Li Xiong: Decoding the legendary wealth story of investing in digital currency

In the industry we are in now, besides Bitcoin, there are nearly 1,000 other digital currencies, which we call "altcoins". Is it a riot of power or a scramble for supremacy? From the popular wallet coins (a transformation of Bitcoin) in 2014 and 2015 to the current asset coins (based on Ethereum's smart contracts), we are not surprised by the legendary wealth stories in recent years. There is no doubt that digital currencies, led by Bitcoin, have indeed made a group of people rich.

The following content is not investment advice, but more of a summary of industry history for friends. As the title says, it deciphers the legendary wealth stories of investing in digital currencies. If there is anything inappropriate, please feel free to communicate with us!

Be a smart programmer or investment speculator

Let's go back to the first half of 2013. If you were a smart programmer or investment speculator, you might have been very successful in this small circle. You can personally experience the legendary process of Bitcoin mining and you will be amazed at how easy it is to mine Bitcoin. A broken computer can easily mine a lot of Bitcoin. But it was not so easy for those who entered later. They used special mining machines. Amateurs like us couldn't play at all. Smarter or more resourceful people began to set up mining farms for centralized mining. We call this the era of large mining farms. At the same time, the price of Bitcoin began to be hyped by speculators, and the price rose rapidly. As a result, all the early miners made a lot of money.

Although you really want to participate in this wave of wealth legend, I regret to tell you: you are late. You are smart, but you did not catch up with the first wave of mining opportunities, and the cost will be even greater later. But now when we envy the early miners who got huge wealth without paying too much, we don’t know that they are also facing great competition pressure. This competition comes from all over the world. In order to win the competition and mine more bitcoins, more and more financial and material resources need to be invested. Mining machines alone are very expensive. You also have to build factories for these treasures and do a good job of heat dissipation. The mining process consumes huge electricity bills. Moreover, you may not be able to get your money back in the end if you carry out this kind of equipment competition mining. This is the current situation of mining.

Copy Bitcoin to create a new legend

Some coders are really smart. Although they missed out on the mining bonuses, they believe that there will always be opportunities. They discovered that the principles and codes of Bitcoin are public and can be easily downloaded and understood. By simply slightly modifying the code, they can create a new digital currency and start a new legendary story of wealth.

I remember that new digital currencies started to appear at the end of 2013. We called them "altcoins" at that time. The earliest altcoin should be Namecoin, followed by Litecoin, and then various XXcoins or YYcoins appeared one after another. These altcoins have no technical threshold at all. Of course, you can make them technically advanced, but there is no need to do so. To issue an altcoin, you only need to change the parameters, change the name, and know how to program. So many people despise altcoins, thinking that they can make so much money by slightly changing Bitcoin and putting in less than 0.01% of the effort of others?

But the market doesn’t care about these things, because Bitcoin is too expensive, the entry threshold is high, and the mining cost is high, while the price of altcoins is low and the market is small, so it is easier to enter the market for speculation, and the profit margin of speculation is large. Since Bitcoin can be speculated, if I make an altcoin like XXcoin or YYcoin, I can also make a fortune, right?

It is easy to make an altcoin. The name, total amount, encryption algorithm, and mining algorithm are all ready-made by Bitcoin. You just need to modify the parameters. After doing these things, you can go to the forum to promote it, saying how good it is, claiming that it has solved problems that Bitcoin cannot solve, and is superior to Bitcoin in some aspects. In this way, when the altcoin is released, investors who did not catch up with Bitcoin mining will rush to start a new mining game, until the altcoin is listed on an exchange, and then you cash out and leave after a wave of price increases. Then you finally get rich. This legendary story is still repeated today.

Holding high the banner of blockchain and issuing tokens

We know that governments around the world do not yet recognize Bitcoin and other related digital currencies because they are worried that Bitcoin will disrupt the monetary and financial system, but they have no concerns about blockchain technology and feel that blockchain technology can bring them unlimited benefits, such as transforming existing database technology, reducing costs, and improving efficiency. In the past 2016, it was the first year of blockchain. Various blockchain projects emerged this year, large companies began to deploy blockchain, and financial giants at home and abroad entered the market. Although the future of blockchain has great potential, there is still no real landing application.

Back to the title itself, can investing in blockchain repeat the above wealth legend? The answer is yes. If everything goes as you wish, you can develop a blockchain and issue digital currency, which we call tokens. This process is not much different from creating a digital currency above. It is a process of coinage, but industry insiders call it "asset digitization". In this way, it can be justified to hold high the banner of government support for blockchain, continue to create new coins, and create one wealth legend after another, starting from the earliest MasterCard, Futurecoin, Ethereum, Notary Coin, etc., to this year's Quantum Chain, Aeternity, Wings and other projects. Each project involves tens of millions, or even hundreds of millions of financing amounts. Speaking of this, isn't it very envious?

In fact, it is not difficult to build a blockchain. Most blockchains are derived from Bitcoin, but now more blockchains are based on Ethereum's smart contracts, that is, developing and issuing tokens on Ethereum's blockchain, which is much easier. This mode of operation is used by many teams. But at this time, if you think you are very smart and want to try it, you don't know that while you are intoxicated with fantasy, many people have already thought of the same idea and have begun to act. When you are finally ready to start doing practical things, you will find that others have already occupied the hilltop and started to collect tolls. This is how things are in the world.

A word at the end

For those of you who have invested in or are preparing to invest in digital currencies, you may have missed out on early mining, Bitcoin, and all the coin-making movements, but this potential market is constantly moving forward, and you must grasp the first-mover advantage. For example, if you are an investor without much money, and unfortunately you missed out on the legendary story of Bitcoin getting rich overnight, and you are eager to reproduce a similar legend, facing a Bitcoin price of RMB 10,000, if you expect 10,000 to double to 1 million, the price of Bitcoin must rise to 1 million per unit, and you will be scared by your mathematical calculation ability.

In this way, you will happily buy various Bitcoin-modified wallet coins and Ethereum-based smart contract asset coins, and start waiting for your legendary wealth story. But it is worth noting that I think digital currencies other than Bitcoin are indeed just copycats, and the "constant appearance" is only a short-term phenomenon. After this historical period of "constant appearance" is over, Bitcoin will be the one with the greatest hope of staying.

Finally, I would like to pour cold water on those of you who are investing in digital currency. It is not a good thing for a complete novice to blindly invest in digital currency or participate in blockchain ICO without knowing much about it. There are risks in cryptocurrency speculation, so be cautious when investing!

Article author: sosobtc Li Xiong

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