The media’s attention on Bitcoin, Blockchain and cryptocurrencies has been undeniable. Technology experts and Fintech specialist can’t get their head out of it, in every city in every town there are Blockchain conferences, seminars and meetups. But, who could blame them?
Something around three years ago a Bitcoin was worth $300, on the first week of January 2018, Bitcoin was traded around $16,700. That means over the last five years, the total value of all bitcoin (i.e., “market capitalization”) has grown from less than $1 billion to over $262 billion with a daily notional turnover on December 8, 2017 exceeding $21 billion. The total value of all cryptocurrency tokens outstanding now (January 2018) approximately $423.7 billion. But this is not only about the value of Bitcoin and other that has gained in the last few years, but also the excitement about the technologies they have introduced to world of technology. We are on the verge of perhaps one of the biggest transformation in the financial industry.
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Let’s get to the point, you might have heard about Bitcoin and how interesting it is for people in and out of technology, but Bitcoin is not alone. There are many other cryptocurrencies which each use a different technology and they have different approaches to trading using digital currency. We understand your wondering, therefore we wrote this post describing probably the most popular cryptocurrencies out there today and to pinpoint their special characteristics that they have.
Let’s start with Bitcoin. The first cryptocurrency to emerge was Bitcoin (BTC), which is based on the SHA-256 algorithm. This digital commodity was conceptualized in a whitepaper written in 2009 by a pseudonymous writer who went by the name Satoshi Nakamoto. Over the span of Bitcoin’s first four decades, the market cost of one Bitcoin has shrunk from under $0.01USD to over $250USD. The highly volatile cost has generated Bitcoin an attractive investment choice for dealers trying to profit from market speculation, while at the exact same time, the industry volatility has made long-term investors and daily users hesitant to participate for lengthy amounts of time.
A single Bitcoin can be spent at fractional increments that Can be as small as 0.00000001 BTC per transaction. The smallest increment of a Bitcoin is popularly known as a Satoshi, after the original whitepaper author. The protocol allows for incremental trades if the value of BTC rises to the point at which micro trades will become commonplace. The gain in the value of BTC is expected because there’s a limitation to the whole amount of Bitcoin that will ever be created. When the Bitcoin blockchain is finished, users can simply circulate the coin that still exists in the community.
Bitcoin is currently the most reliable of all Cryptocurrencies, as it is the oldest, and has become the topic of mainstream media coverage because of rapid market changes and also an innovative technical concept. At the time of writing, Bitcoin could be interpreted as being the ‘gold standard’ of cryptocurrency since all alternate cryptocurrency market costs are matched into the price of BTC.
Read more about the character of the Bitcoin market here.
- The first differentiating character of Bitcoin is that it is a bearer ecash. This simply means that it could function just like physical cash. Bitcoin transfers are irreversible. You make a payment; it is completed. You can not take it back.
- Bitcoin is divisible to around eight decimal places and could be extended further if needed. In the exchange rate of 100, this is divisibility down to $0.0000001.
- Very low processing fee.
Litecoin (LTC) uses the Scrypt encryption algorithm, as opposed to SHA-256. One of the goals of Litecoin would be to have transactions confirmed at a faster speed compared to the Bitcoin network, as well as make use of an algorithm that has been resistant to accelerated hardware mining technologies like ASIC.
The entire amount of Litecoin available for mining and circulation is four times the quantity of Bitcoin, meaning there will be quadruple the quantity of Litecoin accessible to Bitcoin.
- A simpler Cryptographic algorithm makes the block generation 4x faster.
- Litecoin was recently used to perform a cross-chain atomic swap, which allows users to swap cryptocurrencies directly through a smart contract and without the need for a third party, such as an exchange.
Learn more on Litecoin
A platform that enables smart contracts and distributed applications (DApps) to be built and operate with no downtime, fraud, interference or control from a third party. Throughout 2014, Ethereum had established a pre-sale for ether that had obtained an overwhelming response. The applications on Ethereum are conducted on its platform-specific cryptographic token, Ether. Ether is similar to a vehicle for moving around on the Ethereum system and is sought by developers of programs inside Ethereum. According to Ethereum, it can be employed to “codify, decentralize, trade and secure just about anything.” Following the attack on the DAO in 2016, Ethereum was split into Ethereum (ETH) and Ethereum Classic (ETC). Ethereum (ETH) has a market capitalization of $4.46 billion, second after Bitcoin among all cryptocurrencies.
Read more about Ethereum here.
- Ethereum could be used as a platform to create blockchain applications and new tokens
- Uses smart contracts
A decentralized and open-source cryptocurrency launched in the second part of 2016 and it looks promising. In case Bitcoin is like HTTP for money, Zcash is HTTPS. This is how Zcash defines itself. Zcash offers privacy and discerning transparency of trades. Thus, like HTTPS, Zcash claims to give extra privacy or security where all transactions are recorded and printed within a blockchain, but details such as the sender, recipient, and amount stay private. Zcash offers its users the option of ‘shielded’ transactions, which allow for content to be encrypted using an advanced cryptographic procedure or a zero-knowledge proof structure called a zk-SNARK developed by its team.
- Zcash uses specific proof to secure the network or proof of construction. This leads to maintaining the network with a secure ledger of balances without disclosing parties or amounts involved in transactions.
Dash (originally known as Darkcoin) is a more secretive variant of Bitcoin. Dash offers more anonymity as it functions on a decentralized master code system that produces almost untraceable transactions. Launched in January 2014, Dash experienced a growing fan in a brief span of time. This cryptocurrency was made and manufactured by Evan Duffield and could be mined using a CPU or GPU. The rebranding did not change technological features, such as Darksend, and InstantX.
- Dash uses a two-tier architecture to power its network
- Decentralized Autonomous Organization (DAO)
- DASH aims to be the first privacy-centric cryptographic currency with fully encrypted transactions and anonymous block transactions, this feature is called PrivateSend
Read more on Dash
Ripple is a real-time worldwide settlement network that provides instant, certain, and low-cost international payments. Ripple “empowers banks to repay cross-border payments in real-time, with closing transparency, and at lower prices.” Released in 2012, Ripple currency has a market capitalization of $1.26 billion. Ripple’s consensus ledger is a method of confirmation. Ripple does not need mining, a quality that deviates from bitcoin and altcoins. Since Ripple’s structure does not need mining, it reduces the use of computing power and minimizes network latency. Ripple considers that ‘distributing value is a powerful means to incentivize certain behaviors and currently intends to distribute XRP mostly “through business development agreements, incentives to liquidity providers who offer tighter spreads for payments, and selling XRP to institutional buyers interested in investing in XRP.”
- Ripple is not an average cryptocurrency, obtaining Ripple can only be done by buying the currency from various exchanges.
- Backed by many banks and financial institutions.
- In Ripple, there is no mining involved.
Monero is a secure, confidential, and untraceable currency. This Open source cryptocurrency was launched in April 2014 and shortly spiked great interest among the cryptography community and fans. The development of this cryptocurrency is donation-based and community-driven. Monero enables complete privacy by employing a unique technique known as ‘ring signatures.’ with this technique, there seems to be a bunch of cryptographic signatures like at least one real player — but since all of them appear valid, the real one cannot be isolated.
- Monero is not like other cryptocurrencies that are derivatives of Bitcoin, Monero is based on the CryptoNight PoW hash algorithm, which came from the CryptoNote protocol.
- Monero is fungible, which means every unit of the currency can be substituted by another unit.
- Market Cap (December 2018)