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There are some differentiating factors that are now moving the cryptocurrency market


Jan 28, 2018 Posted /  3026 Views


There are some differentiating factors that are now moving the cryptocurrency market

Recently you might have witnessed a strange correlation going on within the cryptocurrency space as all the digital currencies are going up and down in unison. The last three month period has been a roller-coaster ride as there have been a meteoric surge dramatic dips which are circumventing the market. This exact reason makes many critics compare it and call it the Tulip mania of 21st century.

But if you say that comparison and analysis could be that simple, then you are wrong. In the last 30 days, there had been a tremendous decline in the dollar rate of Bitcoin. The correlation appears to be broken too somewhere. This is no accident as aloof from comparatively uninformed speculators, the cryptocurrency-trading community comprises of people who are genuinely engrossed in multiple applications of the blockchain technology and who are presenting knowledgeable bets on its selective choice of currencies.

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The analysts who have determined the relationships of the price of Bitcoin with the cost of the subsequent 10 cryptocurrencies by market capitalization. They turned out to be the mightiest, both over three months and over 30 days, in relation to the three "altcoins" — IOTA, Litecoin and Bitcoin Cash. The following two are Bitcoin "forks" — offsprings of the primary currency meant coarsely for the identical objectives: payments and storing value. Both these currencies were designed to subdue Bitcoin's significant friction (long processing times and high processing fees) and facilitate smaller, everyday transactions more effectually.

IOTA can be labelled as something of an unconventional attribute. Its creators call it as a currency which was reserved particularly for the internet of things, a medium for fee-free machine-to-machine payments. It's a sort of Bitcoin for robots, so naturally, however, a modification of the fundamental idea.

Next in the review are two other comprehensive categories of cryptocurrency amid the magnanimous "altcoins": Those propelled by platforms composed for "smart contracts" and initial coin offerings (Ethereum, NEO, NEM, EOS), and some "minted" by projects operating on blockchain-based transaction processing for the finance industry (Ripple, Cardano). Stellar, the nonprofit project whose cryptocurrency is called the Lumen, falls into both these categories.

If you will look at the last 30 days period, the currencies launched by Ethereum competitors have bestowed the greatest price similarities with Ether, Ethereum's currency. And they haven't been relocating in conjunction with Bitcoin.

We have to respect the fact that the cryptocurrency market is relatively young, however, it is the most rapidly evolving technology itself, and the high volatilization has fascinated a lot of unconscious players. Nonetheless, the market will only move when all the players bet.

One can be sceptical, like my colleagues on the Bloomberg View editorial board, that crypto — decentralized or harnessed by central banks — is the future of money. In that case, it makes sense to stay away from Bitcoin, Litecoin and Bitcoin Cash. But that doesn't rule out believing in other applications of the technology. For example, if one holds that initial coin offerings are a sound way to attract investment and that the blockchain is good for registering property rights and storing contracts, then Ethereum and its competitors are worth watching and perhaps backing. Deciding which ones depend on whose technology or market one likes best: There are different arguments, for example, in favour of China-based NEO and for EOS, with its focus on fast processing.

For a believer in the blockchain as the ultimate replacement for the current money transfer infrastructure such as the Swift system, Ripple's and Cardano's digital currencies make sense. But these investments may be particularly risky since it's not quite clear whether the currencies will ever gain broad acceptance as part of their creators' increasingly popular money-moving solutions.

After a while, any market craze gets boring and discerning investors replace speculators. It happened to dot-coms in the early 2000s, and it's starting to happen to cryptocurrencies in 2018. Eventually, some blockchain applications will turn out to be hot, others not — and some investors who buy and hold, as opposed to speculators, will make money as a satisfying result of smart bets.


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Tags: blockchain technology cryptocurrency-trading

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