The cryptocurrency sector is growing by leaps and bounds. Coinmarketcap.com currently has 1583 cryptocurrencies listed on its website. And new cryptocurrencies with their associated blockchain technologies are being released on a regular basis.
The questions that arise from these two simple facts are:
- Why are there so many different digital currencies?
- What is the aim, function, and purpose of all of these currencies?
- As a CFD trader, how do I know which cryptocurrencies are the best to trade on, outside of Bitcoin, that is?
The answers to these questions will provide a clearing understanding of the importance of the digital currency sector, and its ability to drive change in the global financial and retail industries. Finally, we’ll cite a case study comparing Ethereum and Ethereum Classic to determine which coin is better to trade on.
Digital currencies: Why?
The simple answer to this question is: “Why not?”
It’s important to remember that a digital currency is not solely developed for its coin. It’s the value that the combination of the coin and associated blockchain technology that drives the development of new cryptocurrencies.
The cryptocurrency development life cycle is also reasonably quick when compared to other technological developments such as Information Technology hardware. Additionally, because, blockchain is open source technology, it’s straightforward to build a new digital currency on top of the existing blockchain infrastructure. Incidentally, most of the ICOs (Initial Coin Offering) and Tech Coins are developed on top of existing blockchains like Ethereum.
Finally, the fact that there are so many digital currencies at the moment doesn’t mean that they will all survive. It’s as the adage says: “It’s the survival of the fittest!” Many of these new virtual currencies will fade away, while others will survive. The reason for survival or not is entirely dependent on whether the coin and linked blockchain technology gains traction in the marketplace or not.
Cryptocurrencies: Their aim, purpose, and function
According to the bitcoinexchangeguide.com, “the fascinating world of Bitcoin, cryptocurrency and blockchain has birthed an entirely new era of money, value and its organic purpose.”
In other words, the cryptocurrency industry’s sole aim is to disrupt the function and purpose of the global economy across all sectors as they stand today. Blockchain technology is currently being leveraged to revolutionise industries like finance (banking), retail, payments, data storage, privacy, security, health, and social networks.
Digital Currencies: Ethereum and Ethereum Classic: A case study
At the outset, it is important to note that not all the cryptocurrencies are available as CFD trading instruments. Most online trading brokers like Jones Mutual only offer traders the option of trading on the primary cryptocurrencies like Bitcoin, Bitcoin Cash, Ethereum, and Ethereum Classic.
Let’s consider the question in our case study: Is it better to trade on Ethereum or Ethereum Classic? As mentioned above, we cannot look at all the different digital currencies to determine which is better to trade on or not. Therefore, we are using Ethereum Classic and Ethereum as a case study. Furthermore, the conclusions drawn from this case study can be carried across to other cryptocurrencies that have similar names such as Bitcoin and Bitcoin Cash.
Before we look at our case study, let’s look at a quick history of the split between Ethereum Classic and Ethereum:
Essentially, Ethereum Classic was developed as a result of a soft fork from the original Ethereum ecosystem. Succinctly stated, this soft fork was as a result of the DAO (Decentralized Autonomous Organization) hack. The immutable blockchain purists forked Ethereum Classic as the original Ethereum while the “new” Ethereum works on a brand new blockchain, and as coincentral.com notes, the bulk of miners, users, and investors of the original Ethereum use this new version of Ethereum.
Back to our case study:
There is not a simple or yes/no answer to the question of whether it is better to utilise the Ethereum trading instrument or the Ethereum Classic trading asset. It depends on what your trading goals are and what your personal ideologies and ethics are.
Crypto pundits are divided on which is better: Ethereum or Ethereum Classic. Some say “trade Ethereum, it is better,” while others insist that Ethereum Classic is preferable as a trading instrument. However, most agree that the choice between these two cryptocurrencies is “both an ethical and ideological one.” The decision does not have much to do with which cryptocurrency is better or has greater longevity than the other one.