Jan 032015
 

Best Altcoins of 2015

These are the best altcoins to invest in, in 2015, in my opinion. Each one has promising prospects that may or may not pan out, but if you’re willing to take the risk, these are worth exploring further. If not, just hold on your Bitcoins! There are many interesting cryptocurrency projects out there. Unfortunately, it’s hard to separate out the best and most promising ones from the rest. In my view, the following are the ones to keep an eye out on, in 2015.

Note: This shouldn’t be taken as investment advice. Please do your own due diligence before putting any money into anything in the cryptocurrency space.

Counterparty

Counterparty is one of the most interesting cryptocurrencies out there, with a large potential reward. The biggest win for this would be if Medici goes live and becomes an actual stock exchange (for those who don’t know, Overstock hired the original Counterparty devs to work on Medici, a blockchain-based stock-trading platform). Even if it lists a single low-value stock, the value proposition would be huge. Also, it would mean it has overcome all the regulatory hurdles associated with such a project, which in and of itself would be a big achievement. The developers are also quite good, and actively work on the project (e.g. they were able to port the functionality of Ethereum on to the Counterparty protocol). It has other advantages, such as being built on top of the Bitcoin blockchain and an initial proof-of-burn instead of ICO/IPO model. Counterparty is definitely something to keep an eye out on, going into 2015.

Bitshares

Bitshares is another ambitious project, which has a lot of potential to do well in 2015 and beyond (in spite of a rich history of missing every deadline and reneging on their original promises several times). At its core, Bitshares provides a way to trade assets like BitUSD and BitGold, which track the value of USD and Gold through a clever mixture of price feeds and prediction-market-style price convergence mechanism (giving incentives for longs and shorts when the price deviates either way). It is also a good way to short, say, BTC, through bitBTC, which should help accelerate the price discovery of Bitcoin itself, assuming it is able to have significant volume.

It also uses a delegated proof of stake mechanism to secure the blockchain. Risk factors include the centralization of decisions (e.g. making a deflationary currency inflationary, which has already been done) that might keep investors up at night and a belligerent community that expels any criticism, thus keeping away many good members of the wider crypto community (such as a whole drama with Adam Levine of Lets Talk Bitcoin). Even then, the project has some good potential and would be interesting to see its growth into 2015 and if the ecosystem can mature. In addition, there are new products planned, especially an auction-style decentralized DNS system which could gain more traction than Namecoin (due to the profit model and disincentives to domain-squat) and a decentralized voting system.

MaidsafeCoin

Maidsafe, as a project, goes back to before Bitcoin was even invented. It is probably the most ambitious project of them all, since it isn’t blockchain-based like all other projects on this list, but wants to ‘decentralize the internet’. There is a lot of theory behind how Maidsafe is supposed to work, and it’s not all easy (there’s your big risk factor right there). On the other hand, there is a lot of progress being made, and quite a few developers are already building apps for this system. If the release is successful, expect the coin to rise significantly in value.

Stellar

Stellar is just like Ripple, but is hoping to have a better distribution model. Also, it is backed by some big names in Silicon Valley, which might give it some edge. Being a more trust-based system than say Bitcoin, Stellar needs connections in its network which will be used to transfer value. Ripple actually made some significant progress on the business front in 2014, and if Stellar can get some banks, especially across continents, to use their network for clearing trades, it would be a significant win. Stellar also has quite a few developers working on apps and gateways for Stellar, which is always encouraging. I am not holding my breath, but Stellar has a lot of potential to grow, especially when you compare Stellar’s marketcap with Ripple marketcap.

NXT

NXT is a cryptocurrency that always surprises to the upside, since its launch (remember the initial crowdfunding?) and you never know what 2015 is going to bring. There are many features being implemented, and even though Counterparty is gaining a good deal of traction, several new ‘appcoins’ are being built on top of the NXT network. It has a good developer community, and has had a relatively quiet 2014, so I am definitely looking forward to what 2015 will bring.

Ethereum

Ethereum is perhaps the most talked about altcoin in existence today. Over a period of a few years, its programming language might change the way we look at applications. It is powerful, and it needs a lot of developers building on top of its blockchain. It was arguably the most successful IPO/ICO ever in the space, so be aware of that before you decide to invest. It seems futile to try to predict Ethereum’s success in the short term. Unfortunately, the technology is yet to prove itself in the battlefield, so I’ll defer my comments. It does have a lot of potential though.

Photo Credit: David Diaz

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Nov 292014
 

How to Buy Counterparty

Looking for how to buy Counterparty? This guide will walk you through the process you need to get your hands on arguably the most promising Bitcoin 2.0 technology, Counterparty. Unlike many other protocols (Ethereum, BitShares, NXT, etc.) that also categorize in the Bitcoin 2.0 space, Counterparty is built on top of the Bitcoin blockchain itself, which provides it with all the security and safety afforded to the Bitcoin blockchain through the vast mining hashpower (and of course, the associated risks such as centralized mining) and ecosystem.

Initial Creation of Counterparty

I want to briefly discuss the initial creation of the Counterparty token, before going into details on how to buy Counterparty because some people still think they can get Counterparty through the initial creation route. You cannot.

In order to create a fair distribution, the Counterparty developers had a window, during which anyone who sent Bitcoins to a specific unspendable address (no one knows the private key to this address, and therefore the funds are unspendable). People were rewarded in proportion to the number of Bitcoins sent to this address. This is unlike an IPO/ICO (Initial Public Offering/Initial Coin Offering) that’s so common in the cryptocurrency space, since the developers didn’t get any money from the public. All the Bitcoins just got lost in a black hole, so to speak.

This initial method of creation of Counterparty, using the ‘Proof of Burn’, was done using the unspendable address 1CounterpartyXXXXXXXXXXXXXXXUWLpVr. You’ll notice people still sending some Bitcoins to this address, hoping to get Counterparty. This no longer works – the period is over, and there is no way to recover your Bitcoins! Don’t send any Bitcoins to this address now.

Promise of Counterparty

If you’re looking to buy Counterparty, I assume you’ve done your homework and know what makes Counterparty promising and unique. I won’t spend too many words here, but think about these two main catalysts: Medici, funded by Overstock, a $5 billion company, to build a complete stock exchange on the blockchain, is being built on top of the Counterparty protocol and being worked on by the Counterparty developers. Ethereum, a promising smart-contracts system, was completely imported over to Counterparty, which means anything you can do on Ethereum, you can do on Counterparty.

How to Buy Counterparty Through Counterparty Exchanges

Counterparty is a truly deflationary currency/token, in that there is no initial inflation (like in the case of Bitcoin, which runs at about 10% per year at the current mining rewards) and creating assets requires spending some Counterparty tokens, so the total supply is always dropping, although at a low rate right now. It is important to take adequate precautions while using online exchanges, and only trade on trusted exchanges. Also, don’t use an exchange as a wallet – after you buy Counterparty, transfer them over to your own Counterparty wallet and protect it adequately.

Bter: This is the biggest and most trusted exchange to buy Counterparty, and one that I personally use for all my Counterparty trades. It’s a Chinese exchange with robust volumes, low trade fees, and very prompt withdrawals and deposits. It’s the best way to buy Counterparty in my opinion. It offers two options – buying Counterparty through Bitcoin or Chinese Yuan. The XCP/CNY pair also has a fair amount of volume at Bter although usually less than XCP/BTC. It also offers a XCP/USD trading pair, but it is generally quite hard to get USD on to Bter exchange.

Poloniex: Poloniex has had a fairly good trading volume for Counterparty. It is a relatively new exchange that is yet to really prove itself in the battlefield (unlike Bter, which has been around for several years). It’s a good option to diversify how to buy Counterparty, but I would be cautious of putting too much money into Poloniex just yet.

MasterXchange: This was one of the older exchanges to add Counterparty, but the volume is very low, and therefore the spreads are high. You might get lucky hitting a low price, but this exchange cannot, in general, support a good volume buy.

Melotic: This is an upcoming exchange and fairly new, so it still has to prove itself. However, it looks promising so far, only listing the better altcoins instead of having hundreds of them. It already lists several other Bitcoin 2.0 coins and a few popular altcoins, but still remains very selective. They have a fair amount of trading volume, but nowhere close to Bter. Use this as another exchange to buy Counterparty instead of a primary source.

New to Cryptocurrencies

If you’re new to Bitcoin and cryptocurrencies, don’t own any Bitcoin, and don’t want to deal with all of this, just go through the following steps –

1. Register on Coinbase or Circle to buy Bitcoins in your account. You can link your bank account and buy Bitcoins. Both these companies have raised tens of millions of dollars and very trusted in the community. They won’t try to scam you outright.

2. Register an account on Bter. Go to Account > Balances > Deposit under BTC. This will give you a Bitcoin address to deposit Bitcoins to.

3. From your Coinbase or Circle account, send Bitcoin to this address generated by Bter. Wait for about 20-30 minutes for the Bitcoins to show up in your Bter account.

4. Go to Markets > BTC Markets > XCP/BTC. Place a market of limit order to buy Counterparty.

5. After the trade, withdraw your Counterparty to your own wallet, such as Counterwallet.

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