Ethereum, Litecoin, Ripple
and Bitcoin are few most trending cryptocurrencies in the market that drives
innovation throughout many industries. The
objective is to analyze all major cryptocurrencies and develop a strategy for
investment which can be held for five years without any additional trading.
develop an ideal investment strategy, I have analyzed major currencies like
Bitcoin, Ethereum and Ripple. After studying the qualitative similarities and
differences between each currency, I studied the past performance of each currency
and extend those numbers to predict the five-year forecast.
Since economies have evolved from a barter
system, money has been a primary source of exchange. Due to this, many
individuals have tried to systems that allow for rational ways to exchange
value. In order to keep goods and service comparable, a Greek philosopher
Aristotle came up with four criteria that help to dictate what is considered to
be ‘good money’1
1. The physical feature of money must be so that it
should not fade, vanish or change over the duration of time.
2. It must have a relative weight and size according
to its value.
3. It must be easy to gather or separate without
changing its core characteristics.
4. Its value should be intrinsic
So the original preferred medium of
exchange was gold as it was consisting all the factors above. However, as the
economies developed, the demand of money was increased and that’s where the
governments were forced to issue some more accessible and controlled currency.
This is where fait currency was introduced. This medium came with its own
problems even though it was accepted globally.
get rid of the issue normal currency has, the cryptocurrency was introduced in
year 2009 which gave a grip to blockchain technology. A cryptocurrency is a digital or virtual
currency that uses cryptography for security 2.
The best part of cryptocurrency is that, that its difficult to duplicate
because of this security feature. Cryptocurrency is designed in a way that allows to decentralize digital
ledgers where single authority is not able to effect transactions, providing it theoretically armor to
government interference or manipulation. In these days there are four majorly
adopted cryptocurrencies i.e., Litecoin, Ripple, Bitcoin and Ethereum.
private cryptocurrencies have been created following the footsteps of Bitcoin, but
Bitcoin is the most successful so far. During the year of 2017, Bitcoin has
created a lot of media buzz and it now has a market capital of over 300
Should one Invest?
the cryptocurrency is getting popular day by day, there are many individuals
who what to be an investor in crypto. To invest in new technology, there are
multiple factors that needs to be evaluated. In order to make a responsible
decision, one must need to understand where the technology is originated from.
paper aims to assess the price of Bitcoin and Ethereum can be in the future.
And weather one should invest in it or not.
diagram above indicates the way Bitcoin functions.
discussed before, Bitcoin is the most popular currency used in the market right
now. The current market cap of Bitcoin is 322 billion3.
Bitcoin was developed by a Japanese group or individual named Satoshi
Nakamoto (their/his identity is still not confirmed), which is a strictly
peer-to-peer electronic payment system and can solve double spending issue. It
eliminates the fraud possibility, increase efficiencies, and provides objective
proof-of-work to guarantee any transaction’s validity and security. Now a
day, the economies that have an access to mobile data but deficits in
traditional financial infrastructure has a high acceptance of Bitcoin.
Moreover, economies with high inflation rate can be beneficial with this tool.
above figure shows how Ethereum works.
on the other hand was launched in 2015, a well established open-ended currency
that has the ability to enable SmartContracts within its code4.
It is not only a currency platform but also a programming language. The market
capital of Ethereum is just 68 billion compared to 322 billion5 of
Bitcoin. There are two main purpose of Ethereum; one is trading it like other
cryptocurrency and second is use Ethereum to run applications and also demolish
diagram above helps us understand how Ripple works in cross-border payments
standing on the third position, is used in market for international
transactions for big scale financial firms. In this day and age, banks face a
high cost of international transactions and they also see high volume but low
value transactions. These kind of transactions are very expensive and has no
profit. This can be solved by the technology Ripple offers. It already has been
conducting trials with over 100 financial institutions including American
a great run, we are looking at $19,500 as of Dec 16th 2017. If Bitcoin
strengthens even during its lifetime height, the chances are, it can resume its
uptrend to its target of $24,000. On
the other side, if it doesn’t stay above the highs, there are chances that it
can encourage the bears, who can push the virtual currency towards the 20-day
At this level, there is no attractive setup that one can find for Bitcoin’s uptrend.
Therefore, any trade on this is not recommended as of now.
on the other hand already has broken its target of $600. It has a very tired doji
candlestick pattern. It can be estimated that the currency can stay up to it
$600 mark which is lower than its current market price.
standing on the third, has really created a buzz after skyrocketing from 12
cents to 89 cents. It has already crossed its targeted minimum of 86 cents, and
now it can be seen that the support can only be drawn after it stops raising.
we can notice, all three currencies are based on different purpose. None of
them can be compared directly by their activities. As we can see, the least
known coin amongst all three is Ripple. It can be noticed that Ripple is still
very uncommon between investor and most importantly, it is not traded on some
major trading platforms like Coinbase. Therefore, it can be said that Ripple
sill doesn’t have access to many investors. To get a better Return on Investment
(ROI) its better to buy a coin that’s undervalued and not entered in mainstream.
Also the best holding time frame can be between 3-5 years to get really good
Which Markets Can Consider it?
markets across the globe where cryptocurrency can be used, can include the less
developed countries where the network of traditional banks does not exist but
they do have a high smartphone usage. This can include countries like India,
Kenya, Nigeria etc. where most of the GDP is operated by digital currency. Even
those countries who does not have a well organized network of digital currency
can make efforts to move their economy towards cashless currency, as India did
Overall, these kind of emerging markets can be a great potential for cryptocurrencies
Which Financial Institutions Can Consider it?
the years, many financial institutions have shown interest to use blockchain technologies
to enhance operational efficiencies and explore untouched markets. Many large
institutions have started working with Ripple to make international
transections easier and more efficient. Currencies like Bitcoin and Ethereum are
less likely to be adopted by major financial institutions but Ripple has a
strong reason of being adopted.
Rules and Regulations
crypto currencies have been benefitted buy a wide acceptance in western world.
The are still many countries that are unwilling to accept it and on of them is
China. After banning the Bitcoin in China, there was a great depression on
Bitcoin prices all across the globe, which reminded investors how critical it
is to have a global acceptance of these currencies. Deregulation of these
currency can effect all three currencies to different degrees. Bitcoin can be
treated as currency, which would see a great value increase due to
deregulation. One the other hand Ethereum would see a greater value after the
widespread adoption and decrease in limitations. A larger acceptance of Ethereum
can also increase the demand of smart contracts that only Ethereum offers.
these days, we do used the fait money that is controlled and changed by the
local government, whereas cryptocurrency is a decentralized currency, it doesn’t
have any value in the background nor it is regulated by a specific law, which
makes crypto currency a lot riskier than fait money. However, with the on going
trend and revolution, one can say that there are multiple factors that needs to
be considered before investing in cryptocurrency. Throughout the research and studying
analysis, it can be seen that the cryptocurrencies have a lot of potential in the
five-year time period. Currencies that are less discovered and less known gives
a higher chance a good ROI compared to Bitcoin and Ethereum.