Sentiment toward digital currencies that are backed by “the market” are skyrocketing, but not all cryptocurrencies are the same. What appears to be the similar about many cryptocurrencies is they are build using blockchain technology which provides a historical transaction chain which helps prevent manipulation and fraud.
Bitcoin was first introduced in 2008, but it was not until 2011 when blockchain technology became and open source platform that allowed for the introduction of cryptocurrencies. In 2015 Bitcoin receive 75 million in private financing in a capital round, paving the way for further development. The path toward larger acceptance has been tainted along the way, but cryptocurrencies are flourishing, as both governments and retailors are beginning to accept them. Many believe Bitcoin is used by money laundering groups. Bitcoin have been seized by the DEA.
The news that is positive surrounding digital currencies continues to outweigh the negatives. More and more official organizations are accepting digital currencies as a payment method. For example, Japan passed a law to accept bitcoin as a legal payment method. Additionally, Norway’s largest online bank, Skandiabanken, integrate bitcoin accounts into its network.
Different Types of Digital Currencies
While there are other digital currencies that mimic Bitcoin, such as Litecoin, there are others that are more platform focused. Ethereum is a software platform that was launched in 2015, and facilitates Smart Contracts and applications that are centralized. This means a contract can be made between you and a customer, and eliminate fraud, or third-party interference.
The applications that run on the Ethereum platform use a crypto-toekn called ether. Ether is the digital source used to perform business transactions on the Ethereum platform, and is widely coveted by developers looking to run applications inside Ethereum. An investment in Ethereum, is a bet that the demand for use if this platform will continue. The market capitalization of all the Ethereum platforms is 4.5 billion, which makes it the second largest crypto currency.
Ripple is a digital currency that offers low-cost international payments. Ripple provides banks and financial institutions real-time cross-border payments. Ripple has a market cap of 1.25 billion. One of the benefits is that Ripple does not need mining, which is a feature that is pertinent to Bitcoin. This requires a great deal of computing power, which in turn requires electricity.
News that American Express is evaluating incorporating Ripple into its system and as a liquidity provider would be able to offer tighter spreads for payments, and selling XRP to institutional buyers interested in investing in XRP.
The differences in crypto currencies appear to be their use. While Bitcoin appears to be an investment vehicle that is slowly experiencing acceptance at the government and retail level, other crypto currencies are focused on specific platforms or business opportunities. Bitcoin is also traded as an investment vehicle and you can track the movements with iFOREX company. Digital currencies such as Ethereum and Ripple are focused on either their application growth in the case of Ethereum or payment processing which is the case for Ripple.