The Wide World of Cryptocurrencies

Bitcoin is back in the news. It hit a new high of $5,800 on Friday, October 13, but then fell nearly 9% after the U.S. Commodity Futures Trading Commission (CFTC) issued a report reiterating that cryptocurrencies may fall under the agency’s jurisdiction in certain circumstances.

While bitcoin continues to enjoy the broadest name recognition, there are now more than 1,000 virtual currencies available. A few of these competitors saw their market share increase this year as bitcoin’s fell, though this has reversed in recent months.

While every major cryptocurrency uses blockchain technology—a shared digital ledger that isn’t controlled by any central party —the goals of each network are different.

  • Bitcoin was intended to allow online payments between parties without having to rely on a financial institution.
  • Ethereum, and its virtual currency known as Ether, was built to allow self-executing applications known as smart contracts to be run on the blockchain, allowing things like registration, transfer of property, or any number of other use cases.
  • Ripple, which uses a cryptocurrency called XRP, was created with the purpose of allowing money to be moved between countries and existing currencies in a faster, more secure manner. To that end, Ripple is actively seeking partnerships with banks and governments, a point that differentiates it from many other decentralized blockchain platforms.

The varying goals of each virtual currency make direct comparison difficult. Each currency also has a different cap on the potential number of units, so rather than comparing their value side by side, it may make more sense to explore the value of an individual unit in relation to market cap (units outstanding multiplied by price). It’s anyone’s guess which virtual currency (if any) will come out on top, but it’s safe to assume that bitcoin and other cryptocurrencies will continue to make headlines going forward—for better or worse.

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