Having been interested in cryptocurrencies for many years, I often receive questions about bitcoin or ethereum from friends and others that want to invest or otherwise get involved.
Oddly enough, I have never been asked, “which bitcoin should I buy?” before. So, when this question finally came my way, my gut reaction was to reply with something like: What do you mean? .. Bitcoin.. Get that one, of course. There’s only one.”
But, that is no longer true– at least not from the standpoint of new investors and those people just getting started in the wacky world of cryptos. So, its a valid question.
There are three cryptocurrencies called “Bitcoin” that you might commonly see on exchanges or mentioned in articles and news. The classic Bitcoin, Bitcoin Cash, and now Bitcoin Gold as well. If you go to a site like Coinmarketcap to do your research, it gets even worse…there’s more than 15 variants, including Bitcoin Dark, Bitcoin 21, Bitcoin Planet and even Anti-Bitcoin.
Bitcoin name is not trademarked, although some have tried, so there is nothing stopping groups from launching Bitcoin X and capitalizing on the brand recognition.
My personal take on “Bitcoin” as an investment opportunity is as follows:
What 99% of people mean when they say Bitcoin, is the original bitcoin that trades under the BTC symbol– currently around $10,000/btc. This is the oldest blockchain, the most widely recognized and the one that forms the basis for many other services and currencies.
For someone looking to buy into the original bitcoin and possibly hold long term, BTC is likely something you want to look into first.
Bitcoin Gold (BTG) / Bitcoin Cash (BCH)
These are both relatively new and forks from the original BTC. Because of the way decentralized currencies work, nothing stops you from creating (forking) your own version of bitcoin, or almost any other currency. Whether a forked coin has any value depends on who buys into it, accepts it for trade and commerce and on whom will help secure it by mining it.
BTC and BCH were created because of disagreements on a number of issues in the Bitcoin community, largely surrounding scalability… but also related to other things. Bitcoin Cash was first and trades at roughly around 15% of BTC’s price. Bitcoin Gold trades much lower currently, but this may change.
It is wise to exercise extreme caution when dealing with these variants of bitcoin. There is the lure of cheaper antry and bigger gains, but there is also significantly more instability when betting on these. Their acceptance in the market place outside exchanges is almost non-existent and they may also be less secure.
When dealing with cryptos, caveat emptor is always prudent, but even more so with new coins and forks coming out, so do extensive research if venturing off the beaten path.
All the others
Most of the other ‘Bitcoins’ can be ignored for all intents and purposes, unless you are interested in investing in something particular. Do plenty of research– or risk joining the ranks of those that have lost significant money on crypto investing.
“But.. Bitcoin X is cheaper than the original Bitcoin!”
This is true – but you don’t need to buy whole bitcoins at $10k a pop.. You can buy 0.1 bitcoin or 0.001 bitcoin just the same. Bitcoin is calculated to 8 decimals. Co-incidentally 0.0000001 bitcoin is known as a Satoshi after the anonymous creator(s) of Bitcoin.
Unless you want to spend a lot of time researching the ins and outs of different forks of coins, the original is probably the way you should consider going.
There is one other advantage from owning BTC – namely whenever a fork happens, you most likely both keep your BTC but also get an equal amount of whatever new coin is created. Here is what I mean:
This happens because the new coin assumes the history of all the past bitcoin transactions. Be very careful when dealing with forks and new coins, there are ways to create fake transactions and steal your Bitcoins if you do transactions on a new fork – commonly called Replay attacks. Do research first and tread carefully.
If you keep your coins with a reputable exchange such as Coinbase you will be fine in general, although storing bitcoins is another complicated topic that I hope to write about someday soon
In summary, for almost everyone, the classic Bitcoin (BTC) is what you are looking for but it is less obvious with new coins coming out by the minute – especially when they are confusingly named. I’ll write up something on how to buy and store Cryptocurrency soon, in the meantime good luck!