Cryptocurrencies, Bitcoin, and blockchain are also considered to be a significant part of the evolving FinTech. Although the focus of the research conducted in the diameter of FinTech, from the years of to , was on the business models and mobile payments, researchers were putting in more effort into studying the blockchain and bitcoins from the year and onwards Liu et al.
While many researchers focused their research on the positives of the cryptocurrencies and blockchains, some suggested moderating the expectations regarding their benefits to the society, and the potential value that they might possess, along with the high potential of illicit use anywhere along the way Corbet et al.
Furthermore, it is not just the technology behind the cryptocurrencies and the digital currencies that is disruptive for the financial systems. The leading cryptocurrency Bitcoin, and the blockchain technology, had given way to 30 percent cumulated average abnormal returns when the companies changed their names to include the buzzwords that were related to cryptocurrencies Sharma et al.
Cryptocurrencies and blockchain technologies are shaping the financial systems, and are a significant part of the ongoing global financial innovation. Khraisha and Arthur defined financial innovation as a process that is carried out by any institution involving the creation and adoption of new products and platforms. The latest products and platforms enable technologies to introduce innovative ways in which financial activities can be carried out.
They further suggested that blockchain and PayPal are financial innovations that have been introduced by non-financial institutions. Bianchetti et al. These innovations included the technology behind the blockchain or ledgers and the decentralized ways of governance.
Many authors have argued that the blockchain technology that works behind the cryptocurrencies is a potential breakthrough in financial innovation Glaser and Bezzenberger, ; Su et al. In addition to financial innovation, blockchain technologies and cryptocurrencies also help in developing financial inclusion. Financial inclusion is a process that guarantees availability, ease of access, and usage of formal financial systems, for all the members of a particular economy, Moreover, it also entails the use of financial services Allen et al.
Rodima-Taylor and Grimes Rodima-Taylor and Grimes, argued that remittances through cryptocurrencies and mobile transfers could facilitate a shift in paradigm in financial inclusion and locally innovative ecosystems. They also suggest that digital financial inclusion would be likely to provide solutions to a significant chunk of the unbanked people so that they can effectively communicate with the formal financial systems. It may, therefore, be argued that the digitalization of financial systems, through financial innovation in the form of blockchain and cryptocurrencies, provides financial inclusiveness to the marginal components of the society.
In the extant literature, various authors have discussed the effects of financial innovation on the portfolio risk diversification. The financial innovations have not only brought down the costs associated with the traditional financial systems, but have also provided a broader range of technologically sophisticated, and innovative products into the market.
Allen and Gale Franklin and Douglas, also had a traditional point of view, wherein they believe that the financial innovations facilitate the risk minimization of the portfolios, by providing better diversification features. In contrast, Simsek a , b argued that due to the speculative trading, innovative instruments, increase the riskiness of the portfolios.
With the rise in the prices, interest rates, and the attention is given to cryptocurrencies and other financial innovations during the Fourth industrial revolution, research on the prospects of diversification of the products is indeed the need of the hour. The classification of cryptocurrencies as currencies, financial assets, commodities, or other forms of a financial product, has raised a considerable amount of discussion, as well as criticism with researchers, who have varied opinions on this matter.
Empirical studies in the past have shown that uninformed users have approached the cryptocurrencies as an alternative form of an investment vehicle, instead of an alternative transactional vehicle Glaser et al. Studies show that Bitcoin does not correlate with traditional assets, such as stock and bonds, and is primarily used as a speculative investment, rather than a medium of exchange Baur et al. Some researchers argue that Bitcoin does not behave like a conventional currency, asset, or security.
However, it somewhat resembles a technology-driven product, a bubble event, or even an emerging asset class White et al. They argued that the magnitude of the long-term appreciation of Bitcoin is much higher than the paper currencies. They further discussed that the characteristics of the risk and return, and the inverse correlation with other currencies could make Bitcoin, a potentially viable portfolio investment. Researchers undertook further research, on the efficiency of the cryptocurrencies Tran and Leirvik, ; Urquhart, ; Hu et al.
The investments in cryptocurrencies saw a rise during the year when Bitcoin was brought into the limelight by an upsurge in its price. On the other hand, the experts were criticizing the speculative nature of these currencies. This emerging technological currency opened many avenues for researchers who were interested in the financial markets.
It was observed that while investing in a single cryptocurrency was considered to be a riskier deal, the fund managers and researchers explored the diversification through portfolio investment, which somewhat buffered the risk factor. They concluded that if Bitcoin is included in the portfolio, even if representing it in a relatively smaller proportion, it may significantly improve the risk and return profile of a well-diversified portfolio.
Platanakis et al. Brauneis and Mestel applied the Markowitz's mean-variance analysis, in order to test the risk and return benefits of a portfolio of the top cryptocurrencies, according to the market capitalization Brauneis and Mestel, They also provided a comparative analysis of the different portfolios, based on the data available from January to December The inclusion of Bitcoin, in a traditional hedging portfolio of gold, oil, and equities, reduces the risk of the portfolio by a considerable level.
Guesmi et al. The inclusion of Bitcoin, in a well-diversified portfolio which comprises of different asset classes, provides certain significant statistical benefits when it comes to diversification Symitsi and Chalvatzis, Symitsi and Chalvatzis provided an extensive analysis of the economic value of Bitcoin and suggested that the decrease in the portfolio risk comes from the low correlations between the assets and Bitcoin. Also, further contributing to the literature, Platanakis and Urquhart highlighted that, given the higher potential estimation error in a portfolio of cryptocurrencies, the portfolio theory might face significant difficulties Platanakis and Urquhart, Moreover, Trimborn et al.
Using the mean-variance optimization, and the risk-parity on a data of cryptocurrencies, spanning from January to December , Petukhina et al. Additionally, in their paper, Kajtazi and Moro considered three different geographical locations, i. The results showed that Bitcoin might have played an active role in the diversification of existing, well-diversified portfolios, primarily by increasing the returns than in reducing the risk of the portfolios.
In addition to this, Borri also suggested that a well-diversified portfolio of cryptocurrencies provided better risk-adjusted, and conditional returns, as compared to the individual cryptocurrencies, when analyzing the data of four cryptocurrencies in the period spanning from January to April Table 1 provides a summary of the research conducted on the diversification of portfolios using different cryptocurrencies.
Whether cryptocurrency is considered to be a financial or speculative investment asset, or as an innovative technological product, the endowment fund managers have also shown interest in the investments made in cryptocurrency, primarily to diversify their portfolios. In October , several articles were published stating that a fund manager at Yale University, USA, had invested in a cryptocurrency fund 2.
Moreover, Virginia's police department not only invested in the endowment fund, but in the year , it also became the first institution in America to invest their pension funds in the blockchain-based technology 4. Hence, this paper suggests the diversification of the existing portfolios with multiple cryptocurrencies.
The existing portfolios are developed from the stocks from the general firms, stocks from technological companies, currency, and commodities. The selection of the stocks is based on their performance, and the top-performing stocks have been chosen for the analysis. The data used in the study spanned from November to November This study contributes to the existing literature in three ways. Firstly, the study investigates the diversification of multiple portfolios by adding multiple cryptocurrencies in the existing portfolios on a recent data set.
In the previous studies, either the portfolio of cryptocurrencies or the diversification using Bitcoin only is investigated. In this context, the only two studies that have been conducted by taking into account multiple cryptocurrencies are by Trimborn et al. Secondly, the study provides risk-return profiles, with and without the addition of cryptocurrencies in the existing portfolios, and also provides a comparison of the efficient frontier for the mean-variance analysis.
It is interesting to put forth that such an analysis has not been carried out previously for the portfolios, with several cryptocurrencies taken into account. Therefore, making this study the first of its kind, in this regard. Furthermore, we have also used various metrics for portfolio optimization. The analysis has revealed that the diversified portfolios that take into account cryptocurrencies provide better returns for a given level of risk when compared to the asset portfolios without any cryptocurrencies.
Furthermore, our results also show that including cryptocurrencies in an existing portfolio, significantly reduces the risk, and also increases the Sharpe ratio. In some cases, the returns provided by the diversified portfolios have been higher, while simultaneously reducing the risk.
We also observed that when the short sales of assets are allowed, the results for diversification improve significantly. Thirdly, our study also highlights that Ethereum provides better diversification results as compared to the results of diversification achieved through Bitcoin. In the literature, most studies have been conducted on the diversification achieved through Bitcoin only. Hence, our study encourages financial analysts, and investors, to explore cryptocurrencies other than Bitcoin, for their investment and diversification purposes.
The rest of the paper is organized as follows. Section 2 provides the data and methodologies used in the study. In Section 3 , the results of different portfolios, and their diversification using different cryptocurrencies are summarized. Discussion on the results and other findings are presented in Section 4. Section 5 concludes the paper. In this section, we provide the methodology that we take into account, for the data analysis, along with the data set.
It must also be known that the standard measures for portfolio optimization are being used in this particular study. Moreover, the study evaluates four different portfolios for the performance analysis with the addition of cryptocurrencies. The performance is measured according to three different portfolio matrics. The second metric used is the Markowitz Mean-Variance portfolio, which maximizes the expected return of the portfolio, for a given variance, in order to plot the efficient frontier for each of the asset classes, and also its diversification using the different cryptocurrencies.
The study explores the effects of cryptocurrencies on the portfolios of different asset classes. The cryptocurrencies used in the analysis, Bitcoin, Ethereum, Ripple, Bitcoin Cash, and Litecoin, are the top five cryptocurrencies according to the market cap. The data on the cryptocurrencies is collected from coinmarketcap.
The data on cryptocurrencies account for entries on each of the currencies, with a total of observations for all cryptocurrencies. The study also considers multiple portfolios and optimization techniques with the addition of cryptocurrencies in the existing portfolios on stocks, technological firm stocks, currencies, and commodities.
Furthermore, the data for each of the assets is taken for the same period and has been collected from Bloomberg. Table 2 provides a comprehensive list of all the assets and currencies used in this study. In addition to the data on cryptocurrencies and assets, the risk-free rates used in the study are the 1-year US Treasury note rates, recorded on November 09, Table 3 provides the descriptive statistics of the stocks, currencies, commodities, and cryptocurrencies that are used in the study.
It is observed that four out of the five cryptocurrencies taken into consideration, provide exceptional returns, where Ethereum provided an average annualized return of It is noteworthy that the innovative financial products are difficult to value. The evaluation is difficult in the case of cryptocurrencies, especially since they exhibit bubble-like features as well Frehen et al. A high level of kurtosis has also been observed in some of the cryptocurrencies. The highest kurtosis has been reported in XRP, at the value of However, the kurtosis of other cryptocurrencies is comparable with most technological or other company stocks.
For instance, the kurtosis for Bitcoin and Ethereum stands at a numerical value around 4, and for Apple, Google, Microsoft, and JP Morgan, the same stands in a similar range as well. The high values of kurtosis and skewness open further prospects of research in the cryptocurrencies and the investment universe. This table provides descriptive statistics mean, median, maximum, and minimum returns, standard deviation, volatility, skewness, and kurtosis of daily returns in USD of the assets, currencies, commodities, and cryptocurrencies used in the study over the period between November 10, , and November 09, In this subsection, we provide the optimization techniques that have been used in the study.
After collecting the data on cryptocurrencies and assets daily, we have calculated the log-returns by using the formula,. Once the returns and the standard deviations are calculated, we annualize the values for both. The performance of each portfolio is recorded for its expected return, standard deviation, and optimal portfolio using the Markowitz Mean-Variance analysis and the Sharpe ratio.
The expected returns and the standard deviations, as calculated above, provide the return and risk characteristics for individual assets daily. Moreover, these are the basis of calculating the portfolio returns, and the variance that is required in the Markowitz Mean-Variance optimization, and also in calculating the Sharpe ratios for each portfolio.
In , Markowitz established the theoretical contributions that played a critical role in various aspects of corporate finance and global financial economics. These contributions eventually won him a Nobel Prize later on and also helped establish the modern portfolio theory MPT. Markowitz also provided a conceptual framework to find the optimal weights of the assets in an investment portfolio.
These assets were those that provided a maximum expected portfolio return for a given level of risk in the portfolio. The dual problem is to find the optimal weights of the assets that provide a minimum level of risk for a given expected portfolio return. Before formally identifying the concerns regarding the optimization for the Markowitz Mean-Variance analysis, we calculated the return on a portfolio, E R , that consisted of m assets, as mentioned below:.
The variance of the portfolio is calculated as,. Hence, in this study, we have formulated the following version of the Markowitz Mean-Variance analysis. The second condition constrains the sum of the weights to be equal to 1, while the last condition enforces the long positions in all the assets.
We maximized the portfolio returns, subject to a given level of risk in the portfolio. The solution of the problem provides the optimal weights required for the maximum expected return of the portfolio, given a certain level of risk. Moreover, the maximum amount of the expected portfolio returns against a given level of risk provides an efficient frontier of the problem set.
In this paper, we have solved the problem mentioned above for varying levels of risks and plotted the efficient frontier of the portfolios considered in the study. In addition to this, we also optimize the Sharpe ratio for each of the portfolios in order to observe the effects of diversification through cryptocurrencies. The Sharpe ratio is defined as a measure of the excessive returns, over a risk-free rate of return per unit of the risk in the portfolio. It is calculated as,. The formula is a measure of risk-adjusted returns and had been developed by Sharpe The formula is used to calculate the performance of an individual asset, as well as of a portfolio.
It further helps in comparing the performance of two or more investments or portfolios. A Sharpe ratio that is greater than one is considered to be acceptable. Additionally, the higher the value of the Sharpe ratio, the more excessive returns on the risk-free rate, the portfolio, or the assets provide. In addition to providing an efficient frontier for different portfolios, we solve the optimization problem of maximizing the Sharpe Ratio, subject to the constraint on the weights in a portfolio, that is:.
The optimization problem is also solved by allowing short sales in the cryptocurrencies to achieve an optimized solution. The problem is solved for each portfolio in the settings, using the solver routine in Excel. The study also investigates the diversification of the existing asset portfolios by including cryptocurrencies considered for this research. Four asset portfolios are being considered: Stocks of Technological companies, Stocks of top-performing companies, Currency Exchange rates in dollars against five currencies, and three commodities.
In the next section, we provide the results on the efficient frontiers of the portfolios and the resulting portfolios after diversification using cryptocurrencies. This section presents the results of different asset portfolios, along with the diversification using cryptocurrencies. Cryptocurrencies tend to be riskier, and provide higher returns as compared to the other asset classes. Therefore, an investigation on diversifying different asset portfolios is required in order to implement the diversification strategies.
We argue that in the fourth industrial revolution, the financial markets are also evolving with the emergence of cryptocurrencies and blockchain technologies. Therefore, an asset portfolio must be examined for diversification opportunities, using the technologically advanced cryptocurrencies. Moreover, we have repeated the process by including cryptocurrencies in each of the portfolios and compared the performance of the portfolios for the return and risk profiles.
By understanding this trend, a positive relationship between the return and risk has been observed in the case of the cryptocurrency portfolio. This observation regarding the cryptocurrency portfolio also allows us to explore the diversification of the existing portfolios of different assets, by including cryptocurrencies. When dividing the returns into high and low price volatility regimes, Koutmos observed that a higher volatility regime is associated with higher mean returns.
However, he also observed that the returns in the high volatility regime do not always reward the investors for the higher levels of volatility, and are prone to tail risks when compared with the low volatility regimes. Hence, we have analyzed the diversification of the existing portfolios using multiple cryptocurrencies next in this section. Table 4 provides two portfolios that consisted solely of the five cryptocurrencies that are taken into account for this study.
The same table also provides the statistics for the optimized Sharpe ratio. To calculate the Sharpe ratio, we have used the annualized US Treasury note rates of 1. The maximum Sharpe ratio that was achieved had a value of 1. The results for the optimized Sharpe ratio for cryptocurrencies show that the performance is considered to be good.
We then analyzed the different asset portfolios considered in the study. For this, we initially develop a portfolio of five stocks that were taken from technological companies, namely Microsoft, Google, Apple Inc. The efficient frontier for the stocks only portfolio has been plotted in Fig. A diversified portfolio of the same assets, with the cryptocurrencies incorporated therein, is also plotted in the same figure.
It can be seen that for the same levels of risk, a diversified portfolio provides a higher level of returns. Table 5 provides the results for different portfolios. However, the results for the optimized Sharpe ratio portfolio show a slight improvement in the returns.
An approximate decrease of 0. Therefore, the diversification of portfolios in order to reduce risk and improve the Sharpe ratio is achieved when cryptocurrencies are incorporated into the portfolio. Interestingly, when selling is allowed in the assets of the portfolio, better results are achieved. The return of the diversified portfolio increased to It was further observed that when the selling is allowed in the underlying assets, there is a tendency to decrease the risk by manifold.
Hence, providing an improved and higher Sharpe ratio. Next, we study a portfolio of the top-performing assets, namely the assets of Berkshire Hathaway Inc. It was again observed that for the same level of risk, a diversified portfolio provides higher returns, and hence a better Sharpe ratio. Table 6 provides the results of the different portfolios against the mean, standard deviation, and the Sharpe ratio.
The same was observed for a similar portfolio of the stocks of technology companies as well. An increase in the Sharpe ratio is realized after the diversification with cryptocurrencies. The results of the portfolio diversification, in which the cryptocurrencies were used, on the next two asset classes, were quite intriguing. We applied the same methodology on a portfolio of five foreign currencies: Euros, Japanese Yen, Canadian dollar, British pounds, and the Australian dollar.
It was observed that the returns from the crypto-diversified portfolio were better than the returns from the portfolio consisting of the five currencies, for the same risk level. The results were then plotted in Fig. The Sharpe ratio, in this case, came out to be negative, since the returns on the portfolio were lower than the risk-free rates of 1. Efficient frontier of a currency exchange portfolio along with a cryptocurrency based diversified portfolio.
It is interesting to note that the portfolio diversification that is put into practice by optimizing the Sharpe ratio provides no better results when the cryptocurrencies are being included in the existing portfolio of currencies. Moreover, the short sales simultaneously decreased the volatility to 0. Hence, a well-diversified portfolio was achieved by including the riskier, yet rewarding cryptocurrencies. The final case study provides diversification of a commodity portfolio with the inclusion of cryptocurrencies.
The commodities used in the study are Copper, Gold, and Coffee. The efficient frontier representing the returns for the different levels of risk is plotted in Fig. The efficient frontier of the portfolio with the cryptocurrencies is slightly above by a few points. Table 8 shows that the optimized Sharpe ratio does not provide any better results, unless, selling of the entities is allowed in the portfolio.
It is also observed that the risk factor in the diversified portfolio can be reduced significantly, and a higher Sharpe ratio is achieved. Efficient frontier of a commodity portfolio along with a cryptocurrency based diversified portfolio. The study provides empirical results for the diversification of different asset portfolios by including cryptocurrencies. As discussed above, the results in the previous section were substantially conclusive.
It was observed, in all the cases presented above, that a cryptocurrency diversified portfolio provides better returns as compared to a portfolio of assets without cryptocurrencies , for the same level of risk, as measured by the standard deviation of the portfolios. The cryptocurrency diversified portfolios outperformed the traditional portfolios of not only the technology companies but also of the other stocks in both the long and the short asset portfolios.
Moreover, the diversification through cryptocurrencies also reduced the risk significantly while achieving higher returns. In cases where the selling of assets is allowed, even better results can be achieved by reducing the risk even further. For the portfolios that are consisted of currencies and commodities, the diversification with the inclusion of cryptocurrencies provided better results when the sale of assets was allowed.
The results were improved due to a reduction in the risk that existed in these portfolios. It is noteworthy that better results may be achieved when no additional conditions are applied to a commodity portfolio. Therefore, we can conclude that adding cryptocurrencies to the existing portfolios may significantly increase the returns, and provide a better diversification by reducing the risk of the portfolio.
From the empirical analysis, it was also observed that Ethereum provides better diversification as compared to Bitcoin. The previous studies have mostly focused on diversification of the traditional portfolio by using Bitcoin only Kajtazi and Moro, ; Guesmi et al. In our study, specifically from Table 9 , we observe that Ethereum provides a better diversification by significantly decreasing the portfolio risk as compared to Bitcoin, in most of the portfolios.
Two out of the four portfolios analyzed did not show any improvement when Bitcoin was included, despite allowing short-selling of the entities. The stock portfolio showed a slight improvement, and the commodity portfolio increased the returns, but also increased the risk of the overall portfolio, providing a lower value of the Sharpe ratio.
In comparison to this, Ethereum improved the diversification by either decreasing the risk in the portfolio or by significantly increasing the returns. The commodity portfolio diversification through Ethereum, however, did not improve the results. Our results in the previous section showed that a combination of cryptocurrencies provides better diversification as compared to the diversification using individual cryptocurrencies. Portfolio diversification with optimized Sharpe ratio using Bitcoin only and Ethereum only.
In the literature, many studies have investigated the performance of cryptocurrency inclusive portfolios Platanakis et al. Most of these studies have discussed the portfolio diversification using only Bitcoin as a benchmark. So much so, that we could only find two papers in which Trimborn et al. Trimborn et al. The focus of their paper had been on the low liquidity of the cryptocurrencies market.
Supporters of Ethereum say the blockchain will become more scalable, secure and sustainable after its Eth2 upgrade , slated for , during which the network will shift to a proof of stake, or PoS, model. Currently, Ethereum operates on a proof of work model, where miners must compete to solve complex puzzles in order to validate transactions. This model is frequently criticized for its environmental impact since it requires an extreme amount of computer power.
The shift to PoS will allow users to validate transactions according to how many coins they hold, rather than the energy-intensive mining rigs used now. Solana is seen as a competitor to the Ethereum blockchain. Its founder, Anatoly Yakovenko, designed Solana to support smart contracts, which are collections of code that carry out a set of instructions on the blockchain, and the creation of decentralized applications, or dapps. Not bad for a digital token that started out as a meme-inspired joke.
However, dogecoin's value fell in the latter half of the year. Sign up now: Get smarter about your money and career with our weekly newsletter.
Their counterweight, Luna, powers the the Terra platform and is used to mint more Terra stablecoins. Likewise, when its value falls compared to its base currency, this encourages users to burn their Terra stablecoins to mint more Luna. As adoption of the Terra platforms grows, so too does the value of Luna.
From Jan. Similar to Ethereum and Cardano, Avalanche provides blockchain software that can create and execute smart contracts powered by a native token in this case, AVAX. Since its launch in , Avalanche has rapidly grown, thanks in no small part to its comparatively low gas fees and fast transaction processing speeds. We've combed through the leading exchange offerings, and reams of data, to determine the best crypto exchanges.
Cryptocurrency is a form of currency that exists solely in digital form. Cryptocurrency can be used to pay for purchases online without going through an intermediary, such as a bank, or it can be held as an investment. While you can invest in cryptocurrencies, they differ a great deal from traditional investments, like stocks.
If that company goes bankrupt, you also may receive some compensation once its creditors have been paid from its liquidated assets. Cryptocurrency is treated as a capital asset, like stocks, rather than cash. This is the case even if you use your crypto to pay for a purchase. Multiple companies have proposed crypto ETFs, including Fidelity, but regulatory hurdles have slowed the launch of any consumer products. As of June , there are no ETFs available to average investors on the market.
You can buy cryptocurrencies through crypto exchanges , such as Coinbase , Kraken or Gemini. In addition, some brokerages, such as WeBull and Robinhood, also allow consumers to buy cryptocurrencies. Kat Tretina is a freelance writer based in Orlando, FL. She specializes in helping people finance their education and manage debt. John Schmidt is the Assistant Assigning Editor for investing and retirement. Before joining Forbes Advisor, John was a senior writer at Acorns and editor at market research group Corporate Insight.
Select Region. United States. United Kingdom. Kat Tretina, John Schmidt. Contributor, Editor. Editorial Note: We earn a commission from partner links on Forbes Advisor. Commissions do not affect our editors' opinions or evaluations. Featured Partner Offers. Learn More Via eToro's Website. Learn More On Uphold's Website. Learn More On Crypto. Best Crypto Exchanges We've combed through the leading exchange offerings, and reams of data, to determine the best crypto exchanges.
Learn More. There are several other key differences to keep in mind: Trading hours: Stocks are only traded during stock exchange hours, typically am to pm ET, Monday through Friday. Cryptocurrency markets never close, so you can trade 24 hours a day, seven days a week. Regulation: Stocks are regulated financial products, meaning a governing body verifies their credentials and their finances are matters of public record. By contrast, cryptocurrencies are not regulated investment vehicles, so you may not be aware of the inner dynamics of your crypto or the developers working on it.
Volatility: Both stocks and cryptocurrency involve risk; the money you invest can lose value. Cryptocurrency prices are more speculative—no one is quite sure of their value yet. Was this article helpful? Share your feedback. Send feedback to the editorial team. Rate this Article.
Thank You for your feedback! Unlike most of the cryptocurrencies aiming to escape banking institutions, XRP is popular with banks and aims to partner with them. Uniswap-v1 is an on-chain system of smart contracts on the Ethereum blockchain. Traders pay a basis-point fee on trades, which goes to liquidity providers. Uniswap-v2 is a new implementation based on the same formula, with several new highly desirable features.
Lumen XLM is the native cryptocurrency for Stellar, an open source blockchain payment system. The purpose of Stellar is to connect financial institutions via the blockchain and provide cheap transactions in developing markets. Stellar uses an agreement algorithm instead of a traditional mining network to validate transactions. Litecoin is a cryptocurrency launched in late by former Google and Coinbase engineer Charlie Lee.
To create Litecoin, Lee copied the Bitcoin codebase, increased the total supply, and changed the speed at which new blocks are added to the blockchain. Only approximately 84 million litecoins will ever be created, quadruple the total bitcoin supply.
Litecoin also creates new blocks every 2. Cardano has been pioneered by a team of academics and engineers, and is offering a unique approach to scaling and securing a blockchain network. Cardano is a non-profit platform with three separate bodies responsible for maintaining and developing the platform.
The cryptocurrency which operated in the Cardano network is called ADA and is, like others, can be used for direct value transfer. Polkadot is a flagship project by Web3 Foundation and is built to connect private and consortium chains, public and permissionless networks, oracles, and future technologies that are yet to be created.
Polkadot facilitates an internet where independent blockchains can exchange information and transactions in a trustless way via the Polkadot relay chain. Polkadot aims to make it easier to create and connect decentralized applications, services, and institutions. Chainlink is a tokenized oracle network that provides price and events data collected from on-chain and real-world sources.
The token incentivizes participants to provide and use this data. Chainlink does not operate its own blockchain. Instead, the token protocol is blockchain agnostic and can run on many different blockchains simultaneously. Ether is the cryptocurrency built on top of the open source Ethereum blockchain, which runs smart contracts.
The cryptocurrency acts as a fuel that allows smart contracts to run unlike bitcoin, which is meant to be a unit of currency on a peer-to-peer payment network. A majority of decentralized applications are based on Ethereum and the cryptocurrency accounts for the highest percentage of the total funds staked in the DeFi projects.
Bitcoin was the first cryptocurrency to successfully record transactions on a secure, decentralized blockchain-based network. Launched in early by its pseudonymous creator Satoshi Nakamoto, Bitcoin is the largest cryptocurrency measured by market capitalization and amount of data stored on its blockchain. The Bitcoin software is free and available online to anyone who wants to run a Bitcoin node and store their own copy of the Bitcoin blockchain.
Only approximately 21 million Bitcoins will ever be created. New coins are minted every 10 minutes by bitcoin miners who help to maintain the network by adding new transaction data to the blockchain. What makes HASH worth considering is the fact that it grants low or zero rates on crypto payments, cashback and other day-to-day advantages for crypto users and businesses. Hashbon aims to provide fully-fledged cryptocurrency payment services worldwide, being a secure, swift, reliable and easy-to-integrate payment solution which helps businesses to operate worldwide, decrease costs and reach new markets using cryptocurrency processing methods.
All the prices and market cap data are volatile and are updated as of February 19, Data and information majorly from Coindesk. Bitcoin is going mainstream again. I don't understand why people invest so much in this cryptocurrency, in my opinion, it is one of the riskiest cryptocurrencies of all. I make money on different cryptocurrencies, but I don't like risking, this is why I always plan and analyze a lot before making an investment.
The last investment I made was in a Chinese cryptocurrency, which is the only cryptocurrency approved by the government. In my opinion, in the near future, it will become valuable, because they have in plan to transform it into the national currency of the country. Good post.
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the sum of the market capitalization of the biggest cryptocurrencies households, Stix () argues that potential adopters of cryptocurrencies are. Ethereum was the most used blockchain in , according to Bloomberg News. In , it had the largest "following" of any altcoin, according to the New York. This is possible thanks to cryptocurrency exchanges, which provide a () summarizes the most interesting findings on the role of.