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Ten adjectives for Five Cryptocurrencies

Cryptocurrencies are an asset class with a rich variety. Some are seasoned, some are domain focused, and others keep changing. In this post, I look at a group of five cryptocurrencies and pick two characterizations for each.

WHO — Satoshi Nakamoto

Oldest & Robust

Bitcoin (BTC) can be thought of as the unit of account within the cryptocurrency world. Its faceless success and leadership in the last decade, is unique. The debate as to whether it is a commodity, a store of value (i.e. digital gold) or something different, is still alive.

I‘ve covered several of its attributes in Episode 1 and 2 of the `Crypto No Non-sense series`. The Bitcoin blockchain is being continuously improved by developers so that it remains robust as it grows. The philosophy is that the Bitcoin chain remains a simple, secure, robust base layer.

The recent halving in May was another testament to a unique characteristic that function well in the Bitcoin network. Think of the fact that the reward for the validators was cut 50% and the network continues to operate smoothly and by many indicators it is very healthy.

WHO — A faction of the Satoshi Nakamoto community

Adaptable & Exchangeable

Bitcoin Cash (BCH) is the first sizable fork of the Bitcoin network. It was the result of the disagreement in 2017 amongst Bitcoin miners and developers who were concerned about the scalability of the bitcoin network as it was growing. One group of miners and developers was suggesting that a larger block size would help the scalability of Bitcoin. This group forked the Bitcoin network on August 1, 2017 and created Bitcoin Cash which allows blocks of 8MB compared to 1MB of the original Bitcoin Blockchain. Bitcoin Cash has lower transaction fees and can handle more transactions per second. The Bitcoin Cash community is more focused on becoming a medium of exchange rather than a store of value. It sees the block size increase as an approach that solves scalability and that can be implemented again in the future.

The pair BCH/BTC is currently c. 0.025. In the Fall of 2017, there was another notable fork of Bitcoin (BTC), the Bitcoin Gold (BTG) — 24th of October 2017. A year after the creation of Bitcoin Cash, the market saw a fork of Bitcoin Cash (BCH), the Bitcoin SV (BSV) launched on 15 November 2018.

WHO — Charles Lee

Seasoned & exchangeable

Litecoin (LTC) is the second oldest large-cap cryptocurrency, as it was launched in October 2011. It has a strong influencer face, Charlie Lee, who is its founder. It is seen as the digital silver for those that like to think of Bitcoin as digital gold. The structure of the network seems very similar to Bitcoin with different parameters. The fixed supply is 84 million instead of 21 million. New blocks are created every 2.5minutes instead of every 10minutes in Bitcoin Blockchain. The hashing differs and mining Bitcoin is more difficult, more expensive than mining Litecoin. The most recent Litecoin halving was on the 5th of August, 2019 which set the reward to 12.5LTC. The next halving will in roughly 4yrs (expected 05 Aug 2023) at which time it will catch up with the 6.25LTC reward of BTC.

Similar to Bitcoin, the market will decide whether Litecoin is a better store of value or medium of payment. The pair LTC/BTC is currently c. 0.048.

WHO — Vitalik Buterin

Smart & popular

Ethereum (ETH) is the second-largest (by market capitalization) cryptocurrency and by far the network with the most applications built on top of it. It is 5 years younger than Bitcoin (born in 2014) and made Smart contracts popular on a large scale. The issuance of new ETH is limited to 18 million ETH per year; however, this is not a hard-coded attribute.

In a crypto portfolio context, it is also common to monitor the technicals of the pair ETH/BTC (currently c. 0.025).

Later this year, Ethereum is expected to shift towards what is called Ethereum 2.0 which essentially changes the consensus mechanism from POW (Proof of work) to POS (proof of stake)[1].

The current Ethereum blockchain is actually a fork (modified in 2016 after the DAO failure and the community dispute described in the Ethereum Classic section below) of the original one.

WHO — The Anti-Hard Fork faction of the Ethereum community

Pure & Immutable

Ethereum Classic (ETC) is connected with one of the painful and historic shocks in the cryptocurrency history was the hack of the DAO on the 17th of June 2016. The DAO — Decentralized Autonomous Organization was an ecosystem of smart contracts operating on the Ethereum blockchain and was an innovative way to fund Dapps (Decentralized Applications). One could buy DAO tokens and become part of the DAO, with Ether. Without getting into details of the vision and mechanics of the DAO, there was so much promise in the initiative that within one month the DAO gathered $150 million worth of Ether in a crowd sale.

On the D-day of the DAO, there was a hack that resulted in the loss of $50million Ether. It was actually a smart contract glitch in the DAO and not a fault of the Ethereum blockchain. However, the failure of the DAO created several ethical questions within the Ethereum community, as to whether the DAO holders should be compensated or not. It seemed ethical (to part of the community) to compensate the DAO token holders and to others not. The drama was painful and long and it resulted in two factions. Those that refused to change the Ethereum code — these are today`s Ethereum Classic proponents. And those that wanted to refund the DAO token holders (for every 100 DAO, 1 ETH compensation). And that is how ETH was born.

The ETC/ETH pair is currently c. 0.028 and the ETC/BTC is c. 0.00070.

In a later Episode, I will look into the other cryptocurrencies that are available on the Swissquote trading platform: Ripple, Chainlink, EOS, Stellar, Tezos, Augur, 0x; and also explain Proof of Stake.

The adjectives I`ve picked are by no means exclusive nor do they capture the entire picture. In some cases, I chose them to highlight a difference and in others a characteristic that is unique to them. Add your choices in the comments below.

Efi Pylarinou is a global Fintech & Blockchain influencer — №1 Woman influencer in the finance sector by Refinitiv Global Social Media 2019.

www.efipylarinou.com

[1] Bitcoin uses POW. Proof of Stake and the rise of Staking will be covered in a subsequent post.

DISCLAIMER

The content of this article (including market commentary, market data and observations) is not a work product of any research department of Swissquote or its affiliates. This material is intended to highlight market action and does not constitute investment, legal or tax advice.

Swissquote makes no representation or warranty as to the quality, completeness, accuracy, comprehensiveness or non-infringement of such content. The views expressed are those of the consultant and are provided for educational purposes only. Any information provided relating to a product or market should not be construed as recommending an investment strategy or transaction. Past performance is not a guarantee of future results.

Swissquote and its employees and representatives shall in no event be held liable for any damages or losses arising directly or indirectly from decisions made on the basis of the video content.

The use of any third-party brands or trademarks is for information only and does not imply endorsement by Swissquote, or that the trademark owner has authorised Swissquote to promote its products or services.

Swissquote is the marketing brand for the activities of Swissquote Bank Ltd (Switzerland) regulated by FINMA, Swissquote Bank Europe SA (Luxembourg) regulated by the CSSF, Swissquote Bank Ltd (UK) regulated by the FCA, Swissquote Financial Services (Malta) Ltd regulated by the Malta Financial Services Authority, Swissquote MEA Ltd. (UAE) regulated by the Dubai Financial Services Authority, Swissquote Pte Ltd (Singapore) regulated by the Monetary Authority of Singapore, Swissquote Asia Limited (Hong Kong) licensed by the Hong Kong Securities and Futures Commission (SFC).

Products and services of Swissquote are only intended for those permitted to receive them under local law.

All investments carry a degree of risk.

CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. Between 74–89 % of retail investor accounts lose money when trading CFDs. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.

Digital Assets are unregulated in most countries and consumer protection rules may not apply. As highly volatile speculative investments, Digital Assets are not suitable for investors without a high risk tolerance. Make sure you understand each Digital Asset before you trade.

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Efi Pylarinou

Efi Pylarinou

№1 Finance Global Woman Influencer by Refinitiv 2020 & 2019. Fintech & Blockchain Advisor: 30yrs FINANCE; #fintech #blockchain

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