What Does The Future Looks Like for Bitcoin?

The Lightning Network

For most people, cryptocurrencies are synonymous with Bitcoin. After reaching an all-time high of over $20,000 in December 2017 it’s now trading around $7,000 – 8,000. What is the future for Bitcoin? Will it rise or will it fold? These are questions many crypto investors ask themselves on a daily basis.

History tells us that a first mover advantage doesn’t always help. Anyone remember Netscape or Ask Jeeves? Brands from the early years of The Internet that no one thinks of today. Is this how we will view Bitcoin 10 years from now or will it be considered the world currency?

Let’s look at what could take Bitcoin to the next level.

Bitcoin is the first generation of cryptocurrency, and it’s slow. The current transaction speed is 3 btc per second. In comparison, Litecoin can do around 56 transactions per second and Dash can do 48. There is also interesting to note that the Visa network can handle more than 3,600 transactions every second.

Transaction fees can also run quite high. We experienced that during the peak of the rally in December 2017. Transaction fees could run as high as $50 during the craziest days.

These problems must be solved and Bitcoin investors’ greatest hope right now is the so-called Lightning Network. This is a technology with the potential to solve both the speed and fee problems.

When sending a “Lightning” payment, two parties deposit the funds at one bitcoin address (a channel) in which they can exchange funds a limitless number of times.

Blockchain would work as an arbiter and there would be possible to do an unlimited number of transactions off-blockchain. If this technology works there could finally be practical to use Bitcoin for buying, let’s say, a cup of coffee. This marks a transformation into a real currency.

There are many question marks surrounding the Lightning Network. This is a technology that’s still under development. Technology always moves forward and sooner or later we will have a lightning network. But the time frame is very uncertain.

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RSK – Smart Contracts

Thanks to the RSK (rootstock) project smart contracts on Bitcoin could soon become a reality.

RSK is the first open-source smart contract platform. The system also rewards Bitcoin miners.

If this technology should work it could actually be a huge advantage for Bitcoin to get into smart contracts at a later stage. The reason is that the quality of Ethereum based altcoins generally speaking is very low. This market will clean itself up to a certain degree. And there will also be regulations sooner or later.

When the low-quality altcoins get weather out Ethereum’s image will take a hit. Bitcoin might be able to time these events and offer the market an alternative for smart contracts. With timing and a little bit of luck, this could be very good for Bitcoin and devastating for Ethereum.

Of course, no one can know for sure what will happen to Bitcoin or any other cryptocurrency. As an investor, you must, at least somewhat, diversify your investments in the crypto market.

Diversification doesn’t mean you should buy all the coins out there. Most of the altcoins that’s on the market today will probably not even exist a year from now. It is absolutely necessary that you do your research and stay updated.

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Hans Noren
Hans Norén is a staff writer for Block Telegraph. He covers cryptocurrencies mainly from an investment perspective. Norén has been an active investor in the stock market for over 25 years. He is also the author of several books and eBooks about investing.

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What Are the Key Differences Between Bitcoin and Ripple?

ripple

Key Statistics and Goals

Bitcoin was the first cryptocurrency and is still the most popular one, but Ripple is experiencing an increase in popularity. Although both are cryptocurrencies, Bitcoin and Ripple have many factors separating them, which are worthy of comparison. Bitcoin began in 2008 and Ripple was founded in 2012, and they each have a different purpose in their design.

To start off the comparison, look at some important statistics for each currency. At the time of writing, one bitcoin (BTC) was valued at $6,501.95, while one Ripple (XRP) was equal to $$0.281410 USD or 0.00004321 BTC. Bitcoin has a market cap of $122.6 billion USD, while Ripple has a market cap of $11 billion USD. This puts Ripple in the third-highest spot, while Bitcoin is the top-ranked cryptocurrency. The prices of Bitcoin and Ripple are dramatically different, but this clearly does not affect Ripple’s ability to be a crypto leader.

As mentioned, one of the major differences between the two cryptocurrencies is the main goal behind their development. Bitcoin was created to be used as a digital currency to make payments for services and goods. By contrast, Ripple was developed specifically for payment networks and banks to use for currency exchange, money transfers, and payment settlements. Essentially, the team behind Ripple wanted to make real-time direct asset transfers that would be more transparent, secure, and cheaper than the current methods.

This difference in the goals of Bitcoin and Ripple has also led to variations in how they are used. Bitcoin is used like any other currency since that is its primary goal. By contrast, the Ripple network essentially exchanges XRP for other currencies to complete transactions quickly. The Ripple network makes this possible without any intermediaries involved.

Ripple
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Image credit: Worldspectrum/Pexels

Governance Structures

Bitcoin is a decentralized cryptocurrency and open-source. For major decisions to be made, the community must agree. No one even knows who created Bitcoin since the developer used the codename “Satoshi Nakamoto” and has not revealed their identity. The need for consensus to make major changes to Bitcoin has led to soft forks. By contrast, Ripple has a more closed internal ledger, and a private company owns it. The consensus-seeking approach that the company uses is quicker than that of Bitcoin, but it is more centralized. Ripple has an amendment system that developers use to get a consensus before changing the network.

Fees and Transaction Times

Since two of the goals of Ripple are reducing fees and transaction times, it should come as no surprise that there is a difference in these factors for Ripple and Bitcoin. Bitcoin has proven itself unable to easily scale up to meet the growing demand, which has led to transaction fees of up to $27 and an average transaction time of 70 minutes. By contrast, Ripple uses off-ledger transactions that allow for settlement within just four seconds. Additionally, the fee for a Ripple transaction is just a fraction of a cent, and the XRP paid are destroyed, which increases the value of remaining Ripple.

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European Union Unlikely to Regulate Crypto Market Anytime Soon

Flag of the European Union, which is blue with a circle of yellow stars.

Finance Ministers Meeting

At a recent gathering of European Union (EU) finance ministers in Vienna, it became clear that there is unlikely to be any move to regulate at the EU level in the near future. The meeting came roughly 10 years after the collapse of Lehman Brothers on September 15th, 2008, one of a series of events that arguably led to the rise of Bitcoin and suggestions for alternative, more transparent, economic systems.

The finance ministers have re-affirmed the EU’s desire to not rush any cryptocurrency regulation before a thorough analysis has been made. The agreement is the latest indicator that EU looks favorably on blockchain technology and is so far employing a very reasonable approach to regulations.

Danube River in Vienna at night.
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The EU has already launched several blockchain initiatives. Apart from investment into blockchain-related research, the commission set up the EU Blockchain Observatory and Forum. This body, led by veteran blockchain company Consensys, has the mission of monitoring blockchain initiatives in Europe, acting as a body of knowledge, and advising the EU on its potential role in Europe. As an example of this, the EU Blockchain Observatory is currently analyzing the impact of the recently-launched EU General Data Protection Regulation (GDPR) on the blockchain industry.

Other investments made by the EU in blockchain technology include the Horizon 2020 Prize “Blockchains for Social Good,” which offers a total of 5 million Euros for blockchain solutions aimed at solving social problems.

These investments, coupled with the finance ministers’ recent announcement, are encouraging for the blockchain industry. While the cautious approach to regulation is very sensible, there have also been calls by some industries to remove regulatory uncertainty. Many companies feel that the current hands-off policy leaves them stuck with outdated regulations and ambiguity about the legality and compliance of their business models.

Small Member States Lead the Way

In the absence of EU-wide policy decisions, some smaller EU member states have taken the matter into their own hands and have created crypto-friendly regulations in their jurisdictions, aimed at attracting blockchain companies. Gibraltar, Estonia, and Malta are examples of countries which have managed to create ecosystems ideal for blockchain companies. Contrary to popular belief, the regulations created by these countries are not particularly lenient or characterized by authorities turning a blind eye. Instead, they provide transparency, security, and up-to-date legal frameworks aimed at protecting consumers while also stimulating industry.

It remains to be seen if the EU maintains its hands-off approach, follows the examples set by its smaller member states, or eventually imposes more restrictive EU-wide regulations. For now, the blockchain industry can take comfort in the fact that the EU is actually trying to understand the technology and its potential before regulating it.

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