If you thought of owning some Bitcoin, maybe you should also consider a few other cryptos too

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*This content is brought to you by Jaltech

By Jonty Sacks*

There’s a reason why Bitcoin and Ethereum together account for about half the total market capitalisation of the crypto market.

A recent poll by NBC News found just one in five Americans have invested in, traded or used cryptocurrency, which illustrates the mainstreaming of cryptos as an asset class. To be clear, not everyone has a favourable view of cryptos, given the perceived scope for fraud and illicit activities – not to mention their famed volatility (Bitcoin is down 28% over the last year).

Bitcoin is the gateway coin for most newcomers to cryptos. It may not be the most exciting, but it is likely to remain the royal standard against which all others are measured.

Bitcoin was conceived as private, digital money and store of wealth outside the control of any government or central bank. There will never be more than 21 million coins in issue, in effect countering the kind of reckless monetary expansion we have seen by central banks over the last 100 years.

For information about Jaltech’s Cryptocurrency Basket, click here.

The idea of private money is not a new one. In the nineteenth century, commercial banks issued their own units of currency and customers would back those that had a reputation for stability and safety. Banks that were reckless in their lending would go bust until the concept of central banks as a lender of last resort and underwriters of poor management came into effect at the start of the last century.

Bitcoin is the antidote to all this. Whether it succeeds in its self-assigned role will be subject to the bruises of time, and perhaps can only fairly be judged after 100 years or so. What we do know is that the alternative (fiat), as a store of wealth, has been a catastrophe. The US dollar has lost 95% of its purchasing power since the end of the Second World War, and the rand even more.

Our system of banking, commerce and money is begging for disruption.

Enter the Ethereum revolution

Bitcoin (BTC) was the first salvo in that disruption. Ethereum (ETH) was another.

First postulated by Vitalik Buterin in a 2013 white paper, Ethereum was perhaps even more ambitious in scale, aiming to adapt the blockchain technology first used by Bitcoin to host a decentralised platform that would allow developers to run applications designed to achieve a dizzying range of functions – from monetary transactions to investing, borrowing, lending, underwriting insurance and pretty much any commercial transaction you can think of. All of this is done using smart contracts, which are pieces of computer code that self-execute without human intervention or recourse in the event something goes wrong.

Ethereum is the name of the blockchain, and Ether (ETH) is the currency used to action transactions on the blockchain. Ethereum spawned a generation of other cryptocurrencies, many of which feature in the top 40 cryptocurrencies measured by market cap, some of them offshoots from Ethereum, but all of them seeking to exploit its perceived weaknesses, principally its ability to scale (you have to beat Visa card’s claimed standard of 20 000 transactions per second to get serious attention in this sphere), and Ethereum’s high “gas” or transaction fees. Ethereum is attempting to solve these issues with a number of technology upgrades known as Ethereum 2.0 which will be released in 2022.

Several so-called Ethereum-killers have since appeared on the scene – Polkadot (DOT), Solana (SOL) and Cardano (ADA) being the most prominent.

Solana

Solana has won plaudits from Bank of American, which earlier this year said it could become the “Visa of the digital asset ecosystem”. Since launching in 2020, it has processed well over 71 billion transactions and has blown Visa out of the water with a theoretical transaction rate of 65,000 transactions per second. Bear in mind that these transactions are settled in milliseconds, while Visa often takes three days or more to fully settle its card payments. Solana’s scalability ensures transactions remain less than $0.01 for both developers and users.

Solana now has a market cap of $24 billion, ranking sixth in the pantheon of crypto giants.

Polkadot

Ranking 16th by market cap is Polkadot, another serious competitor to both Solana and Ethereum. One of Polkadot’s founders is Dr Gavin Wood, who was a co-founder of Ethereum. It was his experience at Ethereum and his understanding of its shortcomings that prompted him to launch Polkadot, which set out to allow different blockchains to safely and easily communicate with each other. There’s a lot of fancy technology underlying this network, which has been described as a blockchain of blockchains. it is expected that Polkadot will be able to scale to over one million transactions per second, once new technology upgrades have been implemented.

It remains to be seen who wins this race to own the smart contract blockchain space which will redefine the way we invest and do business. Decentralised finance (DeFi) applications allow investors to lend, borrow, earn interest and transact outside the traditional banking system.

All of the above are included in the Jaltech Cryptocurrency Basket since these represent some of the most exciting stories in the fast-emerging crypto space.

  • Jonty Sacks – Partner at Jaltech

Jaltech offers everyday people effortless and convenient access to the cryptocurrency market.

One of Jaltech’s investments is its Cryptocurrency Baskets which is tailored for investors who are looking for an investment option that provides investors with exposure and diversification across protocols, digital currency and blockchain technology.

For information about Jaltech’s Cryptocurrency Basket, click here.

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