A question that comes up often: 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 this is largely due to FAME. This phenomenon is very similar to what happens in national politics around the world, where a candidate gets the majority of votes based on FAME rather than any proven ability or qualifications to rule a nation. Bitcoin is a pioneer in this market space and continues to garner almost all the market headlines. That 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 in the Bitcoin world about how best to address the issues. As challenges grow, there is an opportunity for developers to launch new coins that address specific situations and thus differentiate themselves from the nearly 1,300 other coins in this market space. Let’s take a look at two Bitcoin competitors and explore 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 powered by the Ethereum network, all of which are beyond what Bitcoin or any other blockchain network can do. Smart Contracts can act as your autonomous agent, following 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 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. This opens up great opportunities for financial institutions, as it facilitates cross-border payments, reduces costs, and ensures transparency and security. All this is done through the creative and intelligent use of blockchain technology.
The mainstream media covers this market almost daily with breaking news, but there is little depth to their stories… they are mostly dramatic headlines.
The Wild West show continues…
5 stock crypto/blockchain picks rose on average 109% From December 11/17. Wild swings continue in daily cycles. Yesterday we had South Korea and China trying to bust the boom in cryptocurrencies.
South Korea’s Justice Minister Park Sang-ki sent global bitcoin prices temporarily lower and virtual coin markets into turmoil on Thursday when he said regulators were preparing legislation to ban cryptocurrency trading. On the same 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 out and said it was their department. does not agree With the Department of Justice’s premature announcement of a potential cryptocurrency trading ban.
While the South Korean government says that cryptocurrency trading is nothing more than gambling and worries 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 of every government.
China has become one of the world’s largest sources of cryptocurrency mining, but now the government is rumored to be trying to regulate the electricity used by mining computers. Today, over 80% of the electricity used to mine Bitcoin comes from China. By shutting down miners, the government will make it harder for Bitcoin users to verify transactions. Mining operations will move elsewhere, but China is particularly attractive because of very low electricity and land costs. If China follows through on this threat, there will be a temporary loss of mining capacity, which will result in Bitcoin users seeing longer timers and higher costs for verifying transactions.
This wild ride will continue and like the internet boom we will see some big winners and eventually some big losers. Also, similar to the internet boom or the uranium boom, early movers will succeed, while mass investors will always appear last and buy at the top.