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Future of Industry

Elon Musk, Bitcoin and the Rise of Cryptocurrencies

In a run of its stunning ascent in early January, bitcoin’s price blew past $45,000, $46,000 and $47,000 in less than an hour this week, which eventually topped $48,000. By early Tuesday, the largest cryptocurrency had found a settlement at about $45,200. This particular surge came after Elon Musk’s electric-vehicle company, Tesla, announced that it had bought $1.5 billion of the cryptocurrency. Bitcoin now has a market capitalization of nearly $890 billion, which would rank it ahead of all but six of the world’s largest publicly trading companies, including No. 7 Tesla at $829 billion.

The Musk effect

As soon as the news of Tesla’s investment in bitcoin came out, it sent shock waves down the digital currency soaring 14% to a record high of $43,500. This marks a 300% increase in the cryptocurrency investment that has moved into the mainstream in the past year.

Tesla disclosed its bitcoin holding in a filing with the US Securities and Exchange Commission in which the company said that it had “updated our investment policy to provide us with more flexibility to further diversify and maximise returns” to allow it to invest cash reserves in “alternative reserve assets including digital assets”.

It added that since the decision was approved by its audit committee it had “invested an aggregate $1.5bn in bitcoin under this policy and may acquire and hold digital assets from time to time or long term”.

Read here: What’s Crypotocurrency?  

Musk and his fascination with cryptocurrencies are not entirely new. He has helped to drive the popularity of cryptocurrencies, including bitcoin and dogecoin, by regularly tweeting that he supports these cryptocurrencies. Soon after the news of his investment came to the forefront,the price of dogecoin also rose soon after the price increased by 50% on 4 February, shortly after he tweeted: “Dogecoin is the people’s crypto.”

Simon Peters, a crypto asset analyst at the investment platform eToro, thinks that bitcoin could possibly hit $50,000 by the end of the week. “If there were any doubts as to the mainstream acceptance of bitcoin, this surely must mark the end of any scepticism,” he said in an interview. “Multiple other brands already accept bitcoin as payment, and we would imagine that, in time, other major companies will follow Tesla’s example.”

Eric Turner, the vice-president of market intelligence at cryptocurrency research firm Messari, said in an interview,  “I think we will see an acceleration of companies looking to allocate to bitcoin now that Tesla has made the first move. One of the largest companies in the world now owns bitcoin and, by extension, every investor that owns Tesla, or even just an S&P 500 fund, has exposure to it as well.” However, others have told people to be careful before considering investing their savings in bitcoin.

As we talk of it now, one realises that Bitcoin has not just been a trendsetter, ushering in a wave of cryptocurrencies built on a decentralized peer-to-peer network, it’s become the de facto standard for cryptocurrencies, inspiring an ever-growing legion of followers.

The 10 Most Important Cryptocurrencies Other Than Bitcoin

Beyond everything, the field of cryptocurrencies is always expanding. While Bitcoin is widely seen as a pioneer in the world of cryptocurrencies, many analysts are adopting approaches for evaluating tokens other than BTC. It’s common, for instance, for analysts to attribute a great deal of importance to the ranking of coins relative to one another in terms of market cap.

1. Ethereum (ETH)

Ethereum, is a decentralized software platform that enables Smart Contracts and Decentralized Applications (DApps) to be built and run without any downtime, fraud, control, or interference from a third party. The goal behind Ethereum is to create a decentralized suite of financial products that anyone in the world can have free access to, regardless of nationality, ethnicity, or faith. This aspect makes the implications for those in some countries more compelling, as those without state infrastructure and state identifications can get access to bank accounts, loans, insurance, or a variety of other financial products.

The applications on Ethereum are run on its platform-specific cryptographic token, ether. Ether is like a vehicle for moving around on the Ethereum platform and is sought by mostly developers looking to develop and run applications inside Ethereum, or now, by investors looking to make purchases of other digital currencies using ether. Ether, launched in 2015, is currently the second-largest digital currency by market cap after Bitcoin, although it lags behind the dominant cryptocurrency by a significant margin. As of January 2021, ether’s market cap is roughly 19% of Bitcoin’s size.

In 2014, Ethereum launched a pre-sale for ether which received an overwhelming response; this helped to usher in the age of the initial coin offering (ICO). According to Ethereum, it can be used to “codify, decentralize, secure and trade just about anything.

In 2021 Ethereum plans to change its consensus algorithm from proof-of-work to proof-of-stake. This move will allow Ethereum’s network to run itself with far less energy as well as improved transaction speed. Proof-of-stake allows network participants to “stake” their ether to the network. This process helps to secure the network and process the transactions that occur. Those who do this are rewarded ether similar to an interest account. This is an alternative to Bitcoin’s proof-of-work mechanism where miners are rewarded more Bitcoin for processing transactions.

2. Litecoin (LTC)

Litecoin was launched in 2011 and became among the first cryptocurrencies to follow in the footsteps of Bitcoin and has often been referred to as “silver to Bitcoin’s gold.” It was created by Charlie Lee, an MIT graduate and former Google engineer. Litecoin is based on an open-source global payment network that is not controlled by any central authority and uses “scrypt” as a proof of work, which can be decoded with the help of CPUs of consumer-grade. Although Litecoin is like Bitcoin in many ways, it has a faster block generation rate and hence offers a faster transaction confirmation time.

3. Cardano (ADA)

Cardano is a cryptocurrency that was created with a research-based approach by engineers, mathematicians, and cryptography experts. The project was co-founded by Charles Hoskinson, one of the five initial founding members of Ethereum. After having some disagreements with the direction Ethereum was taking, he left and later helped to create Cardano.

The team behind Cardano created its blockchain through extensive experimentation and peer-reviewed research. The researchers behind the project have written over 90 papers on blockchain technology across a range of topics. This research is the backbone of Cardano.Cardano aims to be the financial operating system of the world by establishing decentralized financial products similarly to Ethereum as well as providing solutions for chain interoperability, voter fraud, and legal contract tracing, among other things. As of January 2021, Cardano has a market capitalization of $9.8 billion and one ADA trades for $0.31.

4. Polkadot (DOT)

Polkadot is a unique proof-of-stake cryptocurrency that is aimed at delivering interoperability between other blockchains. Polkadot’s core component is its relay chain that allows the interoperability of varying networks.

In difference to Ethereum, rather than creating just decentralized applications on Polkadot, developers can create their own blockchain while also using the security that Polkadot’s chain already has. With Ethereum, developers can create new blockchains but they need to create their own security measures which can leave new and smaller projects open to attack, as the larger a blockchain the more security it has. This concept in Polkadot is known as shared security.

5. Bitcoin Cash (BCH)

Bitcoin Cash (BCH) holds an important place in the history of altcoins because it is one of the earliest and most successful hard forks of the original Bitcoin. In the cryptocurrency world, a fork takes place as the result of debates and arguments between developers and miners. Due to the decentralized nature of digital currencies, wholesale changes to the code underlying the token or coin at hand must be made due to general consensus; the mechanism for this process varies according to the particular cryptocurrency. As of January 2021, BCH had a market cap of $8.9 billion and a value per token of $513.45.

6. Stellar (XLM)

Stellar is an open blockchain network designed to provide enterprise solutions by connecting financial institutions for the purpose of large transactions. Huge transactions between banks and investment firms that typically would take several days, a number of intermediaries, and cost a good deal of money, can now be done nearly instantaneously with no intermediaries and cost little to nothing for those making the transaction.

While Stellar has positioned itself as an enterprise blockchain for institutional transactions, it is still an open blockchain that can be used by anyone. The system allows for cross-border transactions between any currencies. Stellar’s native currency is Lumens (XLM). Stellar Lumens have a market capitalization of $6.1 billion and are valued at $0.27 as of January 2021.

7. Chainlink

Chain Link is a decentralized oracle network that bridges the gap between smart contracts, like the ones on Ethereum, and data outside of it. Blockchains themselves do not have the ability to connect to outside applications in a trusted manner. Chainlink’s decentralized oracles allow smart contracts to communicate with outside data so that the contracts can be executed based on data that Ethereum itself cannot connect to. Chainlink was developed by Sergey Nazarov along with Steve Ellis. As of January 2021, Chainlink’s market capitalization is $8.6 billion, and one LINK is valued at $21.53.

8. Binance Coin (BNB)

Binance Coin is a utility cryptocurrency that operates as a payment method for the fees associated with trading on the Binance Exchange. Those who use the token as a means of payment for the exchange can trade at a discount. Binance Coin’s blockchain is also the platform that Binance’s decentralized exchange operates on. The Binance exchange was founded by Changpeng Zhao and the exchange is one of the most widely used exchanges in the world based on trading volumes. As of January 2021, Binance has a $6.8 billion market capitalization with one BNB having a value of $44.26.

9. Tether (USDT)

Tether was one of the first and most popular of a group of so-called stablecoins, cryptocurrencies that aim to peg their market value to a currency or other external reference point in order to reduce volatility. Because most digital currencies, even major ones like Bitcoin, have experienced frequent periods of dramatic volatility, Tether and other stablecoins attempt to smooth out price fluctuations in order to attract users who may otherwise be cautious. Tether’s price is tied directly to the price of the US dollar. The system allows users to more easily make transfers from other cryptocurrencies back to US dollars in a more timely manner than actually converting to normal currency.

Launched in 2014, Tether describes itself as “a blockchain-enabled platform designed to facilitate the use of fiat currencies in a digital manner.” Effectively, this cryptocurrency allows individuals to utilize a blockchain network and related technologies to transact in traditional currencies while minimizing the volatility and complexity often associated with digital currencies. In January of 2021, Tether was the third-largest cryptocurrency by market cap, with a total market cap of $24.4 billion and a per-token value of $1.00.

10. Monero (XMR)

Monero is a secure, private, and untraceable currency. This open-source cryptocurrency was launched in April 2014 and soon garnered great interest among the cryptography community and enthusiasts. The development of this cryptocurrency is completely donation based and community driven. Monero has been launched with a strong focus on decentralization and scalability, and it enables complete privacy by using a special technique called ring signatures.

While this is a prime candidate for making criminal transactions anonymously, the privacy inherent in Monero is also helpful to dissidents of oppressive regimes around the world. As of January 2021, Monero had a market cap of $2.8 billion and a per-token value of $158.37.

Date added
15.02.2021

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