The cryptocurrency revolution is well underway. That said, it’s time to get more knowledgeable about what that means. Cryptocurrencies are popping up all over the place. Bitcoin and Ethereum are only part of the news. Here are some questions to ask. What’s driving this revolution? How might it impact us all in the future? What are some of the other cryptocurrencies? How are the different cryptocurrencies, well, different? Should I be worried about cryptocurrencies?
What’s Driving The Cryptocurrency Revolution?
This cryptocurrency craze is thought to stem from several sources. First, access to cryptocurrency is getting simpler. With over 2,000 bitcoin ATMs in the U.S., alone, according to Coin ATM Radar, bitcoin is becoming easy to obtain. In fact, other types of cryptocurrencies, like Ethereum, can also be acquired. One advantage of Ethereum over bitcoin is the confirmation time for transactions. According to EthNews, “while Bitcoin users must wait an average of 10 minutes before cashing out their cryptocurrency, Ethereum users should expect a considerably shorter wait time of 15 seconds.”
How Might The Cryptocurrency Revolution Impact Our Future?
A lot of the future of any cryptocurrency rides on how it weathers government regulation. Another factor is if it can become mainstream. A part of the allure of cryptocurrencies is that they operate outside the banking system. But, a risk is that most people are intimidated by the technology. They won’t step out and try to use bitcoin or Ethereum or any other cryptocurrency. Another danger is government regulation. Just this week, bitcoin took a major price hit, and most believe it was due to the Korean government announcing the preparation of a ban on cryptocurrency trading. According to a report from CNN, South Korean Justice Minister Park Sang-ki “told reporters, ‘there are great concerns regarding virtual money.'” There were no details provided about the proposed ban but bitcoin “dropped around 14 percent before recovering slightly in early [Thursday] afternoon trading.”
What Are Some Other Cryptocurrencies?
While bitcoin and Ethereum are the most famous cryptocurrencies, there are many others out there. The numbers increase every day. According to an article from Investopedia, the top five other cryptocurrencies are Litecoin, Zcash, Dash, Ripple, and Monero. While each of these has a different standout characteristic, they all are “built on decentralized peer-to-peer network[s].” However, they do each have risks associated with them that impact their values. Things like “lesser liquidity, acceptance and value retention.” These are things that potentially prevent widespread use.
How Are The Different Cryptocurrencies, Well, Different?
One aspect that is different with each cryptocurrency is the block generation time. Block generation time is the time that it takes for the blockchain to be updated and for a transaction to be confirmed. For example, Litecoin has a block generation time of approximately two-and-a-half minutes, while bitcoin takes about ten minutes. The ten minute generation time impedes bitcoin ever actually becoming mainstream. So, minimized block generation times are a benefit.
Another difference between cryptocurrencies is the amount of the mining reward. These are called “static block rewards.” For example, according to a July 2017 article from ItsBlockchain, the reward for mining bitcoin is 25 bitcoins per block. For Ethereum, it is 5 Ether per block. For Litecoin, it is 25 Litecoins per block. And, rewards diminish over time according to the total number of blocks created.
Should I Be Worried About Cryptocurrencies?
With bitcoin, the chief worry seems to be the bubble bursting. With the meteoric rise of its value over the last year, some experts worry that a bitcoin crash could adversely affect financial markets this year. According to a USA Today article, a bitcoin crash was one of “30 risks for financial markets” for 2018. Another worry for cryptocurrencies, in general, is safeguarding of the virtual asset. The horror stories of bitcoin losses due to a hard drive failure or from a vault hacker could leave people reticent to use cryptocurrencies.