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Cryptocurrencies Annual Market Recap – 2017

By:
FX Empire Editorial Board
Updated: Mar 4, 2019, 13:22 UTC

Cryptocurrencies created media storm worldwide due to their abnormal returns and rapid price spikes in 2017.

cryptos

The digital currencies caught the attention of many traders and investors with some speculators selling their homes in order to own a pie of the crypto market. This golden goose chase made the digital coins reach a total market capitalization of over US$700 billion as at 3 January 2018. According to Coinmarketcap, 36 out of the 1386 listed cryptocurrencies have a capitalization of $1 billion and above. Bitcoin is the dominant crypto among the rest. It enjoys a dominance of 37% of the total market share as shown in the extract below.

Bitcoin % of Total Market Cap
Bitcoin % of Total Market Cap

Other cryptocurrencies such as Bitcoin cash were introduced in 2017 as a result of Bitcoin fork. Other coins have had their fame from the blockchain idea behind their creation; an example is Monero which is considered to be the most anonymous digital coin. Monero is famous among Dark web users and online gamblers.

Bitcoin Mining

Mining Bitcoin becomes complex over time, the algorithm used to arrive at the correct mathematical solution becomes harder and miners are engaged in a competitive process to arrive at the solution. Some miners have opted to join mining pools rather than individual mining because of the capital investment involved in setting and running the miners. Bitcoin mining is costly and involves the use of electricity; in fact, electricity is one of the main overhead. It is rewarding to mine Bitcoin since for every block added to the blockchain the miners are reward with 12.5 BTC.

The below image is a representation of mining difficulty for a period of 2017.

Mining Difficulty
Mining Difficulty

Altcoins mining

Altcoins have the same mining model as Bitcoin whereby, as more coins are mined the transaction cost (gas) increases and miners are continually required to go for advanced computer systems. New block verification methods have emerged such as the proof of stake (POS). Proof of stake is an alternative to proof of work and requires less effort to verify. The consensus is another viable option for verifying block transaction.

Bitcoin transactions 2017

Bitcoin popularity has been on the rise causing its demand and price to increase. A lot of people have been involved in acquiring Bitcoin wallet to store the digital gold or even trade it. Businesses also joined the bandwagon with countries such as Japan reporting over 260,000 stores accepting Bitcoin as a payment method. The result has been a rise in the number of Bitcoin transactions as shown in the image below.

Bitcoin Transaction
Bitcoin Transaction

Bitcoin mining volume

Bitcoin transactions across exchanges have been on the increase especially in 2017. 2017 saw many exchanges increase their volumes drastically. The image below is a two-year graphical representation of exchange volumes from exchanges worldwide. It is clear there was a progressive increase in Bitcoin volumes in 2017 with a peak being reached in December 2017 and the low being in around January 2017.

Bitcoin Trading Volume
Bitcoin Trading Volume

Cryptocurrency Profitability

Cryptocurrencies have been an admiration to many due to their high returns and problem-solving opportunities that they are associated with them. Many cryptocurrencies try to address the issue of decentralization as the primary goal while issues such as anonymity being secondary. Even though Bitcoin has been an admiration to many, its ROI was way below other cryptocurrencies. The excerpt below is a list of the top 19 digital coins that had the highest ROI in 2017, all exceeding the 9000% return mark.

cryptos

From the list above, Ripple is the only major cryptocurrency which managed to be on the list. Doubt as to the stability of these altcoins and the hash power of the coins might be the reasons for the slow adoption. Despite the hullabaloo about their features, they have had an astonishing return and upon investors getting confidence on the coins their prices might soar.

Cryptocurrencies security

Security remains to be a paramount consideration for any investor. Cyber-attacks and Security flaws of exchanges experienced in 2017 have led to the loss of investors’ portfolio. However, established coins and exchanges such as Coinbase have proven to be safe and reliable.

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