Bitcoin – but wait! There’s more …

Indeed, there is much more to the cryptocurrency story than just Bitcoin.  Bitcoin hogs the headlines but CoinMarket currently lists over 1000 different cryptocurrencies.

Medium.com

That is far too many to deal with here so we will look at a few of the current leaders as we continue looking at cryptocurrencies, blockchains, tangles, bubbles and other interesting concepts like mining, forks and paper wallets.

Disclaimers:

  1. Neither the author nor WhaleOil are Registered or Authorised Financial Advisors and nothing written here should be construed as advice to buy or sell anything.  
  2.  The author owns a few cryptocurrencies, so is likely to be biased.

Cryptocurrencies are typically ranked by their Market Capitalization which is calculated by multiplying the Price by the Circulating Supply.  Clearly both of those are moving targets but at the time of writing Bitcoin was out in front by a factor of 4:1.   In early December the Market Cap of Bitcoin was greater than the total NZ GDP.  All the numbers and ratios below will be very different by the time you are reading this post.

So, at one quarter of the market cap of Bitcoin (BTC) is Ethereum (ETH) which took the blockchain technology and used it for one of the other purposes mentioned previously in this series, namely, the ability to embed smart contracts in the blockchain.  Curiously, Ethereum is not just a platform but also a programming language running on a blockchain which allows developers to build and publish distributed applications.

So, Bitcoin and Ethereum differ in purpose. While Bitcoin is created as an alternative to regular money and is thus a medium of payment transaction and store of value, Ethereum is developed as a platform which facilitates peer-to-peer contracts and applications via its own currency vehicle. Ethereum transactions happen much faster than Bitcoin transactions

And Microsoft has partnered with ConsenSys to offer “Ethereum Blockchain as a Service (EBaaS) on Microsoft Azure so Enterprise clients and developers can have a single click cloud-based blockchain developer environment.” (But you probably did not need to know that!)

At around half the market cap of Ethereum is BitCoin Cash (BCH).  That name sounds a bit close to the big boy, doesn’t it?  Yes, and there is a reason.  Bitcoin Cash was the result of a hard fork in the Bitcoin blockchain.  Whaaaaaaaaaaaat?  (Let’s leave the forks on the table for now, we will come back to them later.)

Just like the VHS/Beta wars of years’ back, the cryptocurrency world is young and there will be winners and losers.  Bitcoin Cash came about because a group of software developers and coin miners decided that there were inherent limits in the Bitcoin structure so decided to make some changes and head in a slightly different direction with a product that would run faster,but possibly at the expense of some security.  Time will deliver the verdict.

However, a curious byproduct of a fork in a digital currency is that it creates “free stuff”.  If you owned Bitcoin before the fork and control your private keys, the same private keys can be used to spend your newly minted Bitcoin Cash.  This means a holder of 3.6 BTC  before the fork had in their digital wallet 3.6 BTC and 3.6 BCH after the fork.  Smoke and mirrors, white-man’s magic, whatever. It is just the way it is.

At a similar market cap is Ripple (XRP) which shows up with some major differences.  Ripple cannot be mined.  Every Ripple coin already exists, they were created in Ripple’s own big bang – all 38,622,870,411 of them. Ripple does not have a public blockchain.  Instead, it has a network of nodes that validate transactions, but these are not necessarily anonymous peer-to-peer nodes, they are participating banks and financial institutions.  This is a cryptocurrency that is working with banks rather than trying to disrupt them.

Halving market cap again brings in a batch of cryptocurrencies: Dash (DASH), Litecoin (LTC), Bitcoin Gold (BTG) [another fork!] and IOTA (MIOTA)

IOTA, like Ripple cannot be mined, all 2.779 billion of them already exist, IOTA’s point of difference is that it is designed to allow fee-less micropayments for the Internet of Things.  Suppose your neighbour has some spare watts of power from his solar panels.  Your Internet connected fridge can use IOTA buy and pay for a few watts or power from the neighbours Internet connected solar panels.  Microsoft, Fujitsu and others have teamed up to launch the first publicly accessible data marketplace for the Internet of Things.

And just to add a little more confusion, IOTA does not run on a distributed blockchain, it uses Tangle technology.

Data blocks connected using Tangle technology

Carrying on for another 1000 cryptocurrencies could get tedious. If you are interested in the cryptocurrency revolution, get on the Internet, do your homework, and see what cryptocurrencies you think the future will use. During the writing of this series, a new service has appeared on the Internet, which gives Kiwis a hassle-free way to get into the cryptocurrency market.  Check out Easy Crypto.


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WH is a pale, stale, male who does not believe all the doom and gloom climate nonsense so enjoys generating CO2 that the plants need to grow by driving his MG.

To read my previous articles click on my name in blue.

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