In today’s lesson, we’re going to explain a concept that may seem foreign; once you learn the concept and the lingo, you’ll be in a position to not only know what we’re talking about, but to potentially profit from it. So, it’s time to meet the Satoshis, look for low numbers, and potentially score some high returns.
Who is Satoshi and how did he get a number?
Satoshi Nakamoto is the maybe-pseudonym of the person or entity that created Bitcoin. Does he exist? Is he a she? Are he or she they?
His identity doesn’t really matter, though, because Satoshi created Bitcoin and thus gets a number attached to his name. (And for the purposes of this discussion, we’re going to use the “he” and “his” pronouns.)
Satoshi decided to take Bitcoin and denominate it all the way to 8 decimals. In other words, you could buy 0.00000001 of a Bitcoin. (That’s one-one-hundred-millionth, right?)
But it’s not really easy to say “hey, I have zero-point-zero-zero-zero-zero-zero-zero-zero-one Bitcoins.”
Enter the Satoshi as a unit of measurement. 0.00000001 = 1 Satoshi.
A Sat Is Born
Once other coins started entering the crypto space, especially those with lower values than Bitcoin, it was time for that unit of measurement to really take hold. You have a coin that you want to trade your Bitcoins for, and it’s only worth a fraction of Bitcoins, say .00000125, it’s much easier to say “here are 125 Satoshis.” (Digitally, of course – there’s no such thing as an open outcry cryptocurrency trading floor.) The lingo ended up taking on a life of its own: “Sats” became an abbreviation for “Satoshis” and we were off to the races.
So, now that you know what a Satoshi is, and what Satoshis are, let’s talk about the point of this post: how to find coins that are cheap, or even really cheap, and separate the potential winners from the losers.
Art and Science
There are certain disciplines that are straightforward, like biology and medicine. Others are a little more artistic: political science, for instance, isn’t really a science and…oh gee, I’m not going to let this devolve into a political discussion, am I?
My point is that there’s a combination of the two – art and science – that you’ll need to put together when looking at a potential low-Satoshi coin that could give you high-Satoshi returns.
For instance: let’s look at poor Quatloo.
The numbers aren’t bad, right? I mean, a coin trading at 2129 Satoshis is certainly better than a coin that trades at 200 Satoshis.
That’s the science.
The art, though, tells a little different story.
I will give them credit for updating their webpage, which used to be awful, but, if you visit the site, you don’t have a feel for what it is. There’s no “art” – I’m not talking about images on their webpage, I’m talking about whether or not they can tell you really what they do, and do so in a way that inspires confidence.
In other words, while we traded the coin a while back, it was just “play money” and there wasn’t really any chance of it turning into something big.
So, now that you’ve seen the less-than-desirables, let’s take a look at three picks from the low-Satoshi category; ones that meet an “art and science” test, in our opinion. (**Not investment advice. Use this site at your own risk. Returns not guaranteed. Talk to your advisors.**)
(**ALSO HERE’S AN AFFILIATE LINK FOR COINBASE. You should really consider buying some Bitcoins, Ethereum, or Litecoins to get started in this game.)
Our First Low Satoshi Pick: Siacoin (SC)
We’re in love with this project here – in fact, we’re actually quite amazed that we haven’t talked about it on this site yet. (We HAVE talked about it ad nauseam on Steemit – you should totally follow Dave over there.)
Our understanding of Sia is this: “Your decentralized private cloud. Welcome to a new era of cloud storage on the blockchain.”
That, my friends, is art meeting science. They have the elevator speech DOWN. I immediately get it.
A deeper dive tells us that this could really take off: you rent out space on your computer and others take advantage of that space. Plus, since it’s a distributed network, there isn’t a single point of failure.
Sure, they have a LONG way to go to take out Dropbox, or Amazon Web Services.
SC has been trading at right around 550 Satoshis for the past couple weeks. It’s up, though, from a low in late February/early March of 25 Sats.
Disclosure: We are long on SC.
A couple other things to note: pronounce it “Sigh-uh” with a long “i” and you’ll score serious points. Also, it’s a top-15 coin by market cap right now. Don’t let that persuade or dissuade you.
A quick sidebar on psychology
The psychology behind a low-Satoshi coin, in our view, is this: you can get in at double-digits – such as a 25 Satoshi pick of SC – and feel as if you’ve hit the lottery if it goes into triple-digits.
You can STILL get in at triple-digits and feel as if you’ve hit the lottery if it goes into quadruple-digits; and the price point in US Dollars of a triple-digit Satoshi coin such as Siacoin is still around 1.6 cents. So, mentally, you’re still in “penny stock” territory.
You can even get in at quadruple-digits and STILL see that there’s room to grow: XRP was in the 2000-Sat range for a few months this year, and the project is such that people are still getting in, because the US Dollar value then was pennies and now is around 30 cents.
AND…if you lose it all on a pick, you might tell yourself…well, it was a low-value coin anyway. And you’ll dust yourself off and move on to the next one.
Second Pick: Bytecoin (BCN)
We’ll admit this one can be a head-scratcher. Especially if you’re new to the space: who would name it “Bytecoin” if there’s already something called “Bitcoin” and there’s a “Bitcoin Plus” and a “Bitcoin Dark?”
And, what gives, really, with the price? 5 Satoshis early this year, to 25 Satoshis, up to 175, and now floating around 125 or so?
AND the supply is such that the market cap of this coin leads to a situation where it’s possible that there are way too many of these in the universe.
But this coin is business-focused, cryptographically sound – they say “impossible to crack,” though I say that might be a stretch – and it looks to me like a project that is attempting to go after Ripple.
What might be most important for the active traders: once it hit triple-digits, it has pretty much stayed there.
We do not currently own this coin.
Third Pick: Stellar Lumens (STR or XLM)
Confusion with this one – two different ticker symbols (and that tripped us up a few months ago). Stellar is listed as STR on Poloniex. XLM elsewhere, including Bittrex.
But, if you think of this as, with all due respect, “Baby Ripple,” you might see its potential.
It connects “banks, payments systems, and people.”
It looks like Ripple on the surface; its coin even mirrors Ripple in the markets.
And, if you bounce around the internet at least a little, you can find out that there’s…shall we say…”friendly competition” between the two? (Bad blood?)
That being said, it has the art-and-science thing down, and also falls into the “quadruple-digit-Satoshi” category, trading at sub-2000 for a few weeks now (after bouncing from triple-digits earlier this year).
We do not currently own this coin.
There you go…
Three picks that could be poised for some growth, and ones that are right now low enough on the Satoshi scale to not break the (psychological) bank.
Let us know what you think in the comments, or on Twitter – use the hashtag #lowsatoshis with your picks.