Following the financial crisis of 2008-2009, investors began developing and trading cryptocurrencies. The leading cryptocurrency was at that time and continues to be Bitcoin. Cryptocurrencies operate independently of governments and central banks and rely on encryption and blockchain technology to define discrete units and record transfers among owners. In this article, Rory Brown, Lydian founder discusses some of the top cryptocurrencies and altcoins based on their reputation, pricing history, and more.
Current Financial Conditions Affecting the Cryptocurrency Markets
Recent turmoil in financial and stock markets, much of which centers around the coronavirus pandemic, has people worldwide concerned that regional and global recessions could present significant investment challenges to governmental currencies everywhere. Many cryptocurrencies, and especially Bitcoin, have historically performed well during market downturns. Of course, the limited history of cryptocurrencies limits the power to predict how they will perform under changing and possibly unprecedented conditions.
The likelihood that governmental central banks will continue to attempt to stimulate local economies by pumping more governmental currency into markets. The tradeoff for this type of stimulation is the heightened probability of price inflation as more and more currency is available. Cryptocurrencies are designed to avoid this inflationary risk in that they are based on a fixed and limited supply of units of currency.
Most investors will likely be prudent to wait to invest heavily in cryptocurrency until it has been established that they can fulfill the primary purposes of currency–serving as a secure way to store value and as a readily accepted form of payment. The price volatility in the Bitcoin market especially serves as an indicator that cryptocurrencies remain an uncertain investment vehicle. As financial concerns and instabilities that result from the global coronavirus crisis are likely to linger for months or years, more and more vendors and other commercial actors may become more open to accepting cryptocurrency for certain types of transactions.
The original cryptocurrency came into existence in late 2008 by an unknown group using the name Satoshi Nakamoto. For several years Bitcoin traded in ranges from $350 to $1,000 per coin. In 2017 Bitcoin broke through to higher prices, trading near $20,000 per coin during the year. Valuations have varied since that time widely, and have ranged between $10,000 and $6,000 since the onset of the global coronavirus pandemic. Bitcoin’s open-source code has promoted the development of other cryptocurrencies and altcoins in the intervening years.
XRP is the creation of the Ripple company, which makes up a gross settlement system of processing payments. XRP allows users to effectively create their own proprietary money to make payments between users.
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Ethereum is a cryptocurrency program created by a programmer in 2015 as an alternative to Bitcoin using a more general scripting language. Like Bitcoin, the cryptocurrency is based on blockchain technology and uses a strictly limited number of currency units.
Bitcoin Cash and Bitcoin SV
These cryptocurrencies are variations of Bitcoin designed to be more versatile and useful for ordinary payments and transactions. Both have been in existence for less than three years and their trading values have varied widely. Most users find that these coins are more useful for user to user payments than for longer-term investment value.
About Rory Brown
Rory Brown currently serves as a Managing Partner of Nicklaus Brown & Co. and was a co-founder of VirtualBank in 2000. VirtualBank began as an early adapter of technology creating platforms and interfaces for customers of financial institutions to access financial accounts and records through the internet. VirtualBank has grown to be a multibillion-dollar company, named “Best Online Bank” by Money Magazine. Rory Brown is also the co-founder of Lydian, which garnered him recognition by Ernst & Young as Financial Service Entrepreneur of the Year. Mr. Brown received a Master of Business Administration from the University of Charleston and is a Certified Public Accountant. He has focused on financial technology and investment management for over 30 years. In his spare time, Mr. Brown studies the history of the Lydians, the first people to use gold and silver coinage.