A Comprehensive Analysis of the Cryptocurrency Industry


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Cryptocurrency is known as a digital currency that is assigned value that is determined by those who invest in it. For the purpose of security, cryptocurrencies are reliant on block chaining, a database that is orchestrated in a manner that facilitates the secure recording of information through peer to peer networking.

Each of these records is time stamped and each block is linked to the previous one. Cryptocurrency began in 2009 with the emergence of Bitcoin, the first digital currency that was coined by Satoshi Nakamoto.

Standing

Staying on the subject of Bitcoin, it was a primary decentralized cryptocurrency and began a trend that has not subsided since. It garnered an extensive following from the media and investors followed suit. In principle, cryptocurrency has altered the landscape of the finance industry. Bitcoin is the market leader and other cryptocurrencies have managed to establish themselves as well.

The concept of digital currency is based on cryptographic evidence, as opposed to traditional trust. There are several benefits of cryptocurrency, which include higher liquidity, lower transaction costs and total anonymity, among others, which introduces the opportunities for criminal activities.

Furthermore, the interest in cryptocurrency has not abated at any point. In fact, the nascent industry has witnessed an exponential growth since Bitcoin emerged. Recently, the government of the United Kingdom is considering allocating research grants in Bitcoin currency while information technology companies have been stockpiling Bitcoin as a safety measure against ransomware. Also, another major move that has been inspired by the prominence of cryptocurrency is that the Board of Governors of the United States Federal Reserve has asked central banks to examine innovative and emerging technologies in the financial industry. In a nutshell, interest is always surging and never seems to dissipate.

Prominence

In a decade that has passed since Bitcoin was pioneered, others have followed their example and established themselves as important players in the financial landscape. According to data obtained in 2017, there were more than 700 distinct types of cryptocurrencies.

The Bitcoin has maintained its status as the largest cryptocurrency worldwide, representing 80% of the total market. Isaac Newton’s third law dictates that for every action there is an equal and opposite reaction and the same holds true in the case of small cryptocurrencies as well. Statistics delineate that the vast majority of cryptocurrencies have not garnered wholesale interest from investors and customers, which are typically one and the same.

Moreover, the collective market capitalization of cryptocurrencies is estimated at a staggering 19 billion US dollars in early 2017. Upon further investigation, it can be gleaned that the top fifteen currencies, such as Bitcoin, make up nearly 98% of the total market capitalization. Not bad for an industry that was virtually nonexistent a decade ago!

Besides Bitcoin, there are other cryptocurrencies as well. Examples include Litecoin, Ripple, and Dash among others. The aforementioned names are those which have stood the test of time.

Competition

While the notion of electronic currency can be traced decades back to the 80’s, it wasn’t until the advent of Bitcoin that cryptocurrency emerged to the forefront of the financial industry. Developed by an individual using the pseudonym Satoshi Nakamoto, it was the first of its kind.

Cryptocurrency is a virtual coinage system that shares the same fundamentals as traditional currency. However, users are able to give virtual payments in exchange of commodities. Another fact to consider is that there is no central governing body regulating these transactions. Cryptocurrencies are based on the transmission of digital data through cryptographic measures which directly facilitate legitimized business.

Once Bitcoin became a known entity, it was able to augment the user experience by decentralizing the currency. It enabled individuals with an investment motive to execute transactions electronically on a certified, peer to peer network. In due course, other cryptocurrencies began to emanate as well.

Litecoin was launched in 2011. Although it did not enjoy the stellar success that Bitcoin did, that was partly due to the fact that it was introduced to a developing market and being the first, Bitcoin was a game changer. The former though, witnessed moderate success and meant customers had an alternate cryptocurrency at their disposal. Although it used most of the same protocols, one of the benefits Litecoin provided its customers was that it increased the speed of transaction in order to facilitate a greater number of transactions.

Similarly, Ripple was unveiled in 2013 and became another cryptocurrency success story. Given the advancements that are part and parcel of information technology and the fact that considerable time has passed since Litecoin, Ripple introduced a brand new model of cryptocurrency. This unique feature allowed the cryptocurrency to garner a significant and impressive market capitalization to the tune of 255 million dollars, second only to Bitcoin.

Furthermore, there are other avenues in the cryptocurrency industry as well. In the ever-evolving sequence of cryptocurrency, another notable name was added to proceedings. Peercoin, based on a research paper, was introduced in 2012. Most importantly, it employs a new type of technology. In essence, it represents a technology that combines the blueprint of Bitcoin and Litecoin. This is mixed with Peercoin’s own mechanism, which gives rise to a hybrid network mechanism.

In the last few years, the cryptocurrency market has continued changing as newer players have been added to the mix as well. For instance, NuShares was initiated in 2014. It was based on a dual currency model that was a considerable departure from the single currency model devised and implemented by previous cryptocurrencies.

All in all, the cryptocurrency industry has hundreds of contributors, both big and small. Each cryptocurrency has varying degrees of user bases and trade volumes. In addition, there is an extremely high volatility in the market, which means the market capitalization is prone to significant fluctuations and dramatic shifts are the name of the game.


Posted On August 23, 2018