Beyond Bitcoin: 5 Digital Currencies to Watch
It’s something of a phenomenon. Although we’ve all heard of Bitcoin, cryptocurrencies aren’t limited to this stalwart. Might some of the outside cryptos one day reach Bitcoin’s heights? It’s possible. After all, when Bitcoin first was launched, nobody would have predicted its rise to the mainstream. And though it has been extremely volatile, the overall trend indicates a steadily rising value.
But can other cryptos follow suit? From serious contenders that clearly mean to try, to spoof and ripoff cryptocurrencies, watching the phenomenon that is cryptocurrency unfold is certainly interesting – and other assets have gone virtual too. Without going into the mechanics of it all, including the crypto wallet industry, let’s look at virtual assets worth watching.
The Weird and the Wonderful
I once encountered a man with plans for a new cryptocurrency based on Argentinian beef farming. His idea wasn’t actually bad. The idea was to use the funds raised from crypto to invest in real beef cattle with the profits ploughed back into the currency. Odd though the idea of buying cow-based crypto may seem, his idea was backed by a concrete asset: cattle, which is more than can be said for most cryptos!
All the same, there are direct “joke” currencies out there. Check out the “Useless Ethereum Token,” a less-than-subtle spoof that directly warns potential buyers not to purchase its tokens (unless you want to fund its creator’s shopping list). Joking with satirical cryptos can get serious, however. The Dogecoin, started as a satire of other cryptocurrencies, piqued the interest of Elon Musk and, as a result, gained value quite by accident.
Moving away from humor and without looking at the multitude of serious but unsuccessful attempts to follow Bitcoin’s example, let’s look at the more serious cryptocurrencies that we can expect to hear more about as time passes.
- Ethereum
Ethereum was launched in 2013 and is widely recognized as the runner up in the race for cryptocurrency success. Like Bitcoin, it is volatile and often unpredictable, making it a risky currency for speculators. Nevertheless, of all the virtual currencies, it and Bitcoin are considered to be the “safest” options. - XRP
XRP, a cryptocurrency launched by a company dubbed “Ripple” is often seen in the news. Unfortunately, at time of writing, the company is involved in a legal battle over the sale of the currency while its performance has resulted in a graph pattern known to cryptocurrency traders as the “death cross.” With buyers taking fright, the future of this cryptocurrency looks grim, particularly for those who spent real money buying into it. - Cardano
Cardano is touted as the “next generation” of cryptocurrencies and an improvement on Bitcoin and Ethereum. One of its founders was involved in the development of Ethereum, and the result may be more secure than either of the two current market leaders. It’s believed that this cryptocurrency should be on the watchlist for those following the progress of the crypto phenomenon. - Stellar
Stellar acts as a blockchain for people hoping to send or trade using digital currencies. It has its own currency which has been named the “Lumen.” What makes it different? Think Paypal with its own currency. While some analysts are willing to make longer-term predictions regarding this low-cost crypto, they should be taken with a pinch of salt. When it comes to virtual currencies, especially the smaller ones, growth and even survival are uncertain. Nevertheless, the Lumen is considered to be one of the better efforts and may stand the test of time. - USD Coin
For those who are put off by the volatility of digital currencies, choosing one that’s pegged to the dollar may seem like a good idea. USD coin is known as a “Stablecoin” for this reason, and it was created with the intention of making online buying and selling easier than it would be if handled through bank transactions. USD coin functions across the blockchains of other major digital currencies. Because of its stability, most people don’t regard it as a speculative “investment” since the gambling element in which a digital currency can make sudden gains (or losses) is absent.
What all Cryptocurrencies Have in Common
Although each cryptocurrency may seem completely different to its cousins, the basic principle of cryptocurrency is that it is a form of “decentralized finance.” In essence, this means that it is not controlled by central banks the way regular currencies are, and this also accounts for its volatility as well as much of the reluctance some countries have in allowing cryptocurrency transactions.
There’s also a chance of hacking to which all cryptocurrencies are subject but for which Bitcoin has been the most attractive target so far, and it’s entirely possible that an exchange can go out of business, making it difficult or impossible to obtain repayment. Some exchanges are insured against this while others are not.
Cryptocurrencies: Investment or Gamble?
With crypto exchanges vying for customers and the real money it takes to purchase virtual money, you’ll often hear of Cryptocurrencies being referred to as an “investment.” Unbiased, conventional viewpoints vary from Warren Buffet’s assertion that Crypto is gambling and therefore should be seen as a game rather than investment, to the opinion that longer-term holdings might just be bona fide investments.
However, if one takes the purest definition of what investment is into account, Cryptocurrency doesn’t really fit the bill. After all, it doesn’t pay dividends. Some platforms do offer interest, but experts warn that they are private businesses that rely on lending to generate the promised sums. Are they doing due diligence in vetting loans? We simply can’t know. In general, sound financial advice would be to avoid regarding crypto as an investment – and those who do try to treat it as such need to be aware that it is a highly risky business.
But, the story is still unfolding. The world’s leading cryptocurrency, Bitcoin, has gone mainstream, but many analysts are noticing a downward value trend which could presage a crash. In that case, at least 90 percent of cryptos will very likely go under, and even the future of Bitcoin is uncertain. We’ll be watching the news with interest as this drama plays out.
