The Cryptocurrency Ecosystem

Jun. 07, 2017 3:34 PM ETGLD, COIN-OLD, GBTC, BTC-USD11 Comments
Daniel Goldman profile picture
Daniel Goldman
435 Followers

Summary

  • Bitcoin has a number of flaws.
  • There are a large number of alternative cryptocurrency technologies which tackle these flaws.
  • Watching the cryptocoin ecosystem, seeing what currencies can work together, and wading through the political trades are all necessary for a healthy cryptocoin porfolio.

When I was in the middle of writing "Looking Into Ethereum," I had a discussion with a friend who has been interested in cryptocurrency for a long time. His currency of choice, at the moment, is Monero. I decided to look into the currency and write an article for the currency. However, rather than dedicate the article fully to Monero, I am going to compare a few cryptocurrencies, and show why they are different than Bitcoin and how they could compete, or even coexist, with the most well known cryptocurrency, in what might be called the "cryptocoin ecosystem."

Market capitalization and price data is from "CryptoCurrency Market Capitalizations."

Bitcoin

Market Cap: $46B
Price: $2800

Before I start, here are a few issues with Bitcoin. First, Bitcoin is slow. It takes 10 minutes for a Bitcoin transaction to be confirmed, or even longer, depending on the transaction fee. One of the most powerful features of Bitcoin also makes it problematic if you are truly privacy oriented. Bitcoin's ledger is completely open. Every transaction can be analyzed. Third, Bitcoin's governance, contrary to the original goal, has become highly centralized. Finally, Bitcoin is at risk of a 51% attack. Finally, there is nothing really backing the value of Bitcoin.

Litecoin

Market Cap: $1.5B
Price: $30

Litecoin is often described as being to Bitcoin, what silver is to gold. First, the upper cap of how many coins there are in each currency is different. There is a total of 84 million LTC available to mine, as opposed to only 21 million for BTC. One of the main differences between LiteCoin and Bitcoin is that LiteCoin is faster. It takes much less time for a transaction to clear if you are using LTC: about 2.5 minutes, as opposed to the 10 minutes for Bitcoin. Coindesk has a

This article was written by

Daniel Goldman profile picture
435 Followers
I am an occasional investor/trader and researcher. I use a combination of market theory and economic theory to determine my trading strategies, but focus on periods where contrarian actions seem reasonable, such as when market expectations seem to be trending in the opposite direction as fundamentals. Research Topics I am interested in the relationship between pattern day traders and investors and how value flows between these two groups.

Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Additional disclosure: All market capitalization and prices are approximate and none of this information is a suggestion that any of these specific currencies should be the ones that are added to a portfolio. Whether or not to include cryptocurrencies in a portfolio, and which to include, is only something that can be determined after extensive research on the market and the technologies.

I may take a position in one of more of the cryptocurrencies mentioned in this article.

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