A deal with Moneygram Transfer International (MGI) helped Ripple recoup some of its gains yesterday. According to the deal’s terms, Moneygram will test XRP, Ripple’s cryptocurrency, on xRapid, a Ripple tool for liquidity in emerging markets. (See also: MoneyGram Teams With High-Flying Cryptocurrency.)
At 14:33 UTC, the price of a single XRP was $2.08, up 7.55% from 24 hours ago. It had dropped to $1.62 at 04:34 UTC yesterday. Stellar, which uses the same codebase as Ripple, led gains in the world’s top 10 most-traded cryptocurrencies. Its token, Lumens, was up by 30.12% to $0.69, as of this writing.
There was not much change in bitcoin’s price from 24 hours ago. The original cryptocurrency continued traversing in ranges between $13,000 and $15,000, as it has for most of this week. At 14:43 UTC, the cryptocurrency was priced at $13,770.55, up 3.70% from its price 24 hours ago. After two days of decline, most cryptocurrencies were up this morning. Their market capitalization was $724.7 billion, up from $645.5 billion at 00.37 UTC.
Why Is Stellar Rising?
Along with Cardano, Stellar is among the biggest gainers of 2018. Its price movement has been closely correlated to that of Ripple, so far. This is because both blockchains use the same code base and share a cofounder (Jed McCaleb). It is also backed by a bevy of big names from the tech industry. These include Patrick Collision from Stripe, an online payment network valued at $9 billion in private markets, and Sam Altman, head of Silicon Valley’s most prestigious incubator, Y Combinator.
They also share characteristics. While Ripple has inked agreements with banking systems and institutions in developed economies, Stellar’s focus is on emerging markets. In 2017, it announced a partnership with IBM Corp. (IBM) for a banking network. The network, which consists of “12 currency corridors” encompassing countries like Australia, New Zealand, Fiji and Tonga, will use Lumens and is expected to process 60 percent of all cross-border payments in South Pacific’s retail foreign exchange corridors in 2018.
A Bearish Take On Bitcoin
While critics have piled onto bitcoin’s volatility and its unsuitability as a medium of transaction, none has actually come out with a solid figure to back up their claims. Quinlan & Associate, a Wall Street consultancy, might be the first one. The firm predicts a price target of $1,800 for bitcoin by the end of 2018. It arrived at that figure by putting numbers on bitcoin’s two most popular use cases, medium of exchange and store of value.
“As an asset, we valued Bitcoin using a cost of production approach and a store of value approach, resulting in values of $2,161 and $687,” the firm writes. But its long-term prognosis for cryptocurrencies is good. It estimates a $407 billion crypto market by 2020.
Is Coinbase Responsible for Bitcoin’s High Transaction Fees?
According to the Twitterverse, that might be the case. Several Twitter users have accused the exchange of causing a jam in bitcoin’s mempools, where the cryptocurrency's temporary transactions are stored, through inefficient processing of exchange transactions. In turn, this has caused a transaction backlog, which results in greater waiting time for users and higher transaction fees.
As a solution, they have asked Coinbase to expedite implementation of SegWit, which increases average block size. The exchange has already committed to implemented the technology earlier. (See also: Will Rising Transaction Fees Bring Down Bitcoin's Price?)
In the meanwhile, bitcoin miners in China have begun charging higher maintenance fees due to government crackdown. ViaBTC, the world’s fourth-biggest bitcoin miner, said it had increased maintenance fees to 50% from 6% due to the crackdown. (See more: China Intensifies Crackdown On Bitcoin Mining.)
Investing in cryptocurrencies and other Initial Coin Offerings ("ICOs") is highly risky and speculative, and this article is not a recommendation by Investopedia or the writer to invest in cryptocurrencies or other ICOs. Since each individual's situation is unique, a qualified professional should always be consulted before making any financial decisions. Investopedia makes no representations or warranties as to the accuracy or timeliness of the information contained herein. As of the date this article was written, the author owns small amounts of bitcoin.