Bitcoin's recent rise and fall has resulted in the cryptocurrency receiving a high level of scrutiny from both investors and the media. However, there are now hundreds of cryptocurrencies, which differ greatly in price and characteristics.
The one commonality is that they all use the blockchain system as their virtual ledgers. The blockchain is a method by which records can be kept without needing a central organiser, for example a financial institution.
While bitcoin remains the most dominant cryptocurrency, newer competitors are closing in, both in terms of market value and public awareness.
There are dozens of cryptocurrencies with market values of £1 billion or more, with the following currencies making up the "elite" at this stage.
Since it's launch in 2009, bitcoin has recorded an impressive growth in value, with a high level of volatility. The currency is limited to 21 million pieces and the currency is "mined" by cracking complex mathematical problems with brute computer power.
Etherium allows apps to run on it's network as well as functioning as a medium for the cryptocurrency named Ether. This decentralised network can be used for file storage for example. In addition, Ethereum supports "smart contracts" allowing transactions to ocur after specified conditions have been met.
Bitcoin cash is a development of Bitcoin, with an increased capacity for transactions due to the increased difficulty of mining when compared with Bitcoin.
Unlike the other currencies mentioned, ripple is centralised, with the currency controlled by a company. Transactions are instant, with fees taken from the currency itself.
LItecoin is intended to be a lower value than Bitcoin, acting in a complementary fashion to it. Litecoin is designed to allow for quicker transactions when compared with Bitcoin.
Be aware that the cryptocurrency market is unregulated with many instances of scams having occurred, necessitating extreme caution.
A sound financial plan eschews chasing short term gains in favour of long term, holistic planning, taking a reasonable amount of risk that is appropriate for the client and a sound overall strategy. Westminster Wealth Management can construct a plan that is right for you, without relying on fads or trends. Contact us today.
The value of investments and income from them may go down as well as up and you may not get back the original amount invested.
Information is based on our current understanding of taxation legislation and regulations which is subject to change.
The value of cryptocurrencies are very volatile and can change significantly daily.
Ethereum, Bitcoin Cash, Ripple and Litecoin: here are four of Bitcoin's closest rivals