Here’s a question that often comes up: How do I choose which cryptocurrency to invest in – aren’t they all the same?
There’s no doubt that Bitcoin has captured the lion’s share of the cryptocurrency (CC) market, and that has a lot to do with its WELL-KNOWN. This phenomenon is very similar to what happens in national politics around the world, where a candidate wins a majority of votes based on FAME rather than any proven ability or qualification to lead the country. Bitcoin is a pioneer in this market space and continues to grab almost all the market headlines. It’s FAME doesn’t mean it’s perfect for the job, and it’s pretty well known that Bitcoin has limitations and issues that need to be addressed, but there is disagreement within the Bitcoin world about how best to address these issues. As challenges mount, developers are left with the opportunity to initiate new coins that are suitable for specific situations and thus differentiate themselves from the approximately 1,300 other coins in this market. Let’s take a look at two of Bitcoin’s competitors and see how they differ from Bitcoin and from each other:
Ethereum (ETH) – The Ethereum coin is known as ETHER. The main difference from Bitcoin is that Ethereum uses “smart contracts”, which are account storage objects on the Ethereum blockchain. Smart contracts are defined by their creators and can interact with other contracts, make decisions, store data, and send ETHER to others. The execution and services they offer are provided by the Ethereum network, all of which surpass what Bitcoin or any other blockchain network can do. Smart contracts can act as your autonomous agent, obeying your instructions and rules to spend currency and initiate other transactions on the Ethereum network.
Ripple (XRP) – This coin and the Ripple network also have unique features that make it much more than just a digital currency like Bitcoin. Ripple has developed the Ripple Transaction Protocol (RTXP), a powerful financial tool that allows exchanges on the Ripple network to transfer funds quickly and efficiently. The basic idea is to place money in “gateways” where only those who know the password can unlock the funds. For financial institutions, this opens up huge opportunities as it simplifies cross-border payments, reduces costs, ensures transparency and security. All of this is done with creative and intelligent use of blockchain technology.
The mainstream media covers this market with breaking news almost every day, however there is little depth to their stories…mostly just dramatic headlines.
The Wild West Show continues…
Picks of 5 crypto/blockchain stocks rose on average by 109% from December 11/17. Wild swings continue with daily rotations. Yesterday, South Korea and China were the latest to try to bring down the cryptocurrency boom.
South Korea’s Justice Minister Park Sang-ki sent global bitcoin prices temporarily plummeting and virtual currency markets into turmoil on Thursday when he said regulators were preparing legislation to ban cryptocurrency trading. Later in the day, South Korea’s Ministry of Strategy and Finance, one of the main member agencies of the South Korean government’s cryptocurrency regulatory task force, came forward to say that their department do not agree with the Ministry of Justice’s premature announcement of a potential ban on cryptocurrency trading.
While the South Korean government says that cryptocurrency trading is nothing more than gambling and they are concerned that the industry will leave many citizens in the poor house, their real concern is the loss of tax revenue. This is the same concern that every government has.
China has become one of the world’s largest sources of cryptocurrency mining, but now the government is rumored to be considering regulating the electricity used by mining computers. Over 80% of Bitcoin mining electricity today comes from China. By shutting down miners, the government will make it harder for Bitcoin users to verify transactions. Mining will be moved elsewhere, but China is particularly attractive because of the very low cost of electricity and land. If China follows through on this threat, there will be a temporary loss of mining power, causing Bitcoin users to see longer timers and higher transaction verification costs.
This wild ride will continue and like the internet boom, we will see big winners and eventually big losers. Also, similar to the internet boom or the uranium boom, it’s those who get in early who will prosper, while the mass investors always show up at the end, buying at the top.