Bitcoin reigns supreme in the crypto-currency world, but Ether
During lockdowns, experts have seen renewed investor interest in financial assets. Among the most popular are crypto-currencies. These are particularly popular, as they have a high potential to increase the value of savings. On the other hand, digital currencies allow for better portfolio diversification. Of course, no one can confirm the predictions, but cryptos seem to be profitable investments in the long run for the time being.
Among the thousands of digital assets available, BTC reigns supreme. This is confirmed, among other things, by the new peak that its price recently reached. Some cryptos, on the other hand, are currently only worth a few euros, or even a few cents. However, the latter promise strong growth potential. Indeed, while Ethereum is Bitcoin's main competitor, other currencies could also move to the top of the list.
Currently, the price of BTC is around €52,700. Remember that at its inception in 2009, its value was only € 0.001. This strong growth in particular the current craze of investors for digital currencies.
In recent years, the number of new crypto-currencies has experienced a sharp increase. Since the beginning of 2021, the exchange CoinMarketCap has added 2,655 of them to its list. Recently, CoinPaprika added over 2,000.
To date, more than 10,810 crypto-currencies are listed on CoinMarketCap. Cryptoassets now have a global capitalization of more than €2 trillion.
Every crypto currency works on the principle of blockchain. Each block records information about a number of transactions made with the crypto. This record is immutable, as each block contains a fingerprint of the previous one. Thus, information about transactions cannot be changed or deleted. The creation of a block and its integration into the chain is done when a certain number of transactions have taken place.
Several methods exist to create a new block. The best known is the proof of work. This is done by miners who use their computing power to encrypt new transactions. The main purpose of this mining is to find a unique algorithmic solution that is consistent with the old blocks. Once the solution is found, the recent data is combined into a block which is then added to the end of the chain.
Mining allows transactions to be secured. All miners form nodes, whose role is to verify that transactions comply with network protocols. The network nodes also ensure that each token is only spent once to avoid double spending.
Mining also allows miners to receive rewards. Whoever finds the consensus receives transaction fees and a number of new crypto-currencies from the blockchain, among other things.
There are also blockchains based on a proof of consensus, participation or ownership. In this case, the validation of new blocks is assigned to a part of the nodes. The selection of the latter can be done via elections, random automatic selections or stakes based on crypto-currencies.
Decentralized crypto-currencies are not dependent on any central authority and have completely autonomous prices. These prices are solely based on their scarcity, the trends of their networks and the number of their users. Their first advantage is to provide an optimal level of security to transactions. Indeed, unlike current technologies, once the data is recorded on the blockchain, any modification becomes impossible.
Moreover, the transactions integrated into a public blockchain are visible to all users. This ensures complete transparency. The use of crypto-currencies also aims to reduce transaction costs to only the validation costs of the node. This is because transactions do not have to go through a large number of intermediaries. The players in each transaction are reduced to the two parties in agreement and the network validator.
One of the great advantages of blockchain is the acceleration of financial transactions. Note that this does not depend on the volume of crypto-currencies and destinations. Indeed, digital currencies facilitate international trade, since they are based solely on the internet.
The blockchain also enables the transfer of many types of property, such as financial assets and real estate. For all these transactions, optimal traceability is ensured. Moreover, this technique allows the use of smart contracts which are applications that allow governing the terms and conditions of an agreement.
Cryptocurrencies are in tune with the digital future of the world. Compared to gold and other safe havens, they are transportable, divisible and rare. More than just means of payment for the purchase of goods and services, crypto-currencies also present themselves as true financial assets. Indeed, dedicated to be issued in a limited volume, they gain value over time. They can thus serve as a safe haven in the face of currency devaluations, crises and inflation, while also generating capital gains.
Digital currencies are also used to generate regular income through the staking of crypto-currencies, such as Decred (DCR), Cosmos (ATOM) and Tezos (XTZ). In these transactions, tokens are used to validate trades to collect rewards. However, crypto trading is currently enjoying the most obvious growth.
To help you find the best crypto-currencies for investment, here's a quick rundown of the market.
BTC was the very first cryptocurrency to be created and the king of crypto-currencies. It was officially launched in January 2009 by Satoshi Nakamoto. Displaying an initial price of €0.001 in its early days, its value peaked at €10,800 in June 2019. In March 2020, it dropped to €3,700 due to the covid-19 crisis. However, its price showed a spectacular rise from the end of the same year. On 8 January this year, it was at €42,000.
Currently, Bitcoin is estimated to be over €52,600. Note that like all crypto-currencies, BTC also has some volatility. Its buying and selling price thus depends on the timing of the transaction.
According to analysts, this upward trend is set to continue to exceed €60,000 by early 2022. Forecasts even estimate that 1 BTC will be worth more than $500,000 when all remaining tokens are issued. Indeed, while this cryptocurrency is becoming increasingly scarce, demand is rising every year.
21,000,000 BTC are scheduled to be put into circulation. So far, 18,600,000 have already been issued. The creation of a Bitcoin essentially involves mining. Currently, the reward for miners per mined block is 6.25 BTC. This amount comes out of the third halving on May 11, 2020. This happens every 4 years or so and is resolved by halving the mining reward.
Bitcoin is available for buying and selling on almost all cryptocurrency exchange platforms. One can also invest in it on all trading sites. Many countries, such as the US, Russia, Italy, Hong Kong and Japan, have set up BTC distributors in their territories.
Ethereum is a programmable blockchain, whose native crypto-currency is Ether or ETH. It is the main rival of Bitcoin. This crypto was launched by Canadian Vitalik Buterin at the age of 19 on July 30, 2015. Its creation was mainly aimed at offering solutions to Bitcoin's limitations. Because of the proof-of-work consensus and the high sprawl of its blockchain, the BTC network sometimes encounters congestion.
Moreover, Ethereum can also serve as the basis for an infinite number of applications, whereas Bitcoin is only dedicated to transactions. This is possible due to the ETH network's support for smart contract dapps or decentralized digital applications. These applications are easy for developers to establish. They allow conditions and rules to be applied for the automatic execution of a transaction. This blockchain can thus replace all trusted third parties, such as notaries, banks and lawyers, in transactions. Furthermore, contracts can be set up in place in a matter of seconds.
In 2016, the Ethereum network had to perform a hard fork in order to return funds misappropriated by hackers on an investment fund called DAO (Decentralized Autonomous Organization). This resulted in the formation of two blockchains, including the official ETH and the new ETC network. However, Ethereum is experiencing a great development from 2017. Since then, the majority of new crypto-currencies are created from its blockchain.
The ETH crypto features a native token named ERC-20. This was produced through the same proof-of-work protocol as Bitcoin. However, to reduce the energy consumption needed to validate transactions, the network was upgraded to ETH 2.0.
This new version is based on a proof-of-stake validation protocol. The ERC-20 token is the only payment method on the ETH network. It allows users to pay developers and miners for the creation and management of dapps.
Currently, Ethereum is the second largest crypto-currency behind Bitcoin. It has a capitalization of about €360 billion. Approximately 117,965,000 ETH are currently in circulation. The current price of ETH varies around €3,300. Note also that the issue of ETH tokens is unlimited. On the other hand, the ERC-20 token has a capitalization of €216,772,578 and a price of €0.017.
Ripple is the only crypto-currency that can boast of being supported by traditional financial players. UBS, UniCredit and other banks are indeed showing their support for it. This crypto allows banks to make transfers instantly and almost for free.
Its blockchain combines a real-time gross settlement system, a foreign exchange market and a funds transfer network. On the other hand, the latter offers the advantage of supporting all volumes of funds and supports all value units.
Currently, 1 XRP is worth almost €1 and almost 47 million tokens are already in circulation. Ripple has a market capitalization of over €96 billion.
Tether is a crypto-currency that is very popular because its value is indexed to the US dollar (USD). Thus, 1 USDT will almost always be worth 1 USD. There is no limit to the number of Tethers that are destined to be put into circulation to ensure its parity with the USD.
This crypto-asset allows digital investors to find stability in times of high market volatility. Simply trade the cryptos in USDT during the crisis, and then sell them back when the situation returns to normal. Thus, Tether allows you to stay in the virtual currency business while enjoying the benefits of the dollar. In particular, the rise of Tether has spurred the creation of other fiat currency indexed cryptos, such as EURT and JPYT.
Currently, 1 USDT is worth about €0.861 9. Its market capitalization is about €61 billion, with nearly 61 billion tokens already in circulation.
Dedicated to micropayments, Dogecoin is most popular for its completely anonymous and almost free transactions. It is a crypto-currency that is symbolized by a logo with a dog image. Launched as a joke in December 2013 by Billy Markus and Jackson Palmer, however, it reached a capitalization of 60 million USD in January 2014.
Currently, 1 DOGE is worth about €0.204. Its capitalization is close to €26 billion for more than 131 billion tokens in circulation. However, the number of DOGEs that can be created is not limited.
Based on the Bitcoin blockchain, Litecoin allows for secure, low-cost and instantaneous payments. It is based on a peer-to-peer protocol that was developed by Charlie Lee in 2011. However, LTC is used more for small volume transactions. The maximum number of LTC tokens dedicated for circulation is 84 million. The mining of this crypto differs from the SHA-256 hash of BTC by using the Scrypt language.
Currently, 1 LTC is worth nearly €158, with a capitalization of over €13 billion. The number of Litecoin in circulation is currently over 68,769,000 LTCs.
ETH's USD 300 billion capitalization is still far behind Bitcoin's USD 1 trillion plus. However, many experts believe that Ethereum has every chance of becoming the largest crypto-currency. In addition to being decentralized and anonymous, its network has additional advantages.
Ethereum stores computer programs for setting up contracts and dapps. On the other hand, BTC has had to change from being a currency to a safe haven. The latter has become difficult to acquire due to its soaring price. More and more users are thus led to turn to Ethereum.
Moreover, in terms of technological evolution, ether represents the future. Indeed, many current developers tend to use it. These predictions are further supported by the growing trend of the ETH price towards 3500 USD.
