The Crypto Wild West Show Continues

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 majority of the cryptocurrency (CC) market, 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 most votes based on FAME, rather than proven skills or qualifications to rule a nation. Bitcoin is the pioneer in this market space and continues to grab almost all the market headlines. This FAME does not mean that it is perfect for the job, and it is quite well known that Bitcoin has limitations and problems that need to be solved; however, there is disagreement in the Bitcoin world about the best way to resolve the issues. As the problems get worse, there is a continual opportunity for developers to start new coins that address particular situations and thus distinguish themselves from the 1,300 or so other coins in this market space. Let’s look at two Bitcoin rivals and explore how they differ from Bitcoin and each other:

Ethereum (ETH) – The Ethereum currency 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 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 media 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…

All 5 crypto/blockchain stock picks are up an average of 109% from December 17/11. The wild swings continue with daily twists. Yesterday we had South Korea and China the latest to try to bring down the cryptocurrency boom.

On Thursday, South Korean Justice Minister Park Sang-ki sent global bitcoin prices into a temporary nosedive and virtual currency markets into convulsions 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 task force, 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 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 the government is now rumored to be looking into 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 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 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 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, it is those who come in early that will prosper, while the massive investors always show up last, buying on top.

Stay tuned!