It's a new year, but the cryptocurrency romp higher hasn't slowed one bit. After catapulting from a combined market cap of $17.7 billion to $613 billion in 2017, the aggregate value of all cryptocurrencies has leaped once more to $774 billion as of Jan. 4, 2018. What was once a laughable target of $1 trillion in aggregate market cap a year ago is looking ever more like a genuine possibility at this point.
Perhaps what's even more impressive than the aggregate gain in virtual currencies over the past year is that it's been more a function of digital currencies not named bitcoin than bitcoin itself. Even though bitcoin handily remains the largest virtual coin in the world, it now accounts for only 34% of the total cryptocurrency market cap, according to CoinMarketCap.com, which is less than half of what it accounted for at this time last year. This recent push higher in cryptocurrencies is really about everything not named bitcoin.
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In particular, investors are becoming increasingly excited about the differentiation each digital currency brings to the table. While most cryptocurrencies involve a digital currency that's tethered to an underlying blockchain -- the digital, distributed, and decentralized ledger that records all transactions -- it's the way these foundations or companies that develop these currencies and blockchains are looking to deploy their technology that's really intriguing.
These digital currencies were unstoppable in December
In December, quite a few cryptocurrencies not named bitcoin caught fire. In fact, the aggregate market cap of all cryptocurrencies perfectly doubled between Nov. 30 and Dec. 31. The following three digital currencies were among December's top performers.
Verge: up 3,867%
Not shockingly, the best-performing cryptocurrency in December was Verge and its coin, XVG. I say "not shockingly" because Verge was hands-down the top-performing virtual coin in 2017, gaining more than 1,170,000% in the process. Its December gains were a tamer 3,867%, but that's still not too shabby for a single month.
Verge has come out of nowhere to vault to a multibillion-dollar market cap as a result of growing interest in privacy coins, which are nothing more than virtual currencies with a beefed-up focus on privacy and anonymity. We can probably thank the eccentric tweets of MGT Capital Investments' John McAfee for putting Verge on the map last month, but its innovations have also done a decent job in luring new investors.
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In particular, Verge relies on multiple anonymity-centric networks, such as Tor and I2P, to obscure the original sender of a payment. Though privacy and anonymity are somewhat implied with digital currencies, blockchain analysis can usually be traced back to the sender. That isn't the case with Verge, along with a handful of its competitors, such as Monero, and it's clearly exciting investors.
The Verge network also promises fast-settling transactions. One of the major reasons for the cryptocurrency revolution are transactions on current bank networks that are either slow to process or settle. With Verge's proprietary blockchain, most transactions are expected to settle in around five seconds.
Verge also has a number of ready-to-use mobile wallets that provide decentralization, security, and anonymity directly from a smartphone. Though it's unclear if this incredible run can continue, Verge's investors certainly have a lot to crow about in the interim.
Reddcoin: up 947%
With Americans absolutely addicted to social media these days, it probably comes as little surprise that a virtual currency focused on micro-transactions conducted via social networks was December's second-best performer with a gain of 947%. Ladies and gentlemen, say hello to Reddcoin.
One of the unique aspects of Reddcoin is its incorporation of micro-donations to support the creation of content on social networks. Reddcoin fully understands that its virtual currency is the only currency that some of today's teens and kids have ever known, which makes it uniquely positioned to handle small-money transactions over social networks, and therefore encourage micro-donations to content creators
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Another intriguing feature of Reddcoin's blockchain is its reliance on proof-of-stake velocity to verify transactions.
To ensure that the same token isn't spent twice, quite a few cryptocurrencies employ what's known as the proof-of-work model. This is where folks with high-powered computers compete against other people with high-powered computers to solve complex math equations that are the basis of verifying and protecting an encrypted block of transactions. This is a highly energy-intensive and costly way of verifying transactions.
With Reddcoin, ownership in Reddcoin and activity are the secret sauce required to find valid blocks and receive rewards. Ownership of Reddcoin serves as the "stake," while leaving your wallet open and connected to the internet is the "velocity" or activity that Reddcoin seeks. The more active a Reddcoin holder, the more likely they are to verify blocks and receive rewards.
Ripple: up 817%
Ripple, which recently vaulted to a market cap in excess of $125 billion, had an impressive December as well. Already riding a ton of momentum heading into the final month of 2017, Ripple's XRP coin wound up exploding higher for an 817% gain.
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Why such a good month? To begin with, Ripple has benefited from its partnership with American Express (AXP +0.19%) and Banco Santander (SAN 3.75%), announced in mid-November. This combination is allowing American Express users to send non-card payments over Ripple's blockchain to U.K. Santander accounts, and have these transactions settle instantly. With today's banking networks, a cross-border payment like this may not settle for days. This is Ripple's shot to show big banks that its blockchain is scalable, and that its transaction fees and settlement times are leaps and bounds better than the current payment platform.
Ripple also received a shot in the arm from rumors that it may soon be listed on Coinbase, the world's most popular cryptocurrency exchange. Considering that Coinbase lists bitcoin, Ethereum, bitcoin cash, and Litecoin, it seems only logical that the second-largest cryptocurrency by market cap would soon gain listing. Should Coinbase choose to add Ripple to its platform in 2018, it would greatly improve access and liquidity to a rapidly growing virtual currency.
While a smorgasbord of risks remain for cryptocurrencies as a whole, these three were the shining stars for December.
