Cryptocurrencies are digital assets used for transactions. They’re usually exchanged among users via blockchain platforms and often serve as investments by both speculators and investors alike.
Burnie (2018) conducted an in-depth analysis on correlations among log returns from different cryptocurrencies excluding USD Tether (USDT). His results demonstrated that, other than USDT, all other cryptocurrencies had positive and statistically significant associations between log returns.
Market Cap
There are more than 1,300 cryptocurrencies currently in circulation, but Bitcoin (BTC) remains the leader when it comes to market cap. With its limited supply, which helps prevent inflation and keep prices stable over time.
SWIFT system. Through distributed ledger technology, transactions can be confirmed instantly with minimal transaction costs.
Ripple Labs’ management has come under scrutiny despite its success, for allegedly misappropriating funds and failing to disclose potential risks. The SEC filed suit against them but this dispute has yet to be settled; as a result, cryptocurrency prices were affected negatively; however, recently there have been signs of rebound due to an impending halving event which will reduce mining rewards and thus slow inflation.
Transactions
Bitcoin’s blockchain, used to record transactions, is constantly expanding. New coins enter circulation as miners verify transaction data and close a block – this process is known as halving and will continue until 21 million bitcoins have reached maximum circulation.
Bitcoin can also be used as a form of international payment due to its low transaction fees and quick processing times, drawing many investors who seek new ways of transacting abroad.
Ripple Labs has created a distributed ledger network that enables banks and financial intermediaries to settle transactions more rapidly and affordably than traditional methods. Their cryptocurrency, XRP, can be used as an intermediary currency between currencies; and has garnered widespread speculation due to its potential long-term price appreciation.
Fees
Cryptocurrencies offer many advantages, yet can sometimes be expensive to use. Bitcoin and Ethereum transactions may cost upwards of $20 during periods of high network activity – something many investors find disconcerting. Luckily, there are other cryptocurrencies with lower transaction fees.
Litecoin boasts the lowest transaction fees among major cryptocurrencies, followed by Ripple (another blockchain-based digital payment network that uses its own cryptocurrency, XRP), to facilitate on-demand liquidity for global financial institutions – much like SWIFT).
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Regulations
The cryptocurrency industry has recently encountered regulatory challenges. Clarity in regulation is essential to its future; although many countries are actively trying to regulate crypto, the process is slow and complex. This article addresses some of the main regulatory concerns impacting the market.
Last week’s debut of the first EDX exchange is offering traders access to four specific digital assets – Bitcoin, Ethereum, Litecoin and Bitcoin Cash – for trading. This decision is being taken as these cryptocurrencies are generally seen by regulatory bodies as commodities; thus minimizing legal challenges against them.
Cryptocurrencies are digital currencies which utilise cryptography to verify transactions and record them on an open ledger. Their price can rise or fall according to supply and demand factors.
Future
Bitcoin’s decentralized nature and lack of a central point of failure contribute to its perceived resilience, security and long-term capital appreciation potential. Furthermore, this model facilitates instant and cheap transactions on the blockchain network.
Ripple offers financial institutions an easy cross-border payments solution using its native cryptocurrency XRP. Transactions using XRP require less energy than Bitcoin, are confirmed instantly, and cost little or nothing to execute.
Academic articles typically divide currencies into three groups: country currencies such as Euro, Dollar and Yen), cryptocurrencies such as Bitcoin and user-issued tokens. A trust line represents a directed graph edge from lender to borrower; traders may purchase or sell user-issued tokens backed by user deposits that may be used to pay fees or transfer value between gateways.
