There is no doubt that Crypto Exchange has captured the lion’s share of the crypto currency (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 captures the majority of votes based on FAME, rather than any proven abilities or qualifications to govern a nation. Bitcoin is the pioneer in this market space and continues to garner almost all of the market headlines.
This FAME does not mean that it is perfect for the job, and it is fairly well known that Bitcoin has limitations and problems that need to be resolved, however, there is disagreement in the Bitcoin world on how best to resolve the problems. As the problems fester, there is ongoing opportunity for developers to initiate new coins that address particular situations, and thus distinguish themselves from the approximately 1300 other coins in this market space. Let’s 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 they can interact with other contracts, make decisions, store data, and send ETHER to others. The execution and services they offer are provided by the Ethereum network, all of which is beyond what the Bitcoin or any other blockchain network can do. Smart Contracts can act as your autonomous agent, obeying your instructions and rules for spending currency and initiating other transactions on the Ethereum network.
Ripple (XRP) – This coin and the Ripple network also have unique features that make it much more than just 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 place money in “gateways” where only those who know the password can unlock the funds. For financial institutions this opens up huge possibilities, as it simplifies cross-border payments, reduces costs, and provides transparency and security. This is all done with creative and intelligent use of blockchain technology.
The mainstream media is covering this market with breaking news stories almost every day, however, there is little depth to their stories… they are mostly just dramatic headlines.
The Wild West show continues…
The 5 stocks crypto/blockchain picks are up an average of 109% since December 11/17. The wild swings continue with daily gyrations. Yesterday we had South Korea and China the latest to try to shoot down the boom in cryptocurrencies.
On Thursday, South Korea’s justice minister, Park Sang-ki, sent global bitcoin prices temporarily plummeting and virtual coin markets into turmoil when he reportedly said regulators were preparing legislation to ban cryptocurrency trading. Later that same day, the South Korea 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 their department does not agree with the premature statement of the Ministry of Justice about a potential cryptocurrency trading ban.
While the South Korean government says cryptocurrency trading is nothing more than gambling, and they are worried that the industry will leave many citizens in the poor house, their real concern is a loss of tax revenue. This is the same concern every government has.
China has grown into one of the world’s biggest sources of cryptocurrency mining, but now the government is rumoured to be looking into regulating the electric power used by the mining computers. Over 80% of the electrical power 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 to other places, but China is particularly attractive due to very low electricity and land costs. If China follows through with this threat, there will be a temporary loss of mining capacity, which would result in Bitcoin users seeing longer timers and higher costs for transaction verification.
This wild ride will continue, and much 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 those who get in early who will prosper, while the mass investors always show up at the end, buying in at the top.
Every day there is more news about what can, may, and should happen in the world of Crypto Currencies (CC’s) and Blockchain. There has been significant investment, research, and lots of chatter, but the coins and the projects are still not mainstream. They have not yet delivered the explosive changes envisioned. Many ideas are being discussed and developed, but none have delivered big game-changing results. What may be needed is for big industry players, like IBM, Microsoft, and the large financial services corporations to continue forging ahead in developing useful Blockchain applications – ones that the whole world can NOT live without.
Financial services are a ripe target for Blockchain projects because today’s banking systems are still based on archaic ideas that have been faithfully and painfully digitized, and because these systems are archaic, they are expensive to maintain and operate. Banks almost have a good reason to charge the high service fees they do – their systems are not efficient. These systems have many layers of redundant data, as everyone involved with a transaction has to have their version of the transaction details. And then there is the business of ensuring that there is a trusted third party to clear all these transactions –
Requiring even more versions of the same data. Blockchain technology holds out the promise of addressing these issues, as each transaction will be captured in just ONE block on the chain, and because it is a distributed database, security and integrity is built-in and assured. It may take some time to build up trust in these new systems, given that the verifiers of Blockchain transactions are not the traditional clearing houses that banks use and trust today. Trust by the banks in a new technology will take time, and even more time will be needed for that trust to trickle down to consumers.
Another company that may soon be ready to give CC’s and Blockchain a big boost is Amazon. It looks like Amazon is getting ready to launch their very own crypto currency. This is a company with revenues the size of a good-sized country, and they are in a position to issue a digital token that would be fully convertible with other CC’s, and fiat currencies too. A move like this would enable Amazon to:
- issue (AMAZON) coins to reward and incentivize developers on any of its platforms
- issue coins to consumers to use for in-app purchases
- issue coins to game players for in-game purchase of virtual goodies
- issue coins to regular customers as part of a loyalty programme
Amazon may have the ideal ecosystem of customers and partners to make this all happen. Worldwide they have about 300 million customer accounts, roughly the population of the USA, and they have 100,000 sellers on their platforms, with millions of items for sale. There is hardly a more mainstream company than Amazon, with a massive, vibrant economy all linked in. Amazon’s imminent entry into the world of CC’s may signal the adoption of blockchain technology by mainstream institutions on a large scale. What could be just around the corner if an AMAZON coin comes into play is the likes of a DISNEY Coin, a DELTA AIRLINES coin, a CARNIVAL CRUISES coin, a HOME DEPOT coin – you get the picture.