400 as of February 26th, 2018.

If last year was any indication, 2018 will prove to be a major year in the further development and stabilization of cryptocurrencies.  Here are the top trends to look out for in 2018:

THE TRANSACTION PROBLEM

Slow transaction times and high transaction fees plagued Bitcoin in 2017. According to CoinMetrics, fees started 2017 averaging $0.30 per transaction and eventually peaked at over $40 in December. Bitcoin will implement several potential enhancements to its system designed to lower transaction fees in 2018.

SEGREGATED WITNESS PROTOCOL

The Segregated Witness protocol was first activated in August 2017. It is an upgrade to the Bitcoin protocol replacing Bitcoin’s block size and weight limit to allow for increased transactions and lower transaction fees. While adoption has been off to a slow start, 2018 should see many more wallets and marketplaces adopting the SegWit protocol, including Coinbase, who recently announced they have finished testing SegWit and begun implementing it for customers.

LIGHTNING NETWORK

First proposed by Joseph Poon and Thaddeos Dryja in January 2016, the lightning network is an overlay network which could enable long-term scalability and near-free transactions for Bitcoin. After two years of development by ACINQ, Blockstream and Lightning Labs, the Lightning Network should find more adoption in 2018.

RIPPLE ON THE RISE

Among our top Cryptocurrencies to watch out for in 2018, we featured Ripple. Ripple has  gained traction and value fast in 2018. Recently, Western Union revealed they have been testing the Ripple blockchain for cross-border payments. Ripple currently offers two main payment products for banks: xCurrent and xRapid. Over 100 banking clients are testing xCurrent, which does not use the Ripple coin. Western Union’s announcement makes them the fifth customer to test xRapid.

Ripple has always catered to banks. Ripple’s consensus protocol makes it more scalable than other major cryptocurrencies. While Bitcoin can process seven transactions per second, Ripple can process up to 1500 transactions in the same second. Ripple’s network is designed to trade any asset with any other asset. If Ripple can entrench itself as a payment processor for banks, its value may shoot way up in 2018.

REGULATION, REGULATION, REGULATION

Anybody with significant money invested into cryptocurrencies knows that perhaps the biggest threat facing cryptocurrency is government regulation. While the US has not instituted regulations, South Korea recently created a ban on anonymous accounts.  Governments all over the world are still in the process of developing regulatory measures. These regulatory decisions can make or break the future of cryptocurrencies.

Check out Bitcoin Magazine’s comprehensive rundown on how countries are regulating cryptocurrency across the globe.

WATCH FOR ALT-COINS

With cryptocurrency fervor at an all-time high, 2018 will no doubt see many new players enter the cryptocurrency game as well as current players making big moves. With over 1,300 alt-coins on the market right now, understanding how to properly research a coin is key. Below, check out our brief guide for evaluating a new cryptocurrency:

  1. THE TEAM: While Satoshi Nakamoto may have chosen to remain anonymous, many other cryptocurrencies are prioritizing transparency. By examining the team behind a cryptocurrency, investors can determine how serious a cryptocurrency really is. For example, having Steven Seagal as a brand ambassador does not contribute any value to a cryptocurrency whatsoever. On the other hand, knowing that Litecoin’s creator Charlie Lee is an engineer at Coinbase only further validates our belief in Litecoin’s capacity for growth.
  2. THE “WHY?”: What is it about a specific cryptocurrency that will ensure it will retain its value and significance in the long run? Bitcoin is the original and most popular cryptocurrency. Ethereum automates smart-contracts. Litecoin and Bitcoin Cash are designed for commerce. Ripple is attempting to establish itself with banks as a lightning quick transaction network. Many coins don’t offer any real long-term value. It’s vital to understand the key benefit of a coin in making the decision to invest.
  3. THE “WHEN: How far along is the cryptocurrency in the development process? Is there an ICO? Are new features being released? Coins come and go, so it’s best to invest in coins with solid long term plans.

CONCLUSION

After a landmark 2017, all eyes are on cryptocurrencies in 2018 to see if they can sustain their growth or if it will prove to be a bubble soon to burst. It is an exciting time to be a wise investor!

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Secure Your Cryptocurrency with the Right Wallet

While blockchain technology ensures that cryptocurrency transactions are immutable, irreversible, and secure, where cryptocurrency is stored is a determining factor in how secure it is. Having a vulnerable cryptocurrency wallet is like storing money at a suspicious bank: it’s unsafe and it behooves the investor to do enough research to sleep at night knowing their assets are safe.

WHAT IS A CRYPTOCURRENCY WALLET?

Every transaction in the blockchain shared record is signed by a private key linked to the user’s account. As we covered in the first blog in our cryptocurrency series, the blockchain is the decentralized mechanism that prevents double spending and validates transactions. Cryptocurrency wallets store the private keys. Although cryptocurrencies are not stored within the wallet, they are protected by the address created and stored by the wallet. Deciding on the right wallet for your cryptocurrency is one of the most important decisions since it will make or break the security of your assets.

There are five different types of wallets to choose from: mobile wallets, desktop wallets, hardware wallets, paper wallets and online wallets.

PAPER WALLETS

Paper wallets are the most basic form of wallet. They are an offline wallet consisting of two QR Codes. One of the codes is the cryptocurrency address and the other is the associated encrypted private key.

The benefit of a paper wallet is that it cannot be hacked. It is essentially a piece of paper that is stored in a safe place like a safe or safety deposit box. Unfortunately, while paper wallets may be exceptionally safe since they are unhackable, they are not exceptionally nimble. If you are looking to buy and sell cryptocurrencies frequently, this may not be the option for you.

Learn how to set-up a paper wallet here.

ONLINE WALLETS

If you are new to cryptocurrency and have recently invested, chances are you are currently using an online wallet like Coinbase, Blockchain, or Xapo. Online wallets are run by third-party providers, so the security of currency is dependent on the company running the show. As the hack of NiceHash proves, this is not always the best thing. CoinBase insures their client’s investments and stores the majority of their cryptocurrency offline. While Online Wallets provide an easy avenue for buying and selling cryptocurrencies, storing cryptocurrency offline is significantly safer.

MOBILE WALLETS

Mobile cryptocurrency wallets are software wallets that make cryptocurrency available through mobile devices. One of the benefits of a mobile wallet is that merchants that accept cryptocurrency can use NFC technology to sync with their apps and provide wireless payments.

The most popular mobile wallets include Copay, breadwallet, and for Android users: Bitcoin Wallet. While mobile wallets make cryptocurrencies nimble, they are only as secure as the smartphone on which they are being used. Storing large amounts of cryptocurrency on mobile devices is not recommended, but they can be a good tool for investors who are buying and selling cryptocurrency on the go.

DESKTOP WALLETS

Like mobile wallets, desktop wallets are software designed for desktop computers. They are more secure than mobile wallets, but less nimble. Still, for those who want to secure their cryptocurrency and don’t mind being limited to their computer, desktop wallets are a great option.

Bitcoin Core is the original Bitcoin wallet, but it is somewhat techy and precarious to install as it requires downloading the entire blockchain.

Electrum is one of the most popular desktop bitcoin wallets. It’s easy to use and it can be configured for advanced features like TOR and cold storage, making it accessible to newbies with higher functionality for high-tech users.

Exodus features one of the best UIs available for a wallet. It allows users to instantly trade currencies stored within the exchange between themselves and it is partially open source.

HARDWARE WALLETS

Aside from paper wallets, hardware wallets are the most secure method of securing cryptocurrency. Hardware wallets are small computers, smartcards, or dongles created to generate private keys offline, securely signing transactions in the offline environment. Like paper wallets, hardware wallets cannot be hacked remotely and are as secure as the place in which they are stored. The only difference is that hardware wallets, like all technology, can lose functionality with age and improper upkeep.

The best hardware wallets are Ledger Nano and Trezor. Ledger Nano is a smartcard-based hardware wallet that can be used on any computer or Android phones with Mycelium or Greenbits mobile wallets. Trezor is a tiny computer, rather than a smartcard, but both upon set-up generate a random 24-word seed that backs-up the funds and can be used to recover all funds within the wallet. It is best to have a hardware wallet with its own screen, like Trezor, since hardware wallets that plug into the computer expose themselves to the security vulnerabilities of the computer.

TAKEAWAY

There are many ways to store cryptocurrency with varying levels of security. For those who are looking for the most secure method, hardware and paper wallets are the best route. For those who are looking to trade on the go, mobile and online wallets provide the best flexibility. Desktop wallets are the happy medium. So long as wallet options have been researched, cryptocurrency investors can rest easy knowing they made the informed decision.

Next week, for the next installment of our blog series on cryptocurrencies, we will explore the revolutionary mechanics of the Blockchain. Stay tuned!