Technology and Business in Cryptocurrency Assessments

Cryptocurrencies are more than just technology - they are also a business. Recognition of this fact can make the difference between huge profits and huge losses.

2017 was the year in which the cryptocurrency market exploded. A result of this has been the emergence of a large number of people who wished to make fortunes out of the unprecedented phenomena of Bitcoin and blockchain. 2018 seems to be no less dramatic: many of those who invested in cryptocurrencies are starting to get rid of them and are restructuring their investment portfolios, following on from the cryptocurrency crash last December. Some major players, however, see this as a chance to buy up Bitcoin or Ethereum cheaply, in anticipation of a price rise. The question of what exactly to do is undoubtedly one every investor asks.

Inexperienced investors often try to make money out of exchange rate fluctuations without any experience or strategy. Should the price go up they normally buy; should it fall they panic, without realizing that short-term fluctuations are a normal occurrence in any market.

At the moment, NordFX facilitates trading in six major digital currencies.

"One can certainly profit from short-term fluctuations" say NordFX analysts. "However, cryptocurrency traders will do much better if they replace spontaneous ‘casino’ moves in the exchange rate markets with well-reasoned actions based on assessments of long-term risks and opportunities."

At the moment, NordFX facilitates trading in six major digital currencies. These are Bitcoin, Ethereum, Litecoin, Dash, Ripple and Bitcoin Cash. In order to decide which of these is worth pursuing, it is helpful to consider the technological implications of each of these projects, as well as their potential real-world scope. Financing is also very important: its hypothetical scarcity and unreliability would almost certainly result in a lack of growth in any of these markets and in their eventual collapse.

These factors remain some of the most important in the pricing of these crypto assets in the medium and long term.

For example, Bitcoin rates are supported mainly through purchases by major companies and exchanges. Bitcoin Cash uses a similar model, financed by American "silicone" magnate Roger Keith Ver along with Chinese miners, if rumours are to be believed. Litecoin is similar in this respect.

Cryptocurrencies such as Ethereum form another group: they are financed by token sales and the retention of part of the currency in a fund. Concrete plans for further financing should the fund's reserves be exhausted are, however, unknown.

In this respect, the situation with the financing of Ripple - a very pertinent one in contemporary finance -looks more optimistic. Thus, the Spanish banking giant Banco Bilbao Vizcaya Argentaria (BBVA) has recently announced the possible use of Ripple technology in transactions between various countries in Europe and Latin America. Test money transfers have already been successful, with each transaction having been completed in a matter of seconds: this is a revolution for many countries in South America, where bank transfers still take 2-3 or even 4 days.

It should be noted that many other banks are opening up to Ripple. Since the beginning of the year, Western Union, Woori Bank, and Liechtenstein Bank Frick have announced a partnership with Ripple, whereby Ripple will be used in the South Korean banking system.  Tencent, a Chinese technology company, is currently prepared to invest $2 billion in Ripple technology.

Dash is another cryptocurrency. Financing this project started with a better plan than many others. Some of the new coins and commissions never go to miners. Instead, other aspects of project development are now considered to be a crucial investment in the future. Thus, masternode type contracts allow holders to draft new protocol-wide limitations

In real life, the prospects for using Dash, which positions itself as Digital Cash, are also clear. This becomes especially clear if a project requires developers to create a convenient multi-platform use that eliminates user errors when storing and transferring funds and allows you to use this cryptocurrency for paying for goods and services.

All of the above is neither a forecast nor a recommendation to buy or sell any particular cryptocurrency. The main idea is that, when deciding to buy or sell any of altcoins, e.g. on this Wednesday inclusive (and even Bitcoin itself), one should necessarily study both the project’s technological component and its financing, as well as business prospects. It is here, and not in panic rate jerks, that the most important thing for investors can be hidden.