Beyond Bitcoin: Promising Cryptocurrencies

In the crowded new world of cryptocurrencies, there are over a thousand altcoin options to consider (if you are the risk-taking type, that is). Here are seven worth watching.

Whatever your position on Bitcoin and its supporting blockchain technology, it’s hard to deny its impact. Nearly 1,500 cryptocurrencies have emerged since the launch of the first Bitcoin block in January 2009. In 2017 the price of Bitcoin itself increased from less than $1,000 in January to more than $19,000 two weeks before Christmas. It’s been a wild ride.

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This year, Bitcoin has already dipped well below the $10,000 mark. Many investors still consider this unduly inflated. They do, however, see huge potential for profiting on alternative coins (altcoins) that are still gaining momentum. The challenge is discovering which cryptocurrencies are legitimate, and which aren’t.

Altcoins: A Word of Warning

The cryptocurrency market is highly volatile, making price trends impossible to predict. It’s not uncommon to see daily fluctuations of 5% to 10%. And the impact of future regulations or potential bans in some countries is still unknown.

Example: Volatility of Ripple (XRP); Market caps and coin values were captured on 3/12/2018.

Warren Buffet forecasts that “cryptocurrencies, generally . . . will come to a bad ending.” Bitcoin and its altcoin sisters have no intrinsic value of their own, making them highly speculative, risky investments. Investors are understandably wary.

The cryptocurrency market is also flooded with scams and frauds. In fact, perhaps 95% of altcoin cryptocurrencies are scams, according to industry experts. According to Entrepreneur guest contributor Larry Johnson, Chief Strategy Officer at CyberSponse: “The cryptocurrency markets aren’t just volatile, they are also extremely murky and riddled with fraud. … These markets have been plagued with cyber-attacks and scams that have cost investors millions of dollars.” Because cryptocurrencies are totally lacking any type of regulation, investing in them remains a risky business.

All in all, putting money into cryptocurrencies is a high-risk-reward game. You should never invest more than you can afford to lose.

Cryptocurrency Options Beyond Bitcoin

As volatile, unregulated and prone to fraud as cryptocurrencies are, their ultimate value is still undetermined. Will Hutton of the Guardian describes Blockchain, the technology behind cryptocurrency, as a “foundational digital technology that rivals the internet in its potential for transformation.” The emergence of peer-to-peer (P2P) digital currencies also means we are now capable of storing and transferring money without a middleman. How these play out in the long term remains to be seen, but many investors consider it too early in cryptocurrency’s evolutionary lifecycle to completely disregard it.

Though not all-inclusive, here is a list of P2P digital currencies beyond Bitcoin that are worth learning about.

Ethereum (ETH)

Current Market Cap: $72 billion

Though Ethereum went live in July of 2015, its market cap is still lagging Bitcoin’s (market cap: $166 billion), which is surprising considering that Ethereum is so much more sophisticated and has many more purposes than simply recording P2P payments.

Ethereum is the second most popular cryptocurrency today, and its ledger technology is gaining the trust of many investors. The Enterprise Ethereum Alliance, a coalition of Fortune 500 companies, start-ups, academics and technology vendors, is working with Ethereum experts to explore and expand upon Ethereum’s blockchain technology applications. Without going into too much detail, Ethereum’s smart contract functionality allows it to run all kinds of decentralized applications, which is catching the attention of both businesses and investors.

Ripple (XRP)

Current Market Cap: $32 billion

The fourth largest cryptocurrency in the world, Ripple is still relatively unknown. Some people believe that could change. Ripple’s transaction speeds are faster, and their fees lower than Bitcoin. And as of mid-March, the price for one coin is about 83 cents, which means there is still a lot of room for growth. Additionally, unlike other cryptocurrencies, Ripple works like a centralized system with significant regulatory oversight.

The problem with Ripple, skeptics say, is that it is more suited for trading assets than making day-to-day transactions. Also, Ripple doesn’t have many trading platforms that offer the coin in direct exchange for fiat currency (real money). In most cases, coins are exchanged for, let’s say, U.S. dollars for Bitcoin and, subsequently, Bitcoin for Ripple.

IOTA (MIOTA)

Current Market Cap: $3.8 billion

IOTA is the first cryptocurrency that does not rely on blockchain technology. There are no transaction fees, no miners and no blocks. But for the system to work,…

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