Bitcoin meets Darwin: The evolution of cryptocurrencies

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Original in German:
https://boerse.ard.de/boersenwissen/boersenwissen-fuer-fortgeschrittene/bitcoin-trifft-darwin-die-evolution-der-kryptowaehrungen100.html

 

Between Bitcoin and Ethereum, Bitcoin Cash, Dash & Co., a Darwinian struggle for survival has flared up. But which cryptocurrency is the “fittest”, what’s the stuff for survival?

In 1859, Darwin published his book “The Origin of Species” on evolutionary theory and natural selection. For his work, Darwin was paid in British pounds – the world’s leading currency.

150 years later, the pound, as well as the dollar, the yen and the euro, is challenged by a new species of currency: the cryptocurrencies. The Bitcoin is perhaps the best known – but by far not the only one. In just five years, more than 200 cryptocurrencies based on blockchain technology have emerged.

 

Bitcoin – the big Dominator

These are the ten most important ones:

Marktkapitalisierungen der Top-10-Kryptowährungen

The total market capitalization of cryptocurrencies is currently more than $ 200 billion. A year ago, it was just $ 10 billion. At that time, Bitcoin was the big dominator with a market value of $ 8 billion, the Altcoins made just $ 2 billion. Altcoins are cryptocurrencies, with the exception of Bitcoin.

Catching up the Altcoins

The value of just that Altcoins has literally exploded in the course of 2017:

Gesamtmarktkapitalisierung Kryptowährungen

Correspondingly, Bitcoin’s share of the total market capitalization of cryptocurrencies fell from 85 per cent in the spring of 2017 to less than 40 per cent in the summer – but Bitcoin was able to make up ground recently. The evolution of cryptocurrencies has entered a new phase.

 

»In the first market phase (January 2009 – March 2017) Bitcoin dominated. In the second phase, which started in April 2017, the Altcoins are pushing forward. They are now fighting for attention and market share. ” Robert Rethfeld, Bitcoin expert Wellenreiter-Invest

 

“Clever contracts” with Ethereum

In particular, Ethereum was particularly positive. At the beginning of 2017, Ethereum still had a niche existence, only to rise to number 2 behind Bitcoin within a few months.

In direct comparison, Ethererum can score with additional positive properties in addition to pure value retention. Namely, Ethereum is first and foremost not as a means of payment but as a platform for so-called “smart contracts”.

WHAT ARE SMART CONTRACTS?
These are internet-based contracts that are stored in programming language. After completion, neither of the two contractors has to worry more about the settlement. As soon as a previously defined contract condition occurs, the “smart contract” automatically fulfills the other part. This promises fast and cost-effective contracts with significantly more legal certainty.

The (survival) fight has not yet been decided

Even though Ethereum is just “in vogue”: As volatile as the courses are, the race for the top spots in the crypto currencies is still completely open. The current strength alone, ie the market capitalization, does not say anything about whether a cryptocurrency will survive the process of natural selection.

The decisive factor is: which cyber currency is the “fittest”, which is best adapted to the needs of the people?

Altcoins with very special advantages

The benefits of Bitcoin seem limited, Ethereum can score with additional applications such as “smart contracts”.

The Bitcoin alternatives Dash and Monero, on the other hand, offer more privacy. In turn, IOTA enables transactions directly from machine to machine, for example from car to car park cash register, and could play a major role in the “Internet of Things” in the future.

 

Vernetzte Alltagsgegenstände

When everyday items are networked, IOTA could come into play. | Source: colourbox.de, montage: boerse.ARD.de

 

What would Darwin do?

But which cryptocurrency has come to stay? Which will turn out to be an evolutionary dead end? Unfortunately, it is still too early for a definitive answer to these questions.

Whether Charles Darwin would pay today in Ethereum or Dash?

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