Speaking with Nest Egg, chief market strategist at CMC Markets Michael McCarthy believes the crypto space is set for tremendous changes. This will precede it becoming an accepted, daily currency for investors.
“Nobody knows what the future of cryptocurrencies is. It is very clear that blockchain technology is very important but given the explosion in the number of issue out there now, with more than 1,500 cryptocurrencies out there, it’s difficult to say who the eventual winners and losers will be,” said Mr McCarthy.
He likened it to the “dotcom” boom in the late 20th century where some investors won and many lost as everyone scrambled to be part of the new technology.
Who will the eventual winner be?
According to Mr McCarthy, Ethereum and Ripple could be the eventual winner when a currency becomes more mainstream, at the expense of bitcoin.
“Ethereum is particularly attractive as it’s an offer that is part of a broader technology advance, so the potential for it to adapt and become the key coin because of that backing,” said Mr McCarthy.
“The other one is Ripple. The reason for that is Ripple is already used globally for foreign currency exchange. It has established itself quite well in those markets already,” said Mr McCarthy.
“Both of those have lower transaction costs and shorter processing times, and for that reason I suggest they are the two leading candidates,” continued Mr McCarthy.
The test of time
Mr McCarthy believes that the pioneering coin might not be the last one. It is a slower and older technology which makes it difficult for it to be the successful currency when it is competing with newer coins.
“It’s like that end users will gravitate to a small number of coins. There’s an argument that bitcoin will not be one of those proponents. The technology was groundbreaking and pioneering but that also means it hasn’t had the advantage that later issues have had in terms of development of the technology,” said Mr McCarthy.
Barriers for bitcoin
Despite making its name as an alternative decentralised source, Mr McCarthy believes a lack of regulation is stopping the currency from becoming a major exchange.
“Bitcoin, for example, being decentralised, it’s been difficult for regulators to get a grip on how they would control that aspect of the coin,” said Mr McCarthy.
“The original users of bitcoin had an anti-centralisation state because a lot of the early users where using it for illegal purposes, especially in the pioneering stage,” said Mr McCarthy.