Challenging practical features of Bitcoin by the main altcoins
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Challenging practical features of Bitcoin by the main altcoins Andrew Spurr1 · Marcel Ausloos1,2,3 Accepted: 14 October 2020 © The Author(s) 2020
Abstract We study the fundamental differences that separate: Litecoin; Bitcoin Gold; Bitcoin Cash; Ethereum; and Zcash from Bitcoin, and draw some analysis to how these features are appreciated by the market, to ultimately make an inference as to how future successful cryptocurrencies may be invented and behave. We use Google Trend data, as well as price, volume and market capitalization data sourced from coinmarketcap.com to support this analysis. We find that Litecoin’s shorter block times offer benefits in commerce, but drawbacks in the mining process through orphaned blocks. Zcash holds a niche use for anonymous transactions, benefitting areas of the world lacking in economic freedom. Bitcoin Cash suffers from centralization in the mining process, while the greater decentralization of Bitcoin Gold has generally left it to stagnate. Ether’s greater functionality offers the greatest threat to Bitcoin’s dominance in the market. A coin that incorporates several of these features can be technically better than Bitcoin, but the first-to-market advantage of Bitcoin should keep its dominant position in the market. Keywords Cryptocurrencies · Bitcoin · Blockchain · Altcoins · Investor attention · Google search volume index · Centralization
1 Introduction Much of the cryptocurrency market is focused on the supremacy of coins themselves, with less focus on the technical aspects that are the underlying factors for this success. Our motivation for this paper is to focus on these technical aspects, since the development of new coins, and improvements on existing coins benefit from this type of research. Using “scholarly” methodology, we attempt to gauge how the market values such features. We thereby perform a qualitative analysis for a “better cryptocurrency * Marcel Ausloos [email protected]; [email protected]; [email protected] Andrew Spurr [email protected] 1
School of Business, University of Leicester, Brookfield, Leicester LE2 1RQ, UK
2
Department of Statistics and Econometrics, Bucharest University of Economic Studies, 6 Piata Romana, 1st district, 010374 Bucharest, Romania
3
GRAPES, Sart Tilman, B‑4031 Liege, Belgium
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choice”—although the final choice depends on the user’s own criteria, of course. Concluding this paper, we make predictions as to which existing features are likely to be successful as this market continues to develop. The cryptocurrency market has exploded in recent years, becoming an industry worth USD 470 bn (Coinmarketcap.com 2018). Bitcoin (BTC) was the first currency of its kind; other alternative cryptocurrencies, ‘altcoins’, have since been created in an attempt to improve upon the way that their transaction value is digitally sent and received. The key innovation that can be attributed to Bitcoin’s rapid success is the use of the blockchain technology, but this is challenged (Chatte
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