When someone says crypto, we think Bitcoin. The currency created by the elusive Satoshi Nakamoto has been on a rollercoaster ride across trading markets worldwide. Today, one bitcoin sells at around $60,000, and many predict its value to rise further; considering how the currency was created in 2009, that’s quite a climb.
Types of Cryptocurrency
With so many people tweeting and talking about Bitcoin, you could almost be forgiven for thinking Bitcoin is the only crypto in existence. While it is the first cryptocurrency, it is not the only one. Cryptocurrencies are decentralized digital currencies that allow users to make secure and anonymous transactions. The key feature of cryptocurrencies is blockchain technology, which acts as a public transaction ledger for all users. It records every movement in a distributed ledger (meaning not stored on one central server). While Satoshi Nakamoto introduced blockchain technology alongside Bitcoin, Bitcoin is not the only cryptocurrency in existence.
Ethereum is a decentralized platform that runs smart contracts and applications. These are applications that run exactly as programmed, without any possibility of downtime, censorship, fraud, or third-party interference. Ethereum uses blockchain technology to create a distributed ledger and the cryptocurrency Ether (ETH). The value of Ethereum lies in its ability to record and execute transactions within these specially designed digital “contracts.” These programmable transactions called Smart Contracts can automatically fulfill themselves once certain conditions have been met.
Ethereum is not just a currency; it’s an environment where people can build new things. Ethereum allows for numerous decentralized apps to be created and deployed onto the blockchain. Many refer to this as “Programmable Money” or digital currency with built-in programming code that sets rules and regulations for how many units are created, when they can be sent, etc.
Litecoin was launched in 2011 by former Google employee Charles Lee. The key benefit offered by Litecoin over Bitcoin is speed: transactions happen up to four times faster than bitcoin technology. This is because of the shorter block generation time in Litecoin. Litecoin uses the same fundamental blockchain technology as bitcoin, but it can process transactions more quickly. Litecoin has a total supply of 84 million coins compared to 21million for Bitcoin – this number is roughly halved every four years, similar to bitcoin.
Cardano is an innovative contract platform founded by the ex-CEO of Ethereum Charles Hoskinson. The currency was built using the Haskell programming language, one of the most secure programming languages in existence. It’s designed to run financial applications used by billions of people worldwide.
Polkadot is being developed by Gavin Wood, co-founder of Ethereum. The protocol will allow independent blockchains to exchange information with each other without the use of an intermediary (like a centralized exchange). This will help solve one of blockchain’s biggest problems – allowing multiple networks to quickly communicate and transfer data across platforms.
Stellar was created in 2014 as Ripple but changed its name after legal issues involving their former company in 2015. It has grown into an open-source network that allows individuals and institutions to send money globally at a low cost (roughly $0.01 per transaction) using a cryptocurrency called lumens (XLM) generated through mining.
Bitcoin Cash (BCH):
Bitcoin Cash was formed in 2017 after a split within the original bitcoin network. The fork occurred when one group wanted to increase transaction speeds by increasing block size (while another wanted to keep them at lower numbers). This has led to increased scaling issues for BCH as they continue working on their version of “lightning,” which will help speed up transactions.
Dash was initially known as Darkcoin. However, in March 2015, it changed its name due to negative connotations associated with “dark” related products such as darknet markets. It claims several technical advancements over bitcoin, including having much faster transaction speeds (around two minutes) which would suit large-scale commercial transactions. DASH relies on the use of Masternodes; decentralized servers run by those invested in DASH tokens.
Chainlink is a blockchain-based middleware that connects smart contracts with critical resources necessary for their execution. These include data feeds, web APIs, and traditional bank account payments. This helps expand what can be done with Ethereum technology and builds on the smart contract structure built by Ethereum technology.
EOS was launched in mid-2018 by Dan Larimer, formerly of Bitshares and Steemit, after raising over $700 million through an ICO which disrupted the market for decentralized applications. EOS follows the same standards found in other cryptocurrencies. However, it is explicitly designed for large-scale enterprise operations, which require high transaction speeds at zero cost.
Cryptocurrencies are a new and exciting area with potential usage that goes far beyond just digital money. Countries worldwide are searching for ways to use cryptocurrency and blockchain technology, with advances already being made in either field. As a result, cryptocurrencies are in a constant state of flux. This makes them highly volatile. So, if you are interested in investing in cryptocurrencies, make sure you know how the currency works and if there is room for improvement.