The cryptocurrency landscape today is a little bit of a maze. There seem to be countless cryptos available — thousands of them, by some estimates — and unless you’re particularly well versed in this technology, it can be difficult to tell what differentiates them.
To cut through some of the confusion, we decided to take a closer look at cryptocurrencies. We won’t simply list the most prominent ones, the way so many sites already have. Instead, we’re going to look into what makes a cryptocurrency successful, so that you might learn to gauge the constant new additions to this sector moving forward.
Newness
According to survey data released in 2018, 6 in 10 people in America have heard of bitcoin. Some similar surveys put the number closer to 8 in 10. So, why is this? Is it because bitcoin is the best cryptocurrency? There’s really no way to determine the answer to such a subjective question (though most crypto enthusiasts would say it’s not the best in terms of its technology and function). Is it because bitcoin is the most valuable cryptocurrency? Maybe, but that idea goes both ways; bitcoin’s value is also a result of the fact that it’s so well known.
The reality is that bitcoin is so well known at least in part because it was once so astonishingly new. Bitcoin was the first cryptocurrency — a brand new financial and technological concept, out of nowhere. No other cryptocurrency will ever carry that distinction, but it has remained at least somewhat true that cryptos offering brand new functions tend to get noticed. Newness matters.
Viability With Large Institutions
If bitcoin is the most widely known (and most valuable) cryptocurrency, ripple might be proving to be the most useful. This may seem like a strange statement, because at a glance, ripple is something of a paradox. Its value compared to other major cryptocurrencies is virtually nothing. Yet trader sentiment toward ripple is overwhelmingly positive, with far more people interested in buying it than selling it. It’s an odd situation, but it’s explained by ripple’s viability with major financial institutions.
Ripple is basically designed as a blockchain-based wealth transfer system that takes the hassle and fees out of international transactions. As such, it’s already becoming extraordinarily useful for major financial institutions around the world — with potentially many more to come. Now, whether or not ripple has already cornered this market remains to be seen. But its success has made clear that a cryptocurrency that appears viable with large institutions has a chance to catch on.
Smart Contract Potential
First popularized primarily through ethereum, smart contracts are automatically executed contracts drawn up on blockchain systems. You can think of them as transactions that are marked down, and which are carried out as soon as agreed-upon conditions are met. While the concept is still relatively new, it’s viewed as one that can affect everything from real estate deals to legal agreements.
What’s interesting about smart contracts though is that we’ve already seen that ethereum isn’t alone in helping to facilitate them. Additional cryptos like EOS, TRON, stellar, and more have also emerged as platforms for smart contract development. So, while this is still far from a guarantee, we’d suggest that a cryptocurrency with clear potential for handling simple smart contracts has a shot at success.
Well-Organized ICOs
It’s important to note also that function and uniqueness aside, cryptocurrencies also need well-organized ICOs in order to achieve success. An initial coin offering checklist we wrote up a couple years ago covers much of what goes into a successful launch, from raising capital to covering the legal side of things. Most of these things are never really seen or noticed by the public, but they lay the foundation for a strong cryptocurrency. Without careful attention to detail in the process leading up to the ICO, there’s little chance of success.
Even considering all of this, the truth is that there’s a fair amount of randomness in the crypto world. Sometimes a currency seems to catch on for no discernible reason, and sometimes a cryptocurrency that seems strong won’t catch on at all. Nevertheless, the information we’ve provided here should help you to better assess what works and what doesn’t.
