Competitive Analysis

There are hundreds of different types of cryptocurrency that users can currently use over the internet. Many people are investing in these currencies because they don’t have to deal with a third party for their transactions, making them almost invisible. Users can buy anything, but most often users are looking for illegal goods that they can’t usually purchase under the radar. With the benefits of doing business anonymously, there are many risks that users take in order to have easier transactions. One of the most common risks is that that since the currencies aren’t insured, if lost or stolen, they are gone for good. The coins are stored in a virtual wallet over the internet and hackers are having a field day with trying to get ahold of these virtual coins. This may sway some people away from getting into the trend with cryptocurrencies, but many people are still taking the risk to get what they want and not having to deal with the government, yet. With bitcoin being so popular and the price skyrocketing, there are other competitors out there that some people may not know exist.

Litecoin is an internet currency that allows instant, near zero-cost payments to be exchanged between anyone on the world. It is open source that doesn’t have any government authority. Just like bitcoin, Litecoin transactions take place on the blockchain. It can actually handle more transactions volumes than bitcoin because the network can support more without modifying the software all due to the faster block generation. This also reduces the risk of double spending attacks which can affect bitcoin. Litecoin offers wallet encryption so that a password is required every time you want to do anything with your Litecoins. Litecoin is even going to produce over 84 million Litecoins which is 4 times as many as bitcoin. If IVK started out with 100 Litecoins, they would only be investing $1,100 compared to bitcoin’s $59,000. The current market cap (the total dollar market value of all of a company’s outstanding shares.) is $540,274,528.26 for Litecoin and $10,467,596,650.78 for bitcoin (Investopedia, 2014). The risks are very similar across the board for all cryptocurrencies with the coins being lost or stolen, coins not being able to be insured so not getting the coins back if lost or stolen, and just overall cyber-attacks.

 

Mastercoin is another peer-to-peer internet currency that was just launched in March 2014. It is decentralized meaning there is no third party involved in any transactions, just the two people making the exchange. There is also Master Protocol enabled applications that allow users to design and release their own smart tokens, with their own rules, without doing any software development (2014). There are also Smart properties where users can transfer smart tokens that represent services, products, titles, deeds, virtual currencies, and securities (2014). Then, just like bitcoin, there is a virtual wallet where the coins are kept and transactions sent from the addresses are reversible, unlike bitcoin. Transactions are done in the bitcoin blockchain, so the only real ‘third party’ is bitcoin. It is not as complex as bitcoin and it is easier to use because it can interact with a web browser instead of the servers. Mastercoins are only $19 right now, making 100 of them $1,900 instead of bitcoin’s $59,000. The risks include having your wallet stolen resulting in a loss of Mastercoins which is the same for most cryptocurrencies. Also, since the order of the Mastercoin in a blockchain matters, sometimes a blockchain reorganization can affect the ordering which can make a Mastercoin transaction valid when it was previously invalid.

Then there is Sync, a premium cryptocurrency that has low inflation. There were only 1,000 coins available for mining through Proof-of-Work and the interest rate for Proof-of-Stake is 100%. (Sync, 2014). What is different about Sync is that there is a reward program called Synclub. It is only available to Sync users and they can earn points by completing offers. There are different levels with different privileges. This could attract many customers as people love rewards. There is also a multi-pool that increases the value of Syncs by mining the most profitable alt-coins and exchanging them against Syncs (Sync, 2014). The miners then get the Syncs out of the multi-pool. Multi-pool mining is to create consistent demand on markets where Sync is traded. They choose the most profitable alt-coins and create ‘buy’ pressure to drive up the price. They also leverage buy walls to prevent price manipulation (Sync, 2014). There are wallets, so the same risks apply that the Syncs can be stolen or lost. There is no third party, so Syncs can’t be insured.

	Costs	Value	Risks
Bitcoin	$590	- Highest Market Cap - Loans - Alternative currency - Can create an run exchange website	- Double Spending Attacks (51 percent attack) - Currency isn’t insured - Susceptible to cyber attacks
Sync	$167	- Premium cryptocurrency - Rewards program - Not as big investment as Bitcoin	- Currency isn’t insured - Susceptible to cyber attacks
Mastercoin	$19	- No transaction fees - Low exchange rate, so investment isn’t as large - Users can create their own cryptocurrency	- Susceptible to cyber attacks - Currency isn’t insured - Reorg in blockchain
Litecoin	$11	- 2nd Highest Market Cap - Faster block generation - Coin limit is 84 million - Low exchange rate, so investment isn’t that large - Ease of quicker transactions	- Susceptible to cyber attacks - Currency isn’t insured

 

Within the table, the cryptocurrencies are similar, with some other features. Bitcoin has the highest market cap wit Litecoin coming in at second. Litecoin also has a limit and a faster block generation which could be attractive to new customers. Sync is a premium cryptocurrency that offers a rewards program. Between all of them, the risks are pretty much the same. The coins aren’t insured and they are susceptible to cyber-attacks.


References:

Cryptocurrency market capitalization pie charts. (2014). Retrieved Jun 13, 2014, from Crypto Coin Stat: http://cryptocoinstat.com/blog/?p=46

Crypto-Currency Market Capitalizations. (2014). Retrieved Jun 11, 2014, from Coin Market Cap: https://coinmarketcap.com/

Gibbs, S. (2013, Nov 28). Nine Bitcoin alternatives for future currency investments. Retrieved Jun 13, 2014, from The Guardian: http://www.theguardian.com/technology/2013/nov/28/bitcoin-alternatives -future-currency-investments

Hornyak, T. (2014, Jun 16). One group controls 51 percent of Bitcoin mining, threatening security sanctity. Retrieved Jun 16, 2014, from PC World: http://www.pcworld.com/article/2364000/bitcoin- price-dips-as-backers -fear-mining-monopoly.html

How is the security of Mastercoin different than that of Bitcoin? (2013, Dec 4). Retrieved Jun 12, 2014, from Stack Exchange: http://bitcoin.stackexchange.com/questions/17935/how- is-the-security-of-mastercoin-different-than-that-of-bitcoin

Litecoin. (2014). Retrieved Jun 12, 2014, from Litecoin: https://litecoin.org/
 
Market Capitalization. (2014). Retrieved Jun 12, 2014, from Investopedia: http://www.investopedia.com/terms /m/marketcapitalization.asp

Mastercoin. (2014). Retrieved Jun 13, 2014, from Mastercoin: http://www.mastercoin.org/

Sync. (2014). Retrieved Jun 14, 2014, from Sync: http://www.synclub.net/

What is multi-pool mining? (2014). Retrieved Jun 13, 2014, from Sync Pool: http://sync. multipoolmining.com/faqWhat is the Difference Between Litecoin and Bitcoin? (2014, Apr 2). Retrieved Jun 14, 2014, from Coin Desk: http://www.coindesk.com/information/comparing-litecoin-bitcoin/