Crypto currencies are the latest thing, started a few years ago, allegedly, by an anti establishmentarian who was not happy with the manipulations of conventional currencies, by banks and Governments, he decided to create his own.
It was only popular (or achievable) with the computing “Geeks” and “Gamers” it was generally used to pay for “virtual things” within the gaming community.
The Crypto’s have gained credibility in the last 2 years, leading the way “BitCoin” which has seen values hit the $1200 mark. This is mainly due to the heavy speculation from the big financial institutions and governments, that don’t want to miss the boat. LiteCoin is currently the second biggest and has a greater number of hashable coins that can be generated, hence its value is smaller (at this time) than BitCoin. Some liken the price comparison to the difference between Gold & Silver prices.
Crypto’s are produced by “mining” the generation of long, complicated hash codes, using GPU (graphics cards), there is a finite amount of coins that can be generated. The more people that mine, the harder the difficulty becomes to produce the coins. BitCoin can now be generated with ASIC mining because of the programming, this led to an explosion of BitCoin miners however, they generate very few fractions of a coin these days. Conversely LiteCoin can only be mined efficiently using GPUs and do not have the same issues that BitCoin have with ASIC, at this time, because of a different “coding” in the programming.
Adding to the validity & volatility of the Crypto Currencies various retailers, shops and now Governments are forcing the price up & down when announcements are made to whether they will, or will not accept them as “legal tender”.
Many pessimists believe that these currencies will be short lived and are simply the “latest bubble” however, the bubble has made some entrepreneurs very rich. Massive investments in computing hardware has boosted the industry and prices, due to shortages in certain GPU (graphic cards) as well as the high demand for electricity to run these “mining Riggs”.
For Investors that do not want to go through the hassle of actually mining, many people are “fiscally” trading the currencies and CFDs are also available in the markets.