What is Cryptocurrency?
A Cryptocurrency is a digital asset designed to work as a medium of exchange that uses strong cryptography to secure financial transactions, control the creation of additional units, and verify the transfer of assets. Cryptocurrencies use decentralized control as opposed to centralized digital currency and central banking systems. Cryptocurrencies are considered to be safe, because they use blockchain technology, which is very difficult for hackers to manipulate. The anonymity of the transactions is another reason why some have chosen to invest in the digital coins.
What About Bitcoin?
Bitcoin, first released in 2009, is generally considered the first decentralized cryptocurrency. Since the introduction of Bitcoin, over 4,000 altcoins (alternative variants of Bitcoin, or other cryptocurrencies) have been created. In recent years, Bitcoin has made and ruined fortunes with rollercoaster type swings from an all time of high of $20,000 per coin to the current price of $7,500 per coin. That being said, 25 of these coins could still buy you a decent sized house assuming your realtor accepts cryptocurrency. One of its biggest challenges is the fact that it can handle just 7 transactions per second. However, if the main miners adopt a protocol update enabling higher volumes, it’s not impossible that Bitcoin will become much more widely used. For the time being it is mostly a speculative asset, a tool for money laundering, and a currency of last resort for people in countries with grossly mismanaged currencies, like Venezuela.
What About Libra?
Libra, which should be available in 2020, has been called everything from a blatant attempt to control cryptocurrencies by a big enterprise to a vehicle that will make cryptocurrencies mainstream and drive adoption. A Swiss group called the Libra Association will govern Libra and initially included 28 member companies, including Facebook (Tii:FB), MasterCard (Tii:MC), Visa (Tii:V), Lyft (Tii:LYFT), Uber (Tii:UBER) and Spotify (Tii:SPOT). However, the association is currently down to 21 members as high profile companies like Visa, MasterCard, eBay (Tii:EBAY), and PayPal (Tii:PYPL) pulled out of the group earlier this month. A traditional blockchain is decentralized. Libra is not decentralized in the way that Bitcoin is since Libra’s nodes (independent computers that process and verify a blockchain) will only be run from the servers of Libra Association’s 28 current members. The goal is to have Libra be capable of handling 1,000 transactions per second; Bitcoin can only process 7 transactions per second, while Visa’s payment network can support 24,000 per second. Libra is being described as a “stable coin." The value of Libra units in circulation will be tied to assets made up of various currencies stored by the Libra Association. This is to minimize the traditional volatility of cryptocurrency. Libra will be backed by:
50% US Dollar
18% Euro
14% Japanese Yen
11% British Pound
7% Singapore Dollar
Who Else is Well Positioned?
Ethereum is another cryptocurrency which many believe will touch the highs of Bitcoin. Although there are some concerns regarding their network capability, many are optimistic about its future. It’s hard to calculate the future coins’ price when the total supply is unknown. According to some experts, there will be about 100 million Ethereum circulating in 2020 and the Ethereum market share will be about 1,137,500,000,000 which equates to $11,375 per coin, up a modest 6,000% from the current price of ~ $174.
The rumor is that Ripple’s XRP has established a partnership with Western Union and even wants to replace the SWIFT network. Ripple enables almost instant cross-border, international money transfers. Ripple’s main target market is banks, which will hold large amounts of XRP to transact almost instantly with each other. Ripple has partnered with over 100 financial institutions which include the Bank of America (Tii:BAC), UBS (Tii:UBS), Barclays (Tii:BCS), JP Morgan (Tii:JPM) and American Express (Tii:AXP).
Although there are other potential strong competitors, don’t sleep on Bitcoin. Many cryptocurrency specialists are confident that Bitcoin will still rein the market of top crypto coins in 2020 with a potential resurgence thanks to institutional money, fast adoption rate & a potential global financial crisis.