With its dizzying rise to near $ 20,000 one year ago, followed by the steep drop through much of 2018, Bitcoin (BTC) has quite rightly taken the lion's share of the cryptocurrency headlines. An asset lose $ 16,000 – 81% of its value – in a span of months. In a macabre sort of way, we had to follow the story.
Bitcoin, however, is not the only cryptocurrency out there. It has spawned a wide array of imitators and followers over the last decade, and some of these have become major players on their own. BTC, only they peaked a few weeks later, in early to mid-January.
Some of these values are in place of more investments in a more investor-friendly environment. Fortunately, it seems that may happen. The need for more government regulation, to be crypto's 'Wild West' reputation, has been in the news over the last several months.
As a rule, would you like to be a part of the world? . In addition, when and if crypto faces enhanced regulation, the various alt coins will have to find a way to differentiate themselves; it will not be enough anymore to just be a cryptocurrency. Let's take a look at some of the majors
Ripple is the second largest of the cryptocurrencies. The coin's market cap is $ 36 billion, bit over half that of Bitcoin. Ripple is not really a crypto coin, however; it's a blockchain network making use of a common ledger. The trading token, or coin, is XRP, and XRP was originally intended to be phased out shortly after launch. The sudden rise in crypto markets put the kibosh on that, and Ripple's backers kept XRP in circulation.
XRP hit its peak value of $ 2.78 on January 7, 2018. Bitcoin's was also a narrow trading range faster. It currently trades for $ 0.37 per coin.
Of all the cryptocurrencies out there, Ripple is the most likely to attract institutional investors – banks, hedge funds, insurance companies, etc. The reason goes back to Ripple's beginning: it was never launched through an ICO (initial coin offering); rather, the common ledger network was backed, and devised as a method for streamlining blockchain transactions, reducing the electrical cost of coin mining, and facilitating cross-border transactions. The launch of XRP was almost incidental, as a method of showing off the network.
The unusual start for XRP, however, means that it has never been classified as an 'asset' by the Securities and Exchange Commission. This is the great difference that Ripple brings to the currency market: should be government agencies seek to regulate the market, XRP will likely be exempt.
By market cap, at over $ 14 billion, Ethereum is the third largest in the crypto ecosystem. At its launch, ETH was meant to be an improved version of Bitcoin; it has become instead of BTC's chief competitors. It peaked on Jan 13, 2018, at $ 1385; today it trades at $ 139.
From the beginning, Ethereum addressed one of Bitcoin's main weaknesses: transaction time. BTC, two to the nature of its mining, while ETH handles up to 15 per second. While it is slow compared to a credit card, it is far faster than Bitcoin.
In recent weeks, plans are moving to switch ETH from the standard proof-of-work algorithm, in which coin miners receive rewards for the next block in the blockchain, to a proof-of-stake system. The new system will use less energy (cryptocoin mining is electricity intensive). Rather, the 'mining prize' is awarded to a random member of a pool of applicants. The new protocol, however, has the advantage of expanding the pool of miners (called 'forgers' under proof-of-stake), an essential upgrade for a crypto coin with no hard limit on the total number of coins.
Litecoin takes the same main advantage of Ethereum – faster transaction time compared to Bitcoin – and ups the ante. Litecoin miners produces a new block every 2.5 minutes, compared to Bitcoin's 10. Litecoin also has a higher cap on the total supply; where Bitcoin will max out at approximately 21 million coins, Litecoin will eventually number 84 million in circulation. In short, LTC took Bitcoin's basic technology and improved it.
These basic improvements were the original reason for Litecoin's launch, and even its name. It was conceived as a 'bitcoin lite,' whose faster transactions would attract customers. In terms of cost-of-entry, Litecoin has lived up to its name again. At $ 31.90, it is low enough to be affordable. Again, like the rest of the crypto market, LTC peaked about a year ago, reaching $ 278 on Jan 6, 2018.
Assuming cryptocurrencies gain a wider acceptance of the general public Litecoin's higher speed will help you keep your token more affordable.
Ripple offers an open blockchain and related freedom from regulation, with low cost; Ethereum offers size, along with faster transaction times; Litecoin offers affordability and even faster transactions. Stellar doubles on most of that (the exception is an open blockchain and regulatory immunity). It may be the best placed to profit as the mature cryptocurrency markets.
For starters, it's one of the crypto's fastest coins, and the transactions fees are minimal. Where Bitcoin can take up to 2.5 minutes, Stellar's transaction time is 5 seconds or less, while the processing fee for 600,000 transactions is only one US penny. Bitcoin's transaction fee is equivalent to $ 23, while PayPal, the dominant online payment service, charges 5% per transaction.
XLM has never been an expensive crypto coin. Its peak value, on Jan 3, 2018, was only $ 0.88. It has since fallen to $ 0.11 per coin.
The low price, and the minimal transaction fee, make XLM well-suited for individual traders, rather than institutions. Stellar keeps the fees low by using a non-blockchain security technology, the Stellar Consensus Protocol, to record transactions. With no energy-intensive coin mining going on, there is no cost to pass on.
Each of these cryptocurrencies brings its own set of strengths and weaknesses to the market, and the market itself is likely to change in the near future. If the market will go to Rudyard Kipling out of context, "Down to Gehenna or up to the Throne," no can say say. Cryptocurrencies are an evolving market, and as Yogi Berra pointed out, "It's tough to make predictions, especially about the future."
Author: Michael Marcus
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