Cryptokitties and the Fan-Controlled Football League: The Rise of Altcoins.
In November, the CEO of the popular U.S.-based cryptocurrency exchange Coinbase released a thinly veiled suggestion that his company would be adding new cryptocurrencies to their platform in 2018. Now, Coinbase has followed through and is officially starting to support Bitcoin Cash (BCH).
Previously Coinbase, and its more sophisticated trading platform GDAX, have only accepted Bitcoin, Litecoin and Ethereum, but the new direction is introducing many to the infinite possibilities of “Altcoins.”
Bitcoin (BTC) may be the grandfather of the cryptocurrency world, but it is not the only player in the game. Altcoin is a popular term to refer to cryptocurrencies that were created after Bitcoin, or as an alternative to Bitcoin. By current estimations there are over 1000 Altcoins being traded and utilized around the world.
What differentiates each cryptocurrency is the technology behind it. Each cryptocurrency has a different code that determines how the coin is “mined,” its utility, and its market. Without going into too much detail on the technical side, consider the differences between Bitcoin and these Altcoins:
Litecoin, launched in 2011, is popularly considered the “silver” to Bitcoin’s “gold,” but what really separates the two is the technology. Litecoin was developed as an improvement over Bitcoin, more accessible to miners and more adaptable to changes in technology . The developers of Litecoin also provided a higher coin limit and a higher market cap while making Litecoin transactions upwards of four times faster than Bitcoin. While these differences are subtle, they are important to traders who use these as factors in determining the coin’s value.
IOTA, developed in 2016, has been in the news recently after announcing a partnership with Microsoft and other tech companies (although this was later clarified as a “Participation” by the team behind IOTA). IOTA does away with the bulkier Blockchain technology of Bitcoin and instead utilizes Tangle technology which allows it to conduct quick, rapid-fire micro-transactions. This will be useful for exchanges occurring in the rapidly developing economy of the Internet of Things (from which IOTA derives its acronym).
Altcoins can even be used for purposes beyond the general marketplace. Take for example Cryptokitties, a trading platform fad reminiscent of Pokémon, that utilizes Ethereum (ETH) blockchain technology to facilitate the breeding, trading and selling of internet based kitties. As their website puts it, Bitcoin is just a cryptocurrency but cryptokitties are “cryptocollectibles” and their value is in the collecting and trading of the actual cryptokitties. These collectibles have real value though, some of these cryptokitties are selling for upwards of 240 ETH ($100,000 USD). Or consider the “Fan-Controlled Football League,” (FCFL) expected to launch in 2018, which will release its own cryptocurrency, the FAN token. Under the FCFL the fan is in charge of the team both on and off the field, effectively as the general manager and coach. Fans will purchase FAN tokens, and use these tokens to conduct real-time play calling and roster decisions.
It is important to consider a lot of factors when you are evaluating an Altcoin. Many of the cryptocurrency experts have advised that most initial coin offerings (ICOs) are fraudulent. Always do your research – most if not all reputable coins will have a home page that describes their technology and its purpose. Examine what exchanges facilitate the given cryptocurrency’s trading and where the exchange is located. A coin that is only traded on one exchange in a single country may not be as valuable as a coin that is traded on multiple exchanges worldwide. Research whether the coin has reputable developers or investors backing it or if the coin has been reported on in any technology or educational articles. The more information the better!
As for predictions on what coins Coinbase/GDAX may offer next you should consider some of the more popular coins on the market today, including: Ripple (XRP), DASH, IOTA, Tron (TRX), Verge (XVG). Refer to the GDAX guidelines for more information on how they evaluate potential assets.
This article is not intended to be legal or trading advice and is for informational purposes only. If you would like to discuss this or any other topic further feel free to comment or message me.