While Bitcoin is clearly the poster-child for cryptocurrency, there are a lot of other cryptos that serve a purpose. The application of blockchain technology is not limited to just sending and receiving money. There are many industries that can benefit from this system of storing information and transactions. Obviously Bitcoin is the most famous of all the cryptocurrencies, but that also means that it has the most outdated tech. Today, we’re going to cover the other major cryptocurrencies, what purpose they serve, and what expectations I have for them going forward.
- Ethereum (ETH)
Ethereum is listed third on Coinmarketcap in terms of market cap. It is a platform for developers to build decentralized applications on top of. There are a lot of popular coins actually built on Ethereum. It can also create smart contracts and introduce new coins into the system. The coins that fuel the network are Ether. Ether is worth about $700 at the moment and is currently my largest holding. Aside from the amazing technology, I think that when ordinary people discover that crypto can do a lot more than just transact coins there will be a huge rush to accumulate anything that looks promising. Ethereum is a natural benefactor of this, as it is already established and used commonly for people to participate in ICOs (Initial Coin Offerings), which can be highly profitable and appealing to investors new to these markets. Because of that alone, I am extremely bullish on the price of this coin. It is my belief that once people realize that Bitcoin is no longer that practical for sending/receiving money, Ethereum will become the coin of choice. A bonus to this coin is that it is commonly used as a trading pair on the major exchanges, so if you are aiming to trade alternate cryptocurrencies and not use Bitcoin, this would be basically your only option. My portfolio is currently ~30% Ether.
- Ripple (XRP)
Ripple is a very controversial token. It is listed second on Coinmarketcap and the price is currently hovering around $2. The Ripple Network aims to send money very quickly and very efficiently. In this capacity, it is excellent. It is faster or just as fast as any coin out there. It also has the benefit of being a professionally run company with real partnerships, real-world application, and real leadership. Unfortunately, this also happens to be its downfall. The crypto community is very torn on how they feel about this coin because of how it is centralized, has a large supply, and is aiming to work with banks. If you remember from my earlier post, one of the reasons that cryptocurrency is appealing is that it lets you be free from banks. This does the opposite. It connects blockchain and banks to make banks even stronger. There is also speculation as to how exactly the Ripple token will be used. Some seem to think that banks will really only need 20 XRP to power their transactions and that XRP won’t be the store of value, it will just be the fuel for the network. For the crypto community, Ripple represents everything that we hate. That being said, this coin has a decent price outlook. Despite its enormous supply (100 billion), the price has spiked in the past weeks due to speculation that it will get added to Coinbase, giving thousands of new investors with new money the chance to purchase a cheap coin, which they are likely to drool over. Because I saw this coming, I stockpiled this coin when it was 20 to 30 cents. Since then I have sold enough to cover my original investment and I am going to let the profits ride. If/when it gets added to Coinbase and we experience another dramatic increase, I will reevaluate and probably sell off more. This started off as about 3% of my portfolio but has since increased to 7%.
- Bitcoin Cash (BCC or BCH)
Bitcoin Cash is fourth on Coinmarketcap and has a current price of $2900. This coin is a fork of Bitcoin (If you ask Roger Ver, Bitcoin is a fork of Bitcoin Cash). Basically, a coin will fork when there is a disagreement on how the coin is to proceed with scaling and development. When that happens, sometimes one group of developers will fork the coin and create their own which has all of the properties that they think it should have. Bitcoin Cash is faster and costs less to send. At the moment, it is superior to Bitcoin. Bitcoin does have some upcoming developments that could usurp Bitcoin Cash, but for now Bitcoin Cash is clearly the better option for sending money. However, that doesn’t mean that Bitcoin Cash is the better investment. It is much more centralized. Roger Ver is essentially the “leader” of this coin. He and Bitcoin Cash are both hated by a lot of the community, and that makes Bitcoin Cash a risky investment. Bitcoin Cash could completely replace Bitcoin, or it could completely crash to the ground. Both are possible with this coin, and I only like to swing at things that I know that I can hit. Bitcoin Cash currently represents 0% of my portfolio.
- Litecoin (LTC)
Litecoin is sixth on Coinmarketcap and has a current price of $213. Litecoin is very similar to both Bitcoin and Bitcoin Cash. Its primary use is to send money quickly and inexpensively. It is seen as the “silver” to Bitcoin’s “gold” and is a direct competitor to Bitcoin Cash. While Bitcoin is now regarded as primarily a store of value, Litecoin is used for transactions. It is lightweight and easy to use. The developer of this coin is Charlie Lee. He is mostly liked by the community and does a decent job of representing the coin and communicating the benefits of using LTC. This coin has a cult following and has been around for years, so it has the benefit of being established. I began accumulation of this coin at around $60 and sold all of it between the prices of $250 and $350. I like LTC a lot, but it currently represents 0% of my portfolio. Though LTC serves very well in its capacity, it doesn’t have much use other than to send money. For that reason, I’ve moved on to better things. I’m out for now, but if the technical analysis ever lines up again, I could definitely see myself entering again.
We have now covered the five most popular cryptocurrencies. The goal of this post was to communicate that there are coins that compete with Bitcoin and there are coins that serve a completely different purpose than Bitcoin. We have barely scratched the surface. There are cryptos out there truly doing amazing things. If you are looking to do some research, Coinmarketcap is a great place to poke around. They have a list ordered by market cap and within the individual listings they give links to websites, chat rooms, and other important resources that you should use to understand how these markets work. The more talking and networking that you can do, the better. In my next post, I will be showing you how to sign up for Bittrex, deposit a cryptocurrency, and execute trades.