Understanding the distinctive features of cryptocurrencies
: Kaartemo Valtteri, Kramer Marius
: J. Mark Munoz, Michael Frenkel
: 2021
: The Economics of Cryptocurrencies
: 11
: 17
: 978-0-367-19103-0
: 978-0-429-20042-7
DOI: https://doi.org/10.4324/9780429200427-3
This chapter briefly describes the basics of cryptocurrencies and their main distinctive features. It discusses the framework for showing some of the limitations of the top ten cryptocurrencies on market capitalization and introduces handpicked projects beyond the top ten that meet all the criteria. The chapter focuses on six main features, which help comparing different cryptocurrencies, namely scalability, centralization, permissionlessness, energy consumption, transaction time and transaction fees. It shows that, in these terms, bitcoin, the clear leader in market capitalization, is not strongly positioned against other top cryptocurrencies. The chapter argues that the number of monthly average users is an important key metric in understanding how widely the cryptocurrency has spread and indicates that the coin is actually used. The use cases are important, as many coins may be technologically advanced but never gain traction.