Here is a question that often comes up: How do I choose which cryptocurrency to invest in? Aren’t they all the same?
There is no doubt that Bitcoin has captured the lion’s share of the cryptocurrency (CC) market, and that is largely due to its FAME. This phenomenon is much like what is happening in domestic politics around the world, where a candidate gets the most votes based on FAME, rather than proven skills or qualifications to run a nation. Bitcoin is the pioneer in this market space and continues to grab almost every headline in the market. This 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 worked out; however, there is disagreement in the Bitcoin world about the best way to resolve the issues. As the problems worsen, there is a continuing opportunity for developers to start new coins that address particular situations and thus set themselves apart from the 1,300 or so other coins in this market space. Let’s look at two rivals to Bitcoin and explore how they differ from Bitcoin and each other:
Ethereum (ETH) – The Ethereum currency is known as ETHER. The main difference with Bitcoin is that Ethereum uses “smart contracts”, which are account hold 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 is beyond what Bitcoin or any other blockchain network can do. Smart Contracts can act as your autonomous agent, obeying your instructions and rules to spend money and initiate other transactions on the Ethereum network.
Ripple (XRP) – This currency and the Ripple network also have unique features that make it much more than 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 put money into “gateways” where only those who know the password can unlock the funds. For financial institutions this opens up enormous possibilities, as it simplifies cross-border payments, reduces costs and provides transparency and security. All of this is done with creative and clever use of blockchain technology.
Major news outlets are covering this market with breaking news almost every day, yet there is little depth to their stories… mostly just dramatic headlines.
The Wild West show continues…
Top 5 crypto/blockchain stock picks are up an average of 109% from December 17/11. The wild swings continue with daily spins. Yesterday we had South Korea and China the latest to try to bring down the cryptocurrency boom.
On Thursday, South Korea’s Justice Minister Park Sang-ki sent global bitcoin prices temporarily plummeting and virtual currency markets into turmoil when he reportedly said regulators were preparing legislation to ban cryptocurrency trading. Later that day, the South Korean Ministry of Strategy and Finance, one of the main member agencies of the South Korean government’s cryptocurrency regulation task force, came out and said that its department would not you agree with the premature declaration of the Ministry of Justice on a possible 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 poverty, their real concern is the loss of tax revenue. This is the same concern that every government has.
China has become one of the largest sources of cryptocurrency mining in the world, but now the government is rumored to be looking into regulating the electrical power used by mining computers. Over 80% of the electrical power to mine Bitcoin today comes from China. By shutting down miners, the government would make it harder for Bitcoin users to verify transactions. Mining operations will move elsewhere, but China is particularly attractive due to very low land and electricity costs. If China goes through with this threat, there will be a temporary loss of mining capacity, which would result in Bitcoin users seeing longer timers and higher costs for transaction verification.
This wild ride will continue and just like the rise of the internet we will see some big winners and eventually some big losers. Also, similar to the internet boom, or the uranium boom, those who thrive are those who get in early, while mass investors always show up last, buying at the top.