Here’s a question that often comes up: How do I choose which crypto currency to invest in? Aren’t they all the same?
There is no doubt that Bitcoin has captured most of the cryptocurrency market (CC), and that is largely due to its FAME. This phenomenon is much like what is happening in national politics around the world, where a candidate gets the majority of votes based on FAME, rather than any proven ability or qualification to rule a nation. Bitcoin is the pioneer in this market space and continues to rack up almost every headline in the market. This FAME does not mean that it is perfect for the job, and it is quite known that Bitcoin has limitations and problems that need to be solved, however, there is disagreement in the Bitcoin world on the best way to solve the problems. As problems escalate, there is a continuing opportunity for developers to launch new coins that address particular situations and thus distinguish themselves from the roughly 1,300 other coins in this market space. Let’s take a look at two Bitcoin rivals 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 holding 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 the 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 for spending money and initiating other transactions on the Ethereum network.
Ripple (XRP) – This currency and the Ripple network also have unique characteristics that make it much more than just a simple digital currency like Bitcoin. Ripple has developed the Ripple Transaction Protocol (RTXP), a powerful financial tool that enables exchanges on the Ripple network to transfer funds quickly and efficiently. The basic idea is to put money in “gateways” where only those who know the password can unlock the funds. For financial institutions, this opens up enormous possibilities by simplifying cross-border payments, reducing costs, and providing transparency and security. All of this is done with a creative and intelligent use of blockchain technology.
The mainstream media outlets are covering this market with breaking news almost every day, yet there is little depth to their stories … they are mostly dramatic headlines.
The Wild West show continues …
The 5 crypto / blockchain stock picks have risen an average of 109% from December 17/11. The wild swings continue with daily twists. Yesterday we had South Korea and China as the last to try to bring down the cryptocurrency boom.
On Thursday, South Korean Justice Minister Park Sang-ki caused global bitcoin prices to temporarily plummet and virtual currency markets to shake when he reportedly said regulators were preparing a 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 working group, came out and said that its department would not you agree with the premature declaration of the Ministry of Justice about 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 the home of the poor, 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 studying the possibility of regulating the electrical power used by mining computers. More than 80% of the electrical energy to mine Bitcoin today comes from China. By shutting down the miners, the government would make it difficult for Bitcoin users to verify transactions. Mining operations will move elsewhere, but China is particularly attractive due to very low electricity and land costs. If China goes ahead with this threat, there will be a temporary loss of mining capacity, resulting in Bitcoin users seeing longer times and higher costs for transaction verification.
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, it is the early comers who will prosper, while the investors en masse always show up last, buying at the top.
Stay tuned!