Crypocurrency exchange: Things to learn from Tokyo mishap

After the incident of stealing 530 million dollars from a cryptocurrrency agency in Tokyo , the hack codes of cryprocurrency are in demand. A major cryptocurrency agency named Coincheck from Tokyo posted in their website that, they had suspended withdrawal. So, before investing on any mode of cyptocurrency one need to be cautious about all these vulneralabilities and defensive strategies.

It is recommended to invest in cryptocurrencies only the amounts that you can afford to lose.

These markets require a lot of technical knowledge in order to make a quality assessment, but the good thing is that there are tons of information available online and because blockchains are transparent by nature, you can find everything you need, and talking to creators of the cryptocurrencies is easy, except for Bitcoin, which has anonymous creator/creators. It is not easy to talk to CEO’s of some companies you want to invest in.

One should be aware that these markets are immature, highly volatile, and are driven by speculation. News can move the price significantly and there are unexpected events which can trigger wild price movements(ex. Bitfinex hack 2016, DAO hack 2016, Mt.Gox hack 2014).

Bitcoin and other cryptocurrencies in general follow the subjective economic theory, so the price levels are result of the believes of the holders, rather than real intrinsic value. Of course, there are many properties of Bitcoin that makes Bitcoin valuable and the innovation spectacular, but one can live without holding a Bitcoin.

  1. Bitcoin – currently used as store of value and pretender for gold 2.0. Bitcoin can be considered as the cryptocurrency king, simply because of its first mover advantage, great network effects and security of its blockchain. The computing power required to secure the network is 1000 times more powerful than the world’s top 500 supercomputers combined. If you calculate the costs of those 500 supercomputers, Bitcoin compounded computing power is much cheaper.
    Bitcoin has limitation to processing around 5(theoretically 7) transactions per second, which some consider is hurdle to be accepted as global payment method. Bitcoin can be consider the strongest p2p financial network in the world.
  2. Siacoin – at the moment relatively low market cap, but buying Siacoin means that you buy a future on a peer-to-peer storage network called Sia. If Bitcoin replaces gold bars, Siacoin replaces hard-drives. Siacoin is a storage currency, which allows you to buy data storage on a peer-to-peer network. Can be considered as crypto-commodity. Strong fundamentals and P-o-W mineable. Block time is 10min. It is different than Bitcoin, in the way it handles the transactions, and has a fundamental difference – the blockchain is smart contract enabled, which allow host and renter to transact on open free market for data storage(first in the world).
  3. Ethereum – it allows you to build decentralized applications and run complex smart contracts in the Ethereum network, which wants to become world supercomputer. Think of Ethereum as gigantic computer distributed all around the world, where you can deploy apps and business logic.
    Ether(currency of Ethereum) can be utilized as global payment method, simply because it has very fast transaction processing times. The block time is 14m.29s, compared to Bitcoin block time which is 10m. However this currency followed a series of unpleasant events in 2016 and a hard-fork, meaning that Ethereum chain was divided into two chains, and Ethereum Classic was born, which has exactly the same properties as Ethereum, but it is maintained by different group of developers.
    This network has potential, but still have a lot to proof.
  4. Monero – this is privacy cryptocurrency which allows anonymous transactions and had strong growth in 2016. Monero has block time of 2 min, which allows for faster confirmations of the transactions compared to Bitcoin. It has relatively low market cap compared to Bitcoin at the moment, but it has strong developer community, as Github shows that Monero devs are very active in contributing to this project(Crypto-Currencies commit statistic). Monero needs more infrastructure, but it looks that the ecosystem is growing. Fundamentally looks good.

None of the above written is an investment advice, it is just  subjective opinion based on  observations and before deciding to invest any money in these markets, please make your own research.