Know what you trade — BTC, BCH, LTC
Do you know how BAT is transforming the advertising industry and why Civic is a breakthrough in identity management? Or what is the difference between Ethereum and Ethereum Classic? If you do, congratulations. You are more knowledgeable about cryptocurrencies than 99.99 percent of the people. But don’t feel bad if you can’t answer these questions. These are the earliest days of crypto becoming mainstream, so you are right on time. Read on!
Exodus currently supports over 30 blockchain assets. In the next few weeks we are going to introduce you all of them, a few at a time. Let us start with three projects sharing many common traits: Bitcoin itself, Bitcoin Cash and Litecoin.
Bitcoin
All Hail The King
The world’s first decentralized digital currency was born in 2008. It all started with the paper Bitcoin: A Peer-to-Peer Electronic Cash System published by someone using the pseudonym Satoshi Nakamoto.
Nobody knows who Satoshi is or was. He stopped communicating years ago. Many Bitcoin enthusiasts think he’s not a single person, rather a group of cryptographers. (She might as well be a woman, although the name “Satoshi” is generally used as a boy’s name.)
It is estimated that Satoshi holds around 1 million Bitcoin — most of the coins from the first few dozen blocks — which would instantly make him one of the richest billionaires in the world, right below the family owning Gucci and Yves Saint Laurent. Satoshi’s coins have not been moved or spent since 2008.
We might never know the truth about who Satoshi is, but what he built is transforming our world. The thought of a decentralized, independent and relatively anonymous currency governed not by political elites but by cryptography makes bankers and officials shiver. The underlying technology — the blockchain — is possibly the greatest invention since the Internet.
Few people recognized the power of Bitcoin back then; those who did have been nicely rewarded. Back then BTC was trading for less than $5! Today, a few dozens of those can buy you a luxury apartment anywhere in the world.
Bitcoin has been on a historic bull run since the Christmas of 2014 (from $160 all the way to the Moon), but that started after a year-long bear market during which BTC lost almost 90% of its value. Can you imagine Bitcoin under $2000 soon? We probably won’t see those price levels again, but it’s important to be aware of the risks.
Bitcoin is the linchpin of the crypto world. Whenever it goes up, other assets usually take a dive. When it’s going sideways, other assets rise. Remembering this simple rule can make your trades much more profitable.
Bitcoin Cash
“Satoshi’s true vision” — or is it?
On the first day of August 2017 something unthinkable happened: the Bitcoin blockchain has split into two. It was not an amicable separation.
As Bitcoin entered the mainstream, some of its technological limitations became painfully obvious. Transactions were fast and cheap compared to bank transfers, but they were nowhere near fast and cheap enough to make Bitcoin a viable competitor to credit card companies and online payment providers. It’s hard to imagine paying with Bitcoin in coffee shops and supermarkets if a transaction needs half an hour (the best case!) to be settled.
There were multiple proposals to solve this problem. The technical details are outside the scope of this post, but after heated arguments a minority of the miners and industry players decided to take a more aggressive but controversial technical approach — following “Satoshi’s true vision.”
Bitcoin Cash is the result of this heated argument, and it is indeed much faster and cheaper to send than Bitcoin. While this is good for the users, it can be dangerous to the ecosystem. The BTC and BCH blockchains are very similar, and miners can switch between the two easily; and they do, depending on which chain is more profitable to mine. A sudden increase in the BCH price brought the Bitcoin blockchain to a standstill in mid-November, creating a horrendous traffic jam. Needless to say, incidents like this don’t help with the tension between Bitcoin and Bitcoin Cash believers.
Bitcoin Cash and Bitcoin usually (but not always!) move in opposite directions. A stronger Bitcoin often means a weaker Bitcoin Cash and vice versa. Keep this in mind when you trade BCH!
Litecoin
The Little Engine That Could
“Bitcoin’s younger brother”, “The Rock”, “The silver to Bitcoin’s gold” — this is how crypto-veterans usually introduce Litecoin to newcomers. Many people find it hard to support Bitcoin Cash, but almost everyone likes Litecoin. What’s not to love about it?
Litecoin was created by Charlie Lee in 2011 as a fork of Bitcoin. It was not a contentious fork, and it did not split the Bitcoin chain. Litecoin never tried to steal the king’s crown. While it’s technically almost identical to Bitcoin, there are a few key differences making Litecoin a great project on its own.
First, Litecoin is fast because new blocks are generated every 150 seconds instead of Bitcoin’s 10 minutes. Second, it’s using a slightly different cryptographic algorithm called scrypt — this makes it difficult to build customized mining hardware for Litecoin, and therefore limits the power of big mining companies. (Exodus is using the same scrypt algorithm when you unlock the wallet or when you restore it from an email backup link. It’s very difficult to crack by brute force.)
The project has a solid developer team, and its bright and self-deprecating founder is one of the most influential voices in the crypto sphere.
Litecoin often moves together with Bitcoin in USD value, but it’s usually a bit less volatile (or at least it used to be until the most recent bull run). Many traders use LTC as a hedge when Bitcoin dips. It’s also an excellent choice if you want to send assets to an online exchange (or if you want to receive funds), as it’s reliably fast and cheap.
How to trade these assets?
Bitcoin, Bitcoin Cash and Litecoin are available on most if not all online exchanges. You can also trade them without leaving Exodus! We believe it’s quite intuitive, but we also have a guide on exchanging assets, just in case.
Want to learn more?
Bitcoin.org has plenty of information about Bitcoin, including a great explainer. The Bitcoin Wiki is a treasure trove of knowledge.
Bitcoin Cash has a good FAQ on BitcoinCash.org, and if you are interested in the technical details, we can highly recommend the Bitcoin ABC website.
The best place to start learning about Litecoin is Reddit, especially their Getting Started thread.
Please reserve the Medium comments section for lively and honest discussion about the article! If you have technical issues with Exodus, our Community Support team will be happy to speedily assist you if you send a descriptive email to: support@exodus.io
