[2018-01-22] Cryptocurrency Markets Aren't All the Same

After reading this interesting perspective on the cryptocoin markets, I reckon that there might me a start of a paradigm shift in the cryptospace. Market data sites will order their data into more categories like what they do in the stock market. We might soon see Bitcoin in a different category from Ethereum, and the 2 might not be considered as competitors anymore.

Bitcoin's direct competitors would then be litecoin, bitcoin cash and the rest of the store of value coins. While Ethereum will be in another category with a different set of competitors like NEO, Ethereum Classic or NEM.

In essence, this will create a new and more positive view in the cryptospace. Not just one place where there are full of scams because not all of them are. Unlike how bitcoin maximalists view them.

There are two other broad categories of cryptocurrency among the biggest "altcoins": Those launched by platforms designed for "smart contracts" and initial coin offerings (Ethereum, NEO, NEM, EOS), and those "minted" by projects working on blockchain-based transaction processing for the finance industry (Ripple, Cardano). Stellar, the nonprofit project whose cryptocurrency is called the Lumen, falls into both these categories.

Over the last 30 days, the currencies launched by Ethereum competitors have showed the strongest price correlations with Ether, Ethereum's currency. And they haven't been moving in unison with Bitcoin.

One can be skeptical, like my colleagues on the Bloomberg View editorial board, that crypto — decentralized or harnessed by central banks — is the future of money. In that case, it makes sense to stay away from Bitcoin, Litecoin and Bitcoin Cash. But that doesn't rule out believing in other applications of the technology. For example, if one holds that initial coin offerings are a sound way to attract investment and that the blockchain is good for registering property rights and storing contracts, then Ethereum and its competitors are worth watching and perhaps backing. Deciding which ones depends on whose technology or market one likes best: There are different arguments, for example, in favor of China-based NEO and for EOS, with its focus on fast processing.

For a believer in the blockchain as the ultimate replacement for the current money transfer infrastructure such as the Swift system, Ripple's and Cardano's digital currencies make sense. But these investments may be particularly risky, since it's not quite clear whether the currencies will ever gain broad acceptance as part of their creators' increasingly popular money-moving solutions.

Read in full https://www.bloomberg.com/view/articles/2018-01-21/cryptocurrency-markets-aren-t-all-the-same

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