Thinking of investing in cryptocurrency? Here we list to you 5 popular cryptocurrencies that have scored over the others due to their innovative features. Of course, the Bitcoin rules the roost, but the others are not far behind. Some of them have shown better promise than the Bitcoin. Let us start.
The leader of all the cryptocurrencies, Bitcoin was the start of the blockchain experiment. This decentralized currency uses a peer-to-peer network where the transactions are verified by the individual network nodes. The transactions are recorded in blocks that are a distributed ledger. Bitcoin was created by Satoshi Nakamoto and the identity is still a mystery. The main aim of it was to enable quick and cheap payments. A user can see only their transaction results. Behind the scenes, these transactions are shared using a public ledger or the blockchain. The digital records are combined into blocks. For someone to alter the transaction recordings means that every other previous block is also affected and hence easily spotted. Thus Bitcoin is immutable. The Bitcoin has flipside too. Many countries do not accept it as a legal transaction and moreover, it is too volatile. The way to create Bitcoin is to mine it. But it can be purchased from exchanges, ETFs and private sellers.
2. Litecoin (LTC)
This open source peer-to-peer cryptocurrency was released on GitHub by Charlie Lee who is a Google employee. It went live on 13th October 2011. It differed from Bitcoin primarily in having a decreased block generation time of every 2.5 minutes rather than Bitcoin’s 10 minutes. It uses Scrypt, proof-of-work as its hashing algorithm. With Litecoin the transaction just takes two minutes to go through when compared to 300 minutes for Bitcoin. Targeted for faster transactions, lower fees and payments, the Litecoin has a supply of 84 million when compared to Bitcoin’s 21 million. It has a current market capitalization of $17 billion.
3. Ether (Ethereum)
The digital cryptocurrency Ether was created by a blockchain company Ethereum. The main draw of this blockchain cryptocurrency is the use of smart contracts. To remove the arduous and error-prone task of having to update a digital copy of the contract by each party, the smart contracts were created. This code facilitates the exchange of money, property, shares, content or anything of value. The smart contract is written in code into the blockchain and when the terms of the contract are met by both the parties, the deal is executed. Ethereum is also used to decentralize any services that are centralized. The smart contract is said to be a game-changer for many sectors like the title registries, voting systems, bank loans to regulatory compliance. With Ethereum, other developers can launch other cryptocurrencies and raise funds with an Initial Coin Offering (ICO). The flipside with the smart contract is that it is as good as the people who write them. If there is any bug in it, then a network consensus for rewriting is to be obtained.
4. XRP (Ripple)
Ripple focuses on international payment solutions for financial institutions. It wanted to cover the drawback of high-cost cross-border payments that took more days to complete a transaction. Ripple is just like the RTGS (real-time gross settlement system) and the currency exchange. A network of independently validating servers compares the transaction records based on a consensus process to ensure integrity. The data in Ripple is forged to a single value by using HashTree and this is compared across the validating servers. Ripple is able to handle 1,500 transactions per second (tps) when compared to Bitcoin’s 3-6 tps. Ripple’s token is XRP and 100 billion coins were issued at inception.
5. Bitcoin Cash (BCH)
This offshoot of Bitcoin was launched on 1st August 2017 to make the Bitcoin as the mainstream payment tool instead of just a digital investment. A group of developers were dissatisfied with Bitcoin’s proposed improvement plans and wanted to create a hard fork to increase the block size of Bitcoin to eight megabytes. The Bitcoin Cash began trading at $240 on the day of its launch. The people who owned Bitcoins were given free Bitcoin Cash tokens. But again on Nov 2018, the Bitcoin Cash was again split between two rival factions as Bitcoin ABC (Adjustable Blocksize Cap) that would maintain the block size at 32 MB and Bitcoin SV (Satoshi’s Vision) that would increase the blocksize to 128 MB.
Cryptocurrencies are volatile and many have just vanished into thin air after their ICOs. There are about 3000 cryptocurrencies in circulation now. The cryptocurrency is only as valuable as the value assigned to it by the people dealing in it. But investing in it can even pay off in the long run.