It may still be an obscure and weird world, but cryptocurrencies are gaining global credibility and have reached record valuations.
The most well known cryptocurrency is bitcoin, but there are many others.
According to Investopedia, these are the six most important cryptocurrencies – not including bitcoin, which the website says “inspired” the others, referring to them as “altcoins”:
Other cryptocurrencies include:
In total, there are said to be hundreds of cryptocurrencies, but the top dozen or so account for the majority of market capitalisation, according to an article on Nasdaq.
Bitcoin is said to be the first and most valuable. The latest price for a bitcoin is $2,225 on the CryptoCurrency Market. The total market value – or market capitalisation – of the 16 million bitcoins in circulation is $36 billion.
When all the market caps of all the cryptocurrencies on the CryptoCurrency Market are added together, the total amount reaches $64 billion.
That is approximately twice the value it was a year ago, leading to speculation about the possibility of a bubble forming.
But even if a bubble forms and then bursts, the technology which constitutes the basis of bitcoin is unlikely to disappear. Indeed it looks all set to gain wider acceptance.
Blockchain, the distributed ledger technology, is the “public record of digital handshakes” upon which bitcoin and other cryptocurrencies are built. There is noo central authority equivalent to a national central bank, which is one of the reasons the traditional financial organisations are finding it difficult to accommodate.
Nonetheless, blockchain is increasingly being talked about as the next wave of innovation in financial technology. Specifically, within a few years, blockchain-based cryptocurrencies may be accepted by most banks just the way a dollar or euro or any other “real world” currency is accepted.
The bank’s chief digital officer, Christoffer Hernæs, told local news service E24: “We recognize cryptocurrency as an investment class on an equal footing with other securities.”
There may be other banks which in some way have accepted bitcoin and other cryptocurrencies – if not in practice, then at least in principle as a possible additional currency.
The Bank of England recently decided against accepting blockchain and cryptocurrencies in its latest update of payment systems – which it calls real-time gross settlement systems – but said it may do so in the future.
In a report, the Bank of England says: “The Bank has decided not to build the renewed RTGS service on distributed ledger technology, in light of its findings that the technology is not yet sufficiently mature to provide the exceptionally high levels of robustness required for RTGS settlement.
“But the new generation of RTGS will be built with the flexibility needed to ensure it can interface with such technology as and when it is developed in the wider sterling markets.”
And it’s not just banks which are showing interest in blockchain. Reuters is reporting that Toyota and five other companies are partnering with MIT to explore the technology for the development of driverless cars.
Although it’s not clear if it will be used for financial transactions in the future, Toyota is already using blockchain to set insurance rates.
But mainly Toyota is thinking of using the information collected using blockchain to strengthen the security of future vehicle systems, such as connected and autonomous cars, which could be targets for hackers.
“Hundreds of billions of miles of human driving data may be needed to develop safe and reliable autonomous vehicles,” Chris Ballinger, Toyota Research Institute’s director of mobility services and chief financial officer, told Reuters.
“Blockchains and distributed ledgers may enable pooling data from vehicle owners, fleet managers, and manufacturers to shorten the time for reaching this goal.”