The most basic answer is that the blockchain is a publicly viewable, decentralized ledger which lists every transaction that is executed using a given cryptocurrency and which is made valid through multiple confirmations from decentralized computing power generated by users and/or miners of that currency. There is a fee for confirming each transaction which is split among those users/miners who process that transaction code which gets longer and longer and is digitally recorded forever.

The process is simple although there is a great deal of computing power and mathematics-based algorithms involved in making the blockchain a smoothly functioning and reliable ecosystem. Different currencies have different features, Bitcoin being the oldest and probably the simplest and most popular at this time. It is foreseen that Ethereum may overtake bitcoin because of greater speed of processing transactions and features of the code that underpins the currency. In fact Ethereum is an open-source platform for smart applications, which may in the future be self-governed, self-executing, and some ether based platforms may be controlled by the public at large. There are many other coins available to invest in, such as Zcash and Litecoin; some have increased in value substantially recently, raising speculation of a bubble.

While use of cryptocurrency as an actual currency to buy and sell products and services has been limited, except for the black market, much of the investment into this area is based on speculation and holding a given currency as an asset for appreciation. However, it is generally agreed that this developing area of finance is not going away, and the future seems promising. Many investment advisors will recommend putting some amount of dollar savings into cryptocurrency for probable future appreciation, particularly during dips in value. The limited availability of such electronic currency and the difficulty in obtaining it is what provides and supports its value, in addition to the various features that some coins’ algorithms provide their users. Please check out and register at COINBASE to begin investing and trading in a few of the more popular cryptocurrencies, and use the following code to receive $10 in bitcoin to start off with:

Initial Coin Offerings (ICOs) are a new venture fundraising mechanism which generally are based on a cryptocurrency platform and involve an open-source tech project of some sort wherein the new company will sell its own valueless coins (similar to shares) in exchange for dollars, Bitcoin, or Ethereum in order to fund the new venture. The funds may be used for any purpose, and the incentive for the recipients of the new currency is to use and propagate the new open-source platform in order to increase its usage and popularity thereby increasing the value of the coins they hold. Most ICOs have involved investments by developers and sophisticated tech entrepreneurs who will then employ and develop new applications on the new platform thereby providing sweat equity to the venture.

It is rare at this point, that ICOs will fund a non-tech startup and the investors will be passively putting their money into the new venture. Because ICOs are at this point unregulated by the SEC, a substantial increase in such passive investing being offered to the general public could cause the government to step in and begin to regulate these offerings by declaring them securities. At this point it is a wide open area ripe for experimentation, with the caveat that such fundraising activities must be self-regulated, providing full and open disclosure as to the project details, the management team, and risks involved, while scammers should be quickly identified and shunned from the industry. A single large fraudulent scheme which successfully takes advantage of the public and makes off with a fortune will very likely get the attention of federal regulators. More on ICOs in future posts.