Bitcoin or Altcoins: What Should You Invest in?

The cryptocurrency industry is packed full of different coins. Seemingly, every day we have a new altcoin bursting onto the scene that could potentially change the crypto landscape. So, knowing how to invest your money can save your nerves and time.

With so many different currencies available for purchase, how can you hope to make the right choice? In reality, there is no right or wrong option in the cryptocurrency market, as it all depends on goals and application areas. Arming yourself with knowledge can allow you to make an informed decision and minimize your investment risk. Let’s look at the pros and cons of various options available, which might help you to decide on whether you should buy Bitcoin or opt for altcoins instead.

Why so many investment opportunities?

Before we examine Bitcoin and altcoins, we can look briefly at why there are so many cryptocurrencies on the market. Bitcoin is hugely successful – no one ever thought it would take off in the way it has. Furthermore, the underlying technology, such as blockchain, has proven relatively easy to recreate.

Due to these factors, many budding entrepreneurs and Bitcoin enthusiasts created their own coins. They saw an opportunity to rival Bitcoin or to create their own legacy. As a result, we now have an abundance of altcoins on the market.

Bitcoin as the cryptocurrency poster child

Bitcoin is the original cryptocurrency. Initially created and released in 2009, it introduced blockchain technology and the proof-of-work principle to the world. Since inception, Bitcoin has grown to become the most prominent cryptocurrency. There are over 17 million coins in circulation valued at over $113 billion. This figure vastly outnumbers any other altcoin – the second largest cryptocurrency after Bitcoin is Ethereum and its market cap totals only $21 billion.

Bitcoins are mined, and this mining process is an integral part of the coin’s existence. Miners find new Bitcoins and bring them into circulation for rewards. Furthermore, they are responsible for validating Bitcoin transactions on the ledger.

Bitcoin Advantages

The main advantage of Bitcoin is its widespread use and acceptance. It is by far the most accepted as an actual form of payment. Many financial institutions are backing Bitcoin, and it is certainly the currency that most people have heard of. Moreover, Bitcoin has a vast community of users who are dedicated to its long-term development. Finally, it also has an immense pool of miners who maintain the network and ensure it is secure.

Bitcoin Disadvantages

Although Bitcoin undoubtedly has a host of advantages, it has its flaws. The price of Bitcoin has taken a large hit since December 2017 when it rose to stratospheric heights of around $20,000. The price still remains positive, but many analysts wonder if it will ever return to those numbers.

Another major drawback that is becoming increasingly evident is the Bitcoin transaction fees. Bitcoin was meant to have ultra-low transactions fees – this was one of its main selling points. Since miners can choose which transactions to process, they will opt for ones with higher fees.

Finally, many people comment on heavy energy consumption that Bitcoin mining requires – they see this a damage to our environment and would prefer to use a more ‘eco-friendly’ alternative.

Altcoins as alternatives with great potential

Bitcoin is seen as the original cryptocurrency, therefore any new currency has deemed an alternative. There are currently thousands of altcoins available to invest in, and more are developed on a regular basis. Some of them prevail and remain in high demand, for example, Ethereum and XRP; whilst others fizzle out. The following are some of the altcoins and their market cap (as of October 18, 2018):

  • Ethereum: $21 Billion
  • XRP: $18 Billion
  • Bitcoin Cash: $7.7 Billion
  • EOS: $4.9 Billion
  • Stellar Lumens: $4.5
  • Litecoin: $3.1 Billion
  • Monero: $1.7 Billion
  • Dash: $1.3 Billion

As you can see, there are many altcoins available, and each offers something slightly different.

Altcoin Advantages

One of the main advantages of altcoins is that by their nature they serve as an alternative to Bitcoin. If the almighty Bitcoin crumbles, there are altcoins to fall back on. Furthermore, many altcoins actually have a unique function. For instance, Po.et (POE) is built around a platform where publishers and content creators can easily manage their licensing.

Finally, many altcoins offer different systems and processes to Bitcoin and have a greater scope to evolve in the future. XRP and Ethereum, for example, are two different altcoins that have been widely adopted and used in many industries.

Altcoin Disadvantages

The main disadvantage of altcoins is their relative lack of exposure and acceptance. While Ethereum, XRP, and Bitcoin Cash have great support, others just don’t have the same scope. Moreover, there is a limited number of outlets and ways in which you can use many altcoins as they simply haven’t been adopted to the same degree that Bitcoin has.

Conclusion

Just because Bitcoin is the largest currency in supply and has the best support, it doesn’t necessarily mean that altcoins are worthless. You could consider diversifying your investment portfolio and purchasing some Bitcoin and some of the major altcoins. The main consideration is to minimize your risk and make an informed purchase.

Ripple vs. Stellar: Will There Be Only One Winner?

Cryptocurrency enthusiasts frequently compare Stellar and Ripple due to the similarities in their blockchains. To get a feel for which of these two cryptocurrencies will pull ahead in the grand scheme of things, you need to take a closer look at each and then examine some points of comparison.

Understanding Ripple

To start, take a closer look at Ripple, which Chris Larsen and Jed McCaleb, American programmers, created in 2012. Ripple’s cryptocurrency is XRP, and that crypto has the third top market capitalization with the XRP/USD price of $0.32. It is important to understand that Ripple refers to the technology, while XRP refers to the token itself. The idea behind Ripple is the ability for banks to make international transfers within seconds at almost no cost. The founders decided to create Ripple to overcome challenges of the existing cross-border payment systems, including slowness, inefficiency, and high cost.

Ripple relies on distributed ledger technology that ends the need for third parties when transferring money across borders, cuts costs and reduces the time spent. XRP is also useful for banks thanks to its ability to provide liquidity. Although the target audience of Ripple is banks, everyone is welcome to use it, and banks are certainly not the only ones who have already put it to good use.

Understanding Stellar

One of the co-founders of Ripple, Jed McCaleb, created Stellar in 2014. As with Ripple and XRP, Stellar refers to the technology, while XLM or Lumens refers to the cryptocurrency. Stellar is like Ripple in that it also allows for quick and affordable sending and receiving of funds. It also has similar coding to Ripple, which should be unsurprising considering their shared founder.

The difference lies in whom the blockchain and token target. Stellar Lumens is for the average person, particularly those in the developing areas of the world, although banks can still use it. The focus of Stellar is on increasing the abilities of those in poor or less-developed countries to interact in the global economy with nearly instant and highly affordable transactions. The Stellar protocol allows for a direct exchange of fiat currencies in cases of high activity, but it typically converts the sender’s money to Lumens, then converts the Lumens to the receiver’s currency.

Are Both Necessary? Similarities and Differences

The lengthy list of similarities between Ripple and Stellar would make some believe that there is no need for both. After all, they both:

  • Have private nodes without mining allowed;
  • Rely on distributed ledger technology;
  • Deliver almost free and instant transactions, making them ideal for international payments and transfers.

Despite those similarities, there are enough differences between Ripple and Stellar to account for a need for both cryptocurrencies. The biggest differences are the target audiences and the goals behind the blockchains. As mentioned, Ripple’s creation occurred specifically to appeal to banks, a huge market with a great deal of potential for profit. By contrast, Stellar’s creation was to extend the reach of financial services around the globe, helping the unbanked. In fact, Stellar refers to itself as “not for profit” because its goal is helping people rather than making money.

The two also use different consensus algorithms, with the unique consensus protocol for Stellar and proof of correctness for Ripple. Furthermore, Lumens coins are inflationary, while XRPs are deflationary, meaning they increase and decrease circulation, respectively. Finally, Ripple is more centralized than Stellar, although both are much more decentralized than traditional currencies.

It is also interesting to note that Ripple tends to be a larger organization and has raised much more capital, something likely related to the difference in target audiences. By contrast, Stellar has a smaller yet highly experienced team and has not put as much of an emphasis on marketing as Ripple has.

Overall, there are differences in:

  • Goals;
  • Size of the organization;
  • Inflationary vs. deflationary nature of tokens;
  • Consensus protocols.

Can They Coexist?

Given the differences between Ripple and Stellar, many believe that there is no reason that only one of the two can exist or “win.” In fact, both are among the most popular cryptocurrencies and they have similar prices. At the time of writing, one XRP was at $0.32, while one XLM (Lumens) hit $0.223. Based on market cap, Ripple’s XRP ranks at number 3 with Lumens not far behind at number 6.

Who Would Win?

Those who want to know which of the two cryptocurrencies would come out on top if one had to disappear, will be hard-pressed to get an accurate answer. The world of cryptocurrency is volatile and unpredictable. At the time of writing, however, Ripple’s XRP has a higher market cap than Stellar’s XLM, $12 billion compared to $4 billion.

There is also the fact that Ripple has partnerships with many high-profile banks and continues to target financial institutions. As such, there is a great deal of money invested in Ripple, and those who are most interested have more money to spend. There are more than 100 banks working with Ripple already, a figure which includes RBC and Bank of America.

To make up for this advantage of Ripple, Stellar has the potential to allow for a cheaper and more seamless exchange of currencies, provided it has sufficient users to exchange currency regularly. Additionally, Stellar has the advantage of being more decentralized, which can prove useful if the world is moving toward decentralization, which seems to be the trend.


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Conclusion

Both Ripple and Stellar make it their goal to improve the ease of completing transactions across borders, particularly those that involve multiple currencies. Ripple is two years older and targets banks when spreading its technology, while Stellar targets the unbanked. Both rank incredibly high in terms of popularity and market value, and their prices are relatively similar. As such, it appears that Ripple and Stellar are different enough to coexist in harmony, and each currently enjoys success. Despite their similarities, those in the crypto community seem to support both currencies, indicating that there does not necessarily have to be a winner.

How Bitcoin is Being Used In the Mobile World

Since the invention of  iPhone, mobile devices have become an essential part of most people’s lives. You tend to feel that something is missing when you don’t have access to your phone, and it is considered even more useful than the desktop computer because of its ability to be used on the go. So it is natural that Bitcoin would eventually go mobile.

Bitcoin Becomes a Mobile Tool

It used to be that everyone was afraid to put their credit card information into any website lest they be ripped off. Nobody trusted the Internet or anyone they met through the Internet and this caution was common. In the last decade we have seen that the attitude quickly changes as more people become comfortable with the technology and learn how to secure it.

Banks have all developed their own applications for mobile use in order to make things as easy as possible for customers and facilitate more transactions. The higher the dependence on their service, the more they are going to make in the long run. Now that it is generally accepted that people will put their bank details into their phone, there is no reason they can’t do the same with Bitcoin related applications.

Bitcoin Applications

For companies like CEX.IO, the development of a mobile application can greatly increase their adoption rate and do for their platform what mobile applications have done for other exchanges. It also helps add an extra layer of credibility to the platform, since it shows the company has enough capital to invest in developing an application for mobile.

Setting up these applications has become so easy that it can be fully integrated mere minutes after being downloaded. The CEX.IO mobile application allows for much of the functionality of the regular platform, but without any of the downsides of being stuck in one place or on one computer. Adoption rates tend to increase as the switching costs decrease, and that’s exactly what is likely to occur when users have the ability to analyze market data, monitor price changes, place and cancel orders, and deposit Bitcoin. Also now you can add your payment card inside the app in order to sell and buy bitcoin there.

Another interesting trend that has surfaced within the Bitcoin world is the small services that will pay you in Bitcoin for completing a task or adding value to the platform in some way. For example, you have the startup 21 which pays you in Bitcoin in exchange for reading emails you receive on the service. This places a value on your time so you aren’t constantly giving up attention to emails in exchange for nothing.

Another mobile application which is receiving a lot of attention is Brave. The application allows users to pay to have all ads removed from their browsing experience, but more enticing is the setting which pays you when you opt in to view any of the Brave sanctioned ads. These are two examples of companies that have taken the users’ preferences into account just as much as they’ve taken those of advertisers’, and it seems to be a much more sustainable and symbiotic system than was previously present.

Bitcoin Wallets

There are two different options for mobile applications that decide to go the Bitcoin route. First, they can do what most of the previously mentioned apps did and integrate Bitcoin as a payment option at checkout. Or if they want to get deep in the details, they can develop a mobile wallet. A mobile wallet is basically a Bitcoin storage medium, which can use money transfer systems to engage in transactions.

This wallet application allows you to make and receive transactions in Bitcoin, but it also lets you view your transaction history and current balance. These two features are key for proper operation in the blockchain ecosystem. Because of the level of decentralization present with Bitcoin, your transaction history and balance become key for ensuring that your information is properly synchronized with the blockchain log. Two of the most promising wallet applications are Coinbase and Trezor.

The crazy thing about digital wallets is that much like a physical wallet, they can be stolen or lost. If you can’t find the “wallet file”, you lose the money that was stored in it. As overly simplistic as this sounds, it is completely possible and serves as another example of how complex technology can have simple problems. These are the costs that come from having an anonymous wallet in a decentralized ecosystem. Problems like being able to lose your digital wallet are why Bitcoin has been mostly relegated to those who have high technological capabilities and interest. Eventually it will start to work its way towards the mainstream, but it might take more work on these technology problems before that is the case.

Websites Adopting Bitcoin for Payments

What has been the most surprising about Bitcoin is how quickly major companies allowed it to be used as a payment option on their websites. For example, it is possible to pay for your flights on the Expedia mobile application using Bitcoin, which is not something most economists expected for years.

For companies not yet comfortable with the idea of holding Bitcoin or using Bitcoin payment processors like Spare, there is the option to use a Payment Service Provider (PSP) which will convert Bitcoin into their desired currency. Coinbase is a good example of a PSP that has become a big player in the Bitcoin ecosystem as it facilitates the quick transactions necessary to protect companies from exposure to fluctuations in the cryptocurrency.

Overall, Bitcoin has been quick to spread into the mobile ecosystem. People are already extremely comfortable using their phone for other banking purposes, and as Bitcoin is accepted into the mainstream it will get to piggyback on the mobile trend as well. It is completely plausible to think we will be able to have our phones use Bitcoin to pay for goods at stores in the near future. People enjoy the freedom of using it too much, and it is being adopted so quickly, that its omnipresence is undeniable.