What’s the difference between Cryptocurrencies?

Bitcoin created a lot of hype in 2017. It went from about $3,000 to over $13,000 in a few months, representing an all-time high for the coin. Internet forums like Reddit exploded with activity as the Bitcoin subreddit saw a 59% increase in page views from July to August. The main cryptocurrency subreddit also managed to get over 120,000 subscribers, making it over four times more popular than it was in January.

Bitcoin has existed since 2009. Since then, plenty of other competitors and imitators have popped up, each one wanting to be the next big thing. There are over 1,300 unique cryptocurrencies on the market, each with its ups and downs.

With so many different options out there, it can be difficult to determine which ones are worth your money and which ones will never amount to anything. Each coin has unique advantages and disadvantages which affects their potential as a currency.

Here is a summary of the most well-known cryptocurrencies so that you can get a better understanding of what each one does:

Bitcoin (BTC)

This currency is the one that started it all. Mr. Satoshi Nakamoto created Bitcoin with the intention of a decentralised currency that was also incredibly secure. Its decentralisation makes it impossible for a hacker just to steal all the funds because Bitcoin exists on many different servers and computers. On the other hand, if someone hacked a bank server, the scammer could potentially access all the stored money.

Bitcoin’s blockchain and mining technology make it impossible to forge any transaction. Each exchange is verified by independent miners and must match up with the blockchain in the decentralised network. Bitcoin can also be spent by anyone anywhere on the planet and offers a high degree of anonymity for users.

Litecoin (LTC)

This currency was launched a few years after Bitcoin and has since proven to be a significant competitor. It features an easy-to-use algorithm so that ordinary people can mine from the comfort of their home computer.

Another advantage that Litecoin has is its speed. Litecoin generates blocks four times quicker than Bitcoin, which means that it also processes transactions faster. Creator and MIT graduate Charlie Lee intended Litecoin to be “the silver to Bitcoin’s gold.” It’s a less valuable, but more accessible version of the most potent coin.

Dash (DASH)

Dash was initially known as Darkcoin. This gloomy name came from the fact that Dash provides top-tier anonymity to its users. Those who use this coin will have no trouble hiding from hackers and scammers who wish to pursue them.

In 2015, the name changed to Dash as an abbreviation for “digital cash.” However, Dash is also a fitting name because the coin was created to be faster than Bitcoin. Its two-tier architecture, and cutting-edge transactions make exchanges almost instant.

Ripple (XRP)

Ripple is intended to settle other currencies or units including US dollars, rupees, euros, other cryptocurrencies, or even frequent flier miles. Institutions must pay fees in XRP coins, which are the ones that traders can acquire.

This currency has many other unique qualities such as that it’s backed by several banks including UBS, UniCredit, and Royal Bank of Canada. Plus, there’s no mining associated with Ripple. Instead, the company stores 100 billion coins which may not be released anytime soon so that the market doesn’t become flooded.

In 2017, Ripple’s price went from less than a penny to about a quarter. Investors are uncertain of how far this coin can go, but many remain hopeful of its ascendancy.

Monero (XMR)

This coin was invented to beat Bitcoin in three major areas: security, decentralization, and anonymity. Monero is entirely untraceable, meaning that no hacker will have any way of tracking you down through your purchases. Monero’s website claims that they can protect their user’s identity, even in a court of law and against the threat of a death penalty.

Bitcoin assigns each user a unique identity composed of random characters, to which each transaction is tied. Some organisations, such as government spending and non-profit organisations, must disclose their identity. However, Monero utilises ring signatures. This technique mixes one user’s signature with dozens of others, making it difficult for any hacker to determine which one is true.

Ethereum (ETH)

Ethereum might have only launched in 2015, but its value has exploded since then. Ethereum now stands as the second most valuable cryptocurrency behind just the mighty Bitcoin. This currency was designed to aid software developers. Ethereum rewards miners with a token called ether, which may be used to pay developers and engineers on the Ethereum platform.

Ethereum also has a feature called smart contracts which helps aid exchanges transparently and safely. This is meant to counter collusion, scams, and censorship. Contracts are automatically enforced by Ethereum’s technology, ensuring that all transactions are safe and legal.

Dogecoin (DOGE)

Yes, it’s a cryptocurrency named after a funny meme. Creator Billy Markus initially created Dogecoin as a funny joke. However, its user base grew, and thousands of internet communities gathered around the coin and related memes.

Dogecoin’s market cap is an incredibly massive 100 billion, meaning that most individual dogecoins will be worth fractions of a cent. The vast amount of dogecoin implies that it will likely always remain a very cheap currency mostly used for forums like Reddit, so it’s probably not worth investing if you’re trying to become a millionaire.

Cryptocurrencies are still an emerging technology, and their future is uncertain. More vendors are beginning to accept Bitcoin and other coins for payment. These coins have a nearly unlimited potential as nobody knows how much prices will fluctuate. For example, a programmer once paid 10,000 Bitcoins for two pizzas. Today, those coins would make anyone a millionaire.

It takes a lot of research and luck to find the next Bitcoin. However, developing a nuanced understanding of the prominent cryptocurrencies and their functions is a high starting point for any aspiring trader. Each coin has its unique benefits and potential.