Cryptocurrency raised in excess of $3.69 billion for blockchain projects in 2017. The amount for 2018 reached $17.25 billion by July. Investors need to understand the nuances of the technology and the virtual assets they create. Most investors receive their assets in tokens or coins for bitcoin or ether. Understanding the fundamentals of cryptocurrency is critical for success. Cryptocurrency is a medium of exchange, a store of value and a unit of measurement. These characteristics are demonstrated by the currency.
Ether and EOS
Ether is one of Ethereum’s virtual assets. According to CoinDesk, one ether is trading at roughly $292. This places the market cap for the blockchain at $29.66 billion. The Virtual Machine for ethereum enables the developers to write smart contracts. These programs are executed when a payment is made using ether in the native country of the user. The costs for these transactions are referred to as gas. The more applications used and built for the blockchain, the higher the demand for ether.
EOS is a virtual asset native to the EOS.IO blockchain. The functions are a lot like ether but there are no transaction fees. Block.one raised $4 billion to pay for the rollout and launch of EOS.IO. Approximately $700 million has been allocated for the growth of the EOS.IO ecosystem. One of the benefits for investors is receiving free tokens when the blockchain is supported by venture firm projects. This is called an airdrop. Investors have the option of storing some of the EOS in a digital wallet.
The token generation interface for the Ethereum blockchain is easy to navigate and referred to as a ERC20 Token Standard. This makes certain everyone controlling an electronic wallet remains in compliance to the standard and is able to receive new tokens. The tokens can be listed on exchanges supporting this standard including in excess of 200 virtual asset exchanges. Software engineers are generally coded for a specific function including assigning the rights to others, allowing access and triggering an event. These tokens are not created for use as a unit of measurement. Investors should value these tokens according to the fit of the market, the team experience and the state of the technology. Good signs are when the team is led by technologists with success in the past and depositories with a minimum of one year in code development.
Bitcoin is identified in the 2018 whitepaper by the original creators as electronic cash. The code limits the supply of bitcoin to 21 million. This ensures bitcoin remains scarce. Despite the fact numerous major currencies are accepting bitcoin as a type of cash, it is usually purchased for the store of value function. Investors should consider bitcoin in the same manner as gold, a hedge against bond or stock holdings.
A small number of virtual assets were created to function only as cryptocurrency. This includes Bitcoin Cash, Monero, Dash and Zcash. Numerous prominent merchants accept cryptocurrencies. When they are used by United States exchanges, investors should perceive this as a positive signal as they begin building a cryptocurrency portfolio.
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