Cryptocurrency is basically digital cash, such as Bitcoin and Ethereum, which is used and accepted in many places on the internet and in person as an alternative to government-backed fiat currencies like the US Dollar and the Euro. Because the supplies of these Cryptocurrencies are not controlled by any central government authority, and because most of them have a fixed supply, they are usually compared to commodities like Gold and Silver.
The technology that underlies cryptocurrency is called Blockchain, and its purpose is to create a trustless, decentralized, peer-to-peer means of transferring money quickly and privately over the internet.
A blockchain is formed by a network of computers running software called “miners” and “nodes” and by running this software they create the blockchain and secure the network so that no one person or organization can arbitrarily create the cryptocurrencies, and no one can counterfeit or duplicate them.
There are also other applications of blockchain technology such as “smart contracts” which are used to create trustless and decentralized peer to peer contracts that are enforced by the blockchain.
The biggest of these cryptocurrencies are Bitcoin, Litecoin, Ethereum, Dash, Monero, Ripple, Bitshares and many others, in fact there are hundreds of different kinds of cryptocurrencies all backed by different and independent blockchains, with different development teams and even some venture capital funds backing certain blockchains. The biggest of these cryptocurrencies typical fluctuate, with Bitcoin holding the largest market cap since its inception.
However, even though Bitcoin has a significant “first mover” advantage, being that it was the first cryptocurrency ever, there have been major improvements added to blockchain technology over the last 8 years since Bitcoin was first released.
While many alternative cryptocurrencies (altcoins) have already implemented these new features into their blockchains, Bitcoin’s development has been mostly stuck at a standstill, with a major schism in the development community over something called the blocksize.
The inability to reach an agreement on this issue and many others will likely mean that Bitcoin will fall behind other altcoins that are able to improve their blockchains with very little friction in their respective development communities, and therefore these altcoins are much faster, secure, and have more uses (such as smart contracts) than the classic Bitcoin blockchain.
Many of these altcoins could see massive bull-runs and we could very well be beginning something much like the Dot Com boom that happened in the 90s.
Eventually Bitcoin will continue it’s bull-run as well. Right now though, Bitcoin seems like it may have a slow year while the spotlight gets focused on altcoins, but over the long-term it is possible that as the global debt crisis comes to climax over the next 3-5 years that all cryptocurrencies end up being seen as a “store of value” and a way to hedge against failing government currencies.
ABOUT THE AUTHOR
Trevor Arnold has been trading and mining cryptocurrency since 2013 and is the owner of Intuit Consultants, a cryptocurrency-based consulting service located in Florida.
He has significant investments in alternative cryptocurrencies. More of his past predictions and services can be found at https://intuitconsultants.com