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Bitcoin or Altcoins: Which Is The Best Choice

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In the beginning, there was Bitcoin and all that followed were deemed to be heretics and called by the name Altcoins.  As thus it was. By the end of the year 2017 AD there were 1,386 heretics posing under the names of Ethereum, Litecoin, Ripple and many more that followed in pursuing their vision of the holy grail.  

Passing through the biblical abyss, we are now in the present world of 2018 when a new testament is being written.  The question that must be answered is this. With the price of literally all cryptos having been slaughtered like sacrificial lambs, do you place your beliefs in bitcoin or the heretics?

We can make things a bit easier by putting Ethereum, LTE and XRP into the same group as bitcoin.  In fact the whole point of doing this is to address the question that is frequently being raised these days.

If you already own crypto and living with the frustration of seeing bitcoin tumbling from its near $20,000 high, you are probably inclined to bury your head and ignore the question all together.  Please resist the temptation. Later on you will be happy you did.

Value Can Be A Sucker Bet

Lately, I have been reading more articles featuring what I would call the most depressed priced list from the group of 2017 ICOs.  There is no question that fortunes were made by smart investors who played this strategy last year. Most of these guys are long gone.

Just take the case of ZClassic whose price when from a low of just under $0.40 to nearly $206.00 in the course of about a year.  That is a better investment return than even the 2017 crypto big performers like Ethereum at over 7,500%! Since January, owners of ZClassic have seen the price drop to around the $8.00 level.

So taking ZClassic and bitcoin and looking at these two in a microcosm, the question is which is a better investment from here?  Here is an easy answer. If both return to their previous high levels, bitcoin will about double in value while ZClassic will be worth 26 times it’s present value.  Expressed in a slightly different way, $10,000 invested in bitcoin would become about $20,000 whereas, in ZClassic becomes $257,500: Hmmmm!

In our example, we chose ZClassic for the simple reason is that its business actually is comparable to bitcoin.  For those less familiar, ZClassic started as a fork of Zcash in November of 2016. Zcash is a cryptocurrency that is aimed using cryptography to provide enhanced privacy of its users compared with bitcoin.

This is what makes our example a real challenge to make the right choice.  I do not own either one of these so have no dog in this fight but the risk reward favors ZClassic.

Now For The Real Test

When we make real life choices comparing bitcoin, Ethereum, Litecoin and Ripple to the better then 1,386 ICOs of 2017, the difficulties multiply exponentially.  The first three have each lost 40%-50% of value from their highs. Only Ripple has fallen far more than the others.

It is a safe bet that the average Altcoin has lost much more than half their value.  The average loss is probably mirrors that of ZClassic. So what is the right choice? Finding the answer is why there are so many people interested in making recommendations.  I would advise against the temptation. These days you need to know the source of your information. There is a lot of bias. The reward is most likely not worth the risk. Here is why.

The next move up in prices will the lead by the big names like bitcoin followed by Ethereum and Ripple.  This is not a unique idea but simply applying common sense. If you want to play the Altcoin price recovery cycle keep in mind that many of the ICOs were pre-venture capital companies that have no operating history and many are pre product.  

In the past, entrepreneurs at that level typically raised capital from friends and family.  In other words from people who never expected to get repaid. So while the rewards of playing this strategy may be as attractive as ZClassic, the risks are infinitely higher.

In the days ahead, we will be keeping an eye out for ideas exceptional cases to the average ICO.

Featured image courtesy of Shutterstock. 

Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

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4.4 stars on average, based on 82 rated postsJames Waggoner is a veteran Wall Street analyst and hedge fund manager who has spent the past few years researching the fintech possibilities of cryptocurrencies. He has a special passion for writing about the future of crypto.




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Altcoins

Stellar Lumens Update: Acquisitions and Retirement Accounts

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Stellar Lumens is in the headlines this week amid reports that it is negotiating to acquire a high-profile startup by the name of Chain. Meanwhile, a bitcoin IRA that lets users buy cryptocurrency for retirement added XLM to its list of available assets, potentially raising the investment appeal of the Stellar protocol.

Stellar Eyes Chain Acquisition

Fortune reported Wednesday that Stellar has been in talks to buy the San Francisco-based blockchain startup for $500 million. Citing anonymous sources, the report said the payment would be made in XLM, the seventh-largest cryptocurrency by market capitalization. No cash or equity will be part of the sale, which has yet to be finalized.

Although Stellar’s plan for Chain is not yet known, its interest in the startup is tied to its team of talented blockchain developers. Stellar founder and crypto trailblazer Jed McCaleb has a keen eye for talent, having founded Mt. Gox, eDonkey and Ripple XRP.

Chain develops enterprise-grade blockchain solutions, including ledger products that allow businesses to transfer funds in token format. The company raised over $43 million in venture funding from high-profile investors including Visa, Nasdaq, Citi Ventures and Blockchain Capital.

It is not entirely clear how the purchase would impact XLM’s market value. For current investors, the main concern is a wholesale dump of Lumens by Chain’s backers in the event that the sale actually takes place.

At a current price-per-coin of less than $0.23, the Chain acquisition would translate to roughly 219.3 million XLM. There are roughly 18.7 billion Lumens in circulation, giving the currency a total market cap of $4.3 billion.

Stellar for Retirement

The BitcoinIRA retirement platform has announced the addition of both Stellar Lumens and Zcash to its available list of cryptocurrencies, giving investors the ability to diversify their crypto holdings for retirement.

“[W]e’re excited to meet the high demand for both Stellar Lumens and Zcash in the marketplace by making these coins available to customers looking to diversify their retirement portfolios,” said Chris Kline, BitcoinIRA’s Chief Operating Officer.

In addition to Lumens and Zcash, the BitcoinIRA platform allows retirement planners to access bitcoin, Ethereum, Ripple, Litecoin, bitcoin cash and Ethereum Classic.

Crypto IRAs fall under a much broader category of assets called digital IRAs, which are self-directed retirement accounts. Cryptocurrencies are recognized by the IRS as property, which allows for their inclusion in retirement accounts. Self-directed IRAs have unique tax benefits that can help investors maximize their digital currency holdings.

Disclaimer: The author owns bitcoin, Ethereum and other cryptocurrencies. He holds investment positions in the coins, but does not engage in short-term or day-trading.

Featured image courtesy of Shutterstock.

Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

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4.6 stars on average, based on 462 rated postsSam Bourgi is Chief Editor to Hacked.com, where he specializes in cryptocurrency, economics and the broader financial markets. Sam has nearly eight years of progressive experience as an analyst, writer and financial market commentator where he has contributed to the world's foremost newscasts.




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Three Reasons XRP Is Not a Security: Ripple’s Garlinghouse

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Ripple CEO Brad Garlinghouse was a featured panelist at the CB Insights Future of Fintech conference in New York today. Chief among the themes in the discussion was XRP, the No. 3 cryptocurrency based on market capitalization in which Ripple owns the majority of tokens.

While the No. 1 and No. 2 digital currencies, bitcoin and Ethereum, respectively, were cleared from being regulated as securities, Wall Street regulators have yet to make a call on XRP.

“I think it’s really clear XRP is not a security,” Garlinghouse said in the session.

There is a misconception in the cryptocurrency community that Ripple controls XRP. In fact, XRP is a decentralized digital currency that Ripple uses in its cross-border payments product xRapid. They could just as easily use bitcoin except “ bitcoin transactions on average are 45 minutes in and 45 minutes out. So XRP is uniquely positioned to solve the cross-border liquidity problem,” Garlinghouse said. 

He went on to outline a trio of reasons why XRP should never be identified as a security.

  1. “If Ripple as a company shut down tomorrow, the XRP ledger would continue to operate.”  
  2. “If you buy XRP, you’re not buying shares of Ripple.” As a holder of XRP, you’re not entitled to dividends or equity. Even though Ripple owns more than half of XRP, it doesn’t give them control of the currency, he said, comparing it to the dynamic between Saudi Arabia and oil. “Saudi Arabia owns a lot of oil, but they do not have control of oil.” 
  3. Utility. “XRP is solving a problem. There’s no security in a utility,” he said, adding that he “looks forward to the SEC clarifying some things.

Crypto Exchanges

Garlinghouse was diplomatic about cryptocurrency exchanges like Coinbase that have yet to add XRP to their trading platforms. In recent weeks, Coinbase announced that it would begin supporting Ethereum Classic (ETC), while many in the cryptocurrency community have been wondering when the U.S.-based exchange will add support for XRP.

“XRP is listed on 75 exchanges around the world. It has expanding liquidity … The consumer speculator is not our target market. Our target market is financial institutions that we can solve big problems for,” Garlinghouse noted.

Crypto Rivalry?

Yesterday Ethereum Co-Founder and ConsenSys Founder Joseph Lubin, who was included among the panelists, took a swipe at rival coin XRP, suggesting it is “massively overvalued.” The same question was posed to Garlinghouse during his session about Lubin’s ConsenSys. Garlinghouse took the high road, saying he was “excited” about them, adding they’re “underrated.”

XRP is the third largest cryptocurrency, boasting a market cap of $21 billion compared to more than $53 billion for Ethereum and $115 billion for bitcoin. Garlinghouse’s outlook is that at least one bank will be using it by year-end.

Featured image courtesy of Shutterstock.

Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

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4.5 stars on average, based on 16 rated postsGerelyn has been covering ICOs and the cryptocurrency market since mid-2017. She's also reported on fintech more broadly in addition to asset management, having previously specialized in institutional investing. She owns some BTC and ETH.




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Calm Prevails in Crypto World as Bitcoin Runs Up Against Resistance

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Cryptocurrencies resumed their rangebound trading Thursday, as bitcoin’s relief rally showed signs of stalling while Ethereum and the major altcoins were held to break-even.

Market Update

The combined value of all coins and tokens in circulation is $287 billion, virtually unchanged from the overnight hours.

Bitcoin touched a session high of $6,790.25 but was unable to extend its rally past $6,800. The bulls have been rejected at this level on at least three occasions since Tuesday, a sign the relief rally was losing steam.

The largest cryptocurrency by market cap bottomed around $6,133 on June 13. At the time, the short-term technical indicators supported a further breakdown in price, with $5,900 seen as the next likely target.

Ethereum prices were up a mere 1% Thursday to $534. ETH/USD values reached an earlier high of $542.74, which was not unlike the high from Tuesday.

The major altcoins ranked between nos. 3 and 10 by market cap were virtually unchanged compared with 24 hours ago.

Digital currency prices have shown remarkable progress in terms of stability, as total market values fluctuated within a $4 billion range through the overnight session. Twenty-four hour trade volumes have held just above $12 billion, according to CoinMarketCap.

Bithumb fell to the no. 9 spot based on total volume after the exchange shut down deposits and withdrawals in the wake of a $31 million cyber heist. The exchange has processed $181 million worth of cryptocurrency trades since early Wednesday, which is roughly half of the previous day’s turnover.

In Search of Direction

While cryptocurrencies have exhibited rare price stability over the past nine days, it is too premature to conclude that the bears have relinquished control of the market. The total market is down a whopping 38% from the April swing high and volumes have declined by more than half over that period.

With the exception of the recent attacks on South Korean exchanges, the latest crypto headlines have been mostly positive. If they can be summed up in one theme, it would likely be the growing institutional interest in cryptocurrency.

The San Francisco-based Coinbase exchange has been leading in that capacity by announcing the arrival of crypto custodial services. Goldman Sachs-backed Circle and BitGo are also in negotiation with regulators about launching similar services. Meanwhile, Wall Street custodians JPMorgan Chase & Co and Bank of New York Mellon Corp are reportedly working on custody services that could facilitate digital currency transactions.

While promising, these developments alone won’t be enough to generate the next crypto bull market. For institutional capital to be the driving force of the next major market uptrend, actual custodial services and not merely the promise of them must be deployed.

Disclaimer: The author owns bitcoin, Ethereum and other cryptocurrencies. He holds investment positions in the coins, but does not engage in short-term or day-trading.

Featured image courtesy of Shutterstock.

Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

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4.6 stars on average, based on 462 rated postsSam Bourgi is Chief Editor to Hacked.com, where he specializes in cryptocurrency, economics and the broader financial markets. Sam has nearly eight years of progressive experience as an analyst, writer and financial market commentator where he has contributed to the world's foremost newscasts.




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