Will Stellar Lumens XLM overtake the Ethereum ETH
Cryptocurrencies in comparison
Why are differences between cryptocurrencies important to traders?
The differences between the cryptocurrencies are important to traders as they provide important clues as to how supply and demand for each coin can change over time. This, in turn, affects market prices and the way Bitcoins are traded.
Circulation quantity and upper limit
Bitcoin and Bitcoin Cash each have a cap of 21 million coins, while Litecoin have expanded the maximum supply to 84 million and 100 billion respectively.
These coins will be deflationary once all coins have been mined or released, while coins like ether - with no fixed limit - have the potential to be inflationary depending on how much is "burned" or lost.
Cryptocurrency Mining and Release Rates
The supply of coins changes over time as new coins are mined or released. Mining is the process of reviewing "blocks" of transactions and releasing new coins. Bitcoin is currently being mined at a rate of 12.5 new coins for each verified block, with the reward halving roughly every four years (the last bitcoins being mined around the year 2140).
Although Bitcoin has fewer uses than many of its newer competitors, Bitcoin's value has skyrocketed in recent years and remains the largest cryptocurrency by market capitalization. This suggests that reputation remains an important factor in valuing cryptocurrencies. Reporting in the press is likely to be an important factor here, as negative reports - for example after a so-called wallet hack - tend to have a negative impact on prices.
Decentralized fields of application
While Bitcoin, Bitcoin Cash and Litecoin are independent cryptocurrencies, Ether exists as part of larger networks with expanded fields of application. As these networks grow in popularity or are adopted by well-known and important companies, the demand for the underlying cryptocurrencies could increase.
Transaction speed and scalability
With the increasing acceptance of cryptocurrencies, transaction speeds and their ability to cope with high transaction volumes are likely to be increasingly scrutinized. Scalability could also be affected by the size and security of the blockchain, as these factors affect the profitability of mining, the speed of the associated network, and the willingness of users to buy and use coins. Traders should therefore watch out for software updates and forks to see how scaling technology evolves.
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