In this article, we see the collapse of several crypto coins, including Bitcoin and Ethereum, as well as a few cryptocurrencies that use an algorithmic consensus mechanism like Solana. Many factors caused these crypto assets to go down in price due to speculation, market manipulation, government interventions, and other reasons, but each coin has different characteristics and thus is different in terms of how it was affected. We will also analyze some other factors such as politics, regulation, economics, social media, and others, in-depth.
The main reason for the cryptocurrency crash we are discussing today may be traced back to the end of June 2020. On June 14th, the biggest cryptocurrency in the world fell about 13%. It dropped by more than 60% in a day. The falling price of bitcoin led to its downfall, with many analysts wondering if a similar fate would follow for most of the major cryptocurrencies as well. If you have ever been on Reddit forums, you know what happened after the blockchain crashed. Some people started spending money more carefully while some were losing money because they spent recklessly.
The impact may not be that drastic if you remember another one of the largest crashes in history, which took place almost eight years ago. Between December 7th and 8th 2017, the value went as low as $14,000. That was one of the lowest values recorded in all history. Before that year, the prices were already at an all-time high in 2016. However, despite being the second worst downturn in history, many experts believe that there are still opportunities for recovery for all of the digital currencies that use algorithms. As a result, according to Goldman Sachs, the best time of the decade for them all could well be now. This means that we should expect prices to rise even further, since demand for cryptocurrencies is high and the economic situation is still favorable for investing in them.
As you can see, the fall of bitcoin, ether, XRP, solana, tron, dash, zcash, litecoin, and ethereum was triggered by various events. These incidents include massive institutional investors moving their funds from traditional investments into bitcoin, as well as speculation about what would happen with the future of the US dollar and other monetary measures as well as the possibility of recession.
Bitcoin vs. Eternals (Ethereum)
Bitcoin and Ethereum, two of the leading cryptocurrencies in the world, are both open source platforms and are free to download and use for their services. Each coin’s development was driven by its founder’s vision of introducing new innovations into the industry. For example, only 50% of Ethereum transactions are using bitcoins. One of the differences is the fact that the transaction fees are much lower when transferring between these two cryptos. According to Coinbase data, the average transaction fee for transfers made with altcoins (crypto coins supported by smart contracts) is 5%, compared to 17% for transactions performed with bitcoin. Additionally, the difference in cost is explained by the higher level of security measures taken while implementing cryptocurrency wallets. Another explanation is that bitcoin is still considered a commodity rather than a financial asset (by the US). Therefore, the current interest rates set for the currency make it cheaper to purchase bitcoins than to transfer them. Because Bitcoin and Ethereum are both decentralized, no single entity owns them. They are created by individuals or organizations that want to improve upon existing technology in order to provide developers with additional options and better tools for creating applications for the creation and implementation of crypto tokens.
Bitcoin vs Ether (ETH)
The primary feature for ETH is that it is based on proof-of-stake — a system called Proof-of-Stake (PoS) where users and miners propose blocks in exchange for staking their cryptocurrencies. Although it is not used as much anymore, PoS is still present in Ethereum, albeit quite slowly. According to Gartner, by 2024, 80% of Ethereum transactions will be run by PoS. Meanwhile, 70% of nodes of Ethereum are currently equipped with a PoS wallet. At the same time, according to CoinMarketCap, less than 30% of Ethereum’s network is currently running without any type of PoS solution. Moreover, over 40% of the total number of ETH transactions that occur every day happens outside of chains powered on top of Ethereum.
The core principles of Ethereum remain unchanged. First of all, Ether is an alternative version of bitcoin that is created through mining. Second, it is designed around trustless, tamper-proof processes and uses an algorithm known as Avalanche Technology to ensure the smooth operation of the platform in comparison to bitcoin. Lastly, it uses state channels to prevent fraud and mismanagement. Similar features are present in Litecoin, which also uses PoS. With regards to transaction fees, Ethereum’s network does not charge any gas fees. Transactions in ether are therefore processed quickly and smoothly.
Bitcoin vs Cardano
According to research firm Block Explorer, cardano had become the favorite cryptocurrency after Bitcoin due to its focus on improving scalability and speed and decentralization. Unlike regular cryptocurrencies, which are often centralized, cardano acts as a “universal ledger” — an underlying technology that enables various digital payment methods, like PayPal and Moneygram, among other banks. Currently, cardano allows you to buy goods and services via debit cards, Apple Pay, Google Wallet, Amazon Pay, Microsoft Pay, etc., and to send money from your bank account. Also, this coin has plans to replace SWIFT to facilitate global commerce for cross-border payments in the near future. However, although more and more companies want to launch digital banking systems using the token, the company lacks the ability to create new products. Blockchain technology presents itself to help with providing a reliable infrastructure for this purpose.
Solana vs Polkadot
Solana is another one of the fastest growing blockchains. Its native token SOL is used for governance, transaction processing, storage, smart contracts, and so on. Due to increased popularity among traders and enthusiasts, POL tokens are being developed by its founders and are gaining traction in 2022. By launching the platform in 2019, it received approximately 75 million USD in capital, as noted by Bitmartech. In addition, it became the first project of its kind in Asia and has a long history of working with big names in the region. Recently, POL tokens have appeared in numerous projects and were included in Binance Smart Chain’s list of exchanges, proving once again that the ecosystem is expanding and becoming more complex. Solana is also unique in terms of its functionality and structure, as opposed to most other competitors, such as Polkadot. When speaking of technical solutions, Polkadot utilizes Tezos’ Tendermint protocol with its own custom codebase. To date, it offers four parachains and supports a variety of programming languages. However, the greatest advantage of Polkadot is its compatibility with various public blockchains, making it easy to integrate with many blockchain networks without difficulties. Nevertheless, it remains mostly an experiment for large enterprises and tech firms with limited resources.
Solana vs Hyperledger Fabric (HLEX)
There is one major downside and positive side to HLEX. Firstly, unlike Terraform Labs, which focuses primarily on building interoperable metaverses, he is mainly focused on interoperability. Secondly, his community has grown significantly over the past couple of years, helping him grow significantly faster. Finally, its success may be attributed to its modularity and extensive support for various types of software. All these qualities make it stand out from other leaders in hyperledger.
Hyperledger is a decentralized operating system. It is based on Red Hat Linux and relies on a distributed database known as Ledger for storing the various blockchain information. The system is built on the principle of zero-knowledge proofs with the notion of verifiable and trusted immutability. What makes HLEX different is that it supports the introduction of multi-chain architecture and provides access to the entire blockchain within a common interface. Such innovation, combined with flexible protocols, makes the platform user-friendly and flexible.
Solana vs IOTA (IOTA DOT)
It goes without saying that IOTA DOT is another promising player in the field of decentralized finance (DeFi) and is frequently featured in top news and lists of popular podcasts. Furthermore, IOTA is actively promoted by the creators of Ethereum. Its functionalities are comparable to Cosmos Network and allow for parallel execution and verification of computations. More importantly, DeFi communities have begun focusing on integrating this cryptocurrency, which is why the number of active buyers and sellers continues to increase. Nonetheless, the main challenge for DeFi developers is that the native currency of the network, MANA, cannot be connected to other stable coins outside of DEXs. Also, the lack of proper testing limits the possibilities of bringing the network closer to real life scenarios. As far as blockchain technologies go, IOTA DOT is probably the most challenging one to test and implement. However, because of its nature as an open-source product, there is a vast amount of available resources online and community participation on Github. Thus, the potential risks associated with the project do not seem high.