|
Have cryptocurrency and/or cryptoassets become a proper asset class in the financial world? It's hard to answer. But, sitting at the end of the first 1/5th fo the 21st Century, it seems like crypto is on its way to becoming a real asset class if it's not already there.
There isn't some special or sacred list in finance houses in London's financial district or on Wall St. in NYC that has a list of all asset classes - it doesn't work that way. What's considered a proper asset class and what's regarded as an alternative asset class (and further distinctions at various levels of granularity) is more based on collective consensus. Common consensus may make sense, but whose consensus are we talking about. Generally speaking, whether a financial instrument is considered a proper primary asset class (like stocks, bonds, and cash) is determined by the conglomeration of the following people's/org's opinions:
It's the interplay between individuals in each of the above categories that determine whether an asset class is going to be considered a core/primary asset class in the general conception. Another critical thing to think about is the size of the crypto market. The market cap of all cryptos can be viewed against the market cap of individuals asset classes and the entire finance industry as a whole. Questions like the following might be asked to understand better how big the overall crypto market is relative to all other finance-related markets:
Although there's no hard and fast way to determine whether anything is a core asset class definitely, crypto seems on its way to getting there. It seems likely that one day, gold will remain an alternative asset, but crypto will be a core part of most people's long term investing and retirement portfolios. One day, financial advisers may even find it imprudent to not include crypto as part of a proper diversified investing strategy.
0 Comments
Bitcoin cash is a cryptocurrency created in August 2017, arising from a fork of Bitcoin, the classic/original cryptocurrency. The most significant difference between Bitcoin and Bitcoin Cash has to do with the size of blocks on the blockchain.
By increasing the block size from 1MB up to 8MB, Bitcoin Cash allows many more transactions to be processed in one block. The idea is to process larger transaction volumes faster and for lower fees. Bitcoin Cash offers lower fees and a purportedly, more reliable transaction rate than Bitcoin. In terms of development, Bitcoin Cash and Bitcoin share a majority of code. Having so much code in common makes developing software or altering existing software to support Bitcoin Cash quite simple. Bitcoin Cash differs from Bitcoin Classic in that it increases the block size from 1 MB to 8 MB. Bitcoin Cash attempts to increase the number of transactions that can be processed in a given interval of time. Bitcoin Cash supporters hope that this change will allow Bitcoin Cash to compete with the volume of transactions that PayPal and Visa can handle by increasing the size of blocks. Since the issue of scalability tends to be at the forefront of cryptocurrency debates, developers have made increasing block size and improving transaction processing speeds their top focus areas. Despite the many vocal Bitcoin Cash advocates, as of early 2019, Bitcoin cash is used in exchanges at far lower rates than Bitcoin. In fact, with so little traffic that as of yet in the Bitcoin Cash network, the block size increase hasn't been necessary to process transactions more quickly than Bitcoin. Since the beginning, there have been questions surrounding bitcoin's ability to scale effectively. Bitcoin is a cryptocurrency that exists within a decentralized network of computers all over the world. Payment transactions are verified by majority rule, not by an individual actor. The problem with this technology is that it's slow, especially in comparison to banks that deal with credit card transactions. For example, Visa processes 150 million transactions per day, averaging roughly 1,700 transactions per second. The company's capability far surpasses that, standing at aproximately 24,000 transactions per second. How many transactions can the bitcoin network process per second? Seven. Transactions take about 10 minutes to process. As the network of bitcoin users grows, waiting times will become longer since there are more transactions to handle without a change in the underlying technology that processes them. Ongoing debates around bitcoin's technology have graviated around this central problem of scaling and increasing the speed of the transaction verification process. 2017 was a tremendous year ever for Bitcoin and the cryptocurrency and digital asset world at large. The alpha dog cryptocurrency leading the entire cryptoasset industry had a spectacular run from around $1000 per BTC at the start of 2017 to almost $20,000 per BTC at the end of 2017 - all this despite trial and tribulations throughout the year including a Chinese ban on cryptocurrency and digital currency mining and a denial by the Securities and Exchange Commision (SEC) of a Bitcoin exchange-traded fund (ETF). There was another trial/tribulation for Bitcoin in 2017, however. Despite its unprecedented surge, Bitcoin was (and still is) plagued with key problems that hinder its usability in a truly widespread manner as originally intended for this cryptocurrency - these problems might affect Bitcoin's future as an alternative currency to fiat currency and the current traditional banking and financial system. In August 2017, acting out of growing fear that Bitcoin would one day become too archaic and lose relevance in the cryptocurrency and digital currency industry, a group of Bitcoin developers split from the original cryptocurrency and created Bitcoin Cash in a process/procedure known as a fork. First, what is a fork? A fork in the cryptocurrency world can be simply explained as the splitting of any cryptocurrency into two or more independent branches but which all share the same roots. A fork is said to happen when the core developers of any particular cryptocurrency or digital asset disagree on the future operations of the blockchain underlying that digital asset and, as such, decide to go separate ways. When a fork happens, the newer cryptoasset does not start from scratch from block zero or a genesis block but continues on from the point in the original blockchain when the split occurred. This means that all transactions and amounts of cryptocurrencies held by users on the old cryptoasset remain valid, but any future transactions are conducted independently of the original or parent cryptocurrency. Bitcoin vs. Bitcoin Cash The main point of contention that led to the split in the core Bitcoin development community was the slow transaction processing speed that Bitcoin was dealing with. This, coupled with very high transaction fees that were born out of the very low number of transactions the Bitcoin blockchain could support at any given period of time, made some in the core bitcoin development community desire a change. Bitcoin’s block size is pegged at just 1MB but was designed to be increased at a later date by the creator of the cryptocurrency, Satoshi Nakamoto, who (if this is, in fact, a single individual) was never heard from after 2010, but the upgrade was never carried out by the developers who have since taken over control. With the huge adoption of Bitcoin, whose blockchain could only carry out about 250,000 transactions every 24 hours, a lot of backlogs began piling up which meant that miners received larger and larger fees for mining (eg. validating transaction on the Bitcoin blockchain). This is the problem that Bitcoin Cash attempts to solve - with an increased block size of 8MB, transactions can be verified at a very much faster rate on-chain, which then translates into cheaper transaction fees. The Future of Bitcoin Cash Bitcoin Cash markets itself as the true image of what the Bitcoin founder Satoshi Nakamoto had in mind - it's not attempting to be some sort of alternative version of Bitcoin, but attempt to be regarded as the true Bitcoin itself. The core Bitcoin development team obviously disagree with this contention. from which the core Bitcoin has deviated. With time, the Bitcoin Cash development team hopes that this new cryptocurrency will become the number one cryptocurrency in the industry and be regarded as the one true Bitcoin.
|
Archives
January 2020
Categories
All
|
RSS Feed