Day trading crypto, jumping from one coin to another, can be both a strategic exercise or an entirely intuitive activity. Either way, this type of trading focuses almost entirely on the opportunities presented by volatility and needs little to no research.
But when it comes to long term investments, a decent study of the various cryptocurrencies is necessary - unlike with stocks, this type of fundamental analysis does not focus as much on the firm’s performance or the appraisal of financial statements. Rather, the investor needs to study the currency itself, where its value comes from, what the underlying technology is, and what its future prospects are in terms of utility.
Some coins, such as Bitcoin (BTC) and Litecoin (LTC), are more payment focused or serve as a store-of-value, whereas others, such as Ether (ETH) and BitShares (BTS) perform a specific function as part of a blockchain economy. In this post, we want to have a look at the latter.
BitShares and Ethereum are both blockchain platforms that enable users to build decentralised applications (dApps). However, whereas BitShares is primarily focused on financial use cases, Ethereum is more flexible allowing for a wide variety of use cases. Especially during the ICO boom, many entrepreneurs turned to Ethereum to launch blockchain apps - and issue a token of their own - without having to build their own blockchain platform.
Ethereum, which was created by Vitalik Buterin in 2013, allows users to build their own smart contracts. It was built with the intention to give users greater control over their own data and offer an alternative to dominant internet companies and services. Ethereum’s native currency is ETH, which is used to run dApps on the network. Practically, this means that the more dApps are built on top of Ethereum, and the more use cases are developed, the greater the demand is for ETH.
BitShares was created in 2014, by Dan Larimer, who also developed the Steem blockchain and EOS. From the outset, BitShares has focused on powering financial transactions as well as trade through its decentralised exchange (DEX). Technically, in terms of speed and efficiency, BitShares is superior to Ethereum, capable of handling up to 100,000 tx/s, as opposed Ethereum’s 15 tx/s - although plans are in place to change these figures.
Following Bitcoin, Ethereum is currently ranked second on CoinMarketCap, with a market cap just over $18 billion USD, and priced at $170 per coin. Primarily as a result of the ICO boom, back in 2017, on January 13, 2018, it reached its all-time high of $1,400 USD.
BitShares is currently ranked 59th, with a market cap of around $86 million USD, at a price of $0.03 cents. On the 2nd of January, 2018, it reached its all-time high of $0.90 cents
But in order to appraise these coins properly, we have to go beyond price, volume, and market cap. Block’tivity provides a helpful index here: in addition to monetary value, it takes into account the capabilities, activity, and overall potential of various blockchain platforms into account.
From the index, we can learn that Ethereum, which is ranked 6th, processes around 730,000 transactions per day, holds a record of 1,3 million transactions per day, and currently operates at around 55% of its total capacity. BitShares, ranked 25th, has processed 600,000 transactions per day on average over the last 7 days, holds a staggering record of 6 million transactions per day, and is currently operating below 0.1% of its total capacity.
We have built our system on top of BitShares, not only for performance reasons but also because the blockchain and DEX allows us to create stablecoins for any of the world’s local currencies. These coins are created by locking BTS (or BitUSD) up in a smart contract as collateral. The stablecoins supported by us include stable.PHP, sparkdex.HKD, BitUSD, and BitEUR.
Stablecoins effectively mirror the forex market except that there is no need to trade across currencies through brokers and traders are not subject to the same exchange rates.
