The top 10 cryptos explained
With over 1500 cryptos in circulation and new tokens being introduced all the time, it’s almost impossible to stay up to date with the market.
Luckily, only a handful of these truly influence the industry, so understanding what these cryptos do and how they work is key to understanding the whole space.
In this artcle we’ll take a quick look at 10 of the most important and interesting cryptos, and simply explain what they do and where they’re going.
Internet money and digital gold.
Bitcoin is the original cryptocurrency. Released in early 2009, it is a new form of internet money that is fundamentally different from existing currencies.
It is decentralised, meaning it isn’t controlled by any single company or person, and all transactions are peer-to-peer. The history of all transactions is continually being verified by powerful computers, so it is impossible to change once a transaction has been accepted.
This means that anybody in the world is able to buy bitcoin and send money to anybody else cheaply and quickly, which has never been possible before.
Bitcoin blockchain, using Proof-of-Work (PoW) consensus.
Scalability. Bitcoin can typically handle 5–7 transactions per second, with fees from a few cents to a few dollars. When the transaction volume on the network increases, fees skyrocket and transactions take a long time to clear.
In contrast, Visa and Mastercard can reportedly handle around 2000 transactions per second.
In order to be a global payments system, Bitcoin needs to improve on this dramatically.
More on Bitcoin here.
Developer platform, as well as programmable contracts and money.
Ethereum utilises smart contracts, which allow somebody to send money to another person automatically, but only when a certain set of conditions are met. For example, during the process of selling a house, the buyer and seller could enter into a smart contract that transfers ownership to the buyer, and money to the seller automatically once a deal has been reached.
The other major benefit Ethereum holds is its developer platform, that allows decentralised applications (or Dapps) to be built on top of Ethereum. An easy way to think about this is that Apple or Microsoft allow developers to build applications on top of their software, and Ethereum takes a similar approach. It has its own functions, but also allows other developers to use its blockchain to build new applications and uses.
This has also given rise to ICOs (initial coin offerings) being held on Ethereum’s network. ICOs allow developers working on new blockchain technologies to raise money by selling off tokens in their future application.
Ethereum blockchain, currently using PoW, but will eventually move to Proof-of-Stake (PoS).
Ethereum has a few issues at the moment. It is suffering the same scaling problems as Bitcoin due to the inherent size of their transaction capacity (more on how blockchain tech works here).
It’s become clear since the crash of crypto prices in early 2018 that the market for Dapps is much smaller than first thought, so Ethereum is experiencing slower than expected growth.
There are also other platforms such as EOS creating similar technology that’s simpler to use, which are putting pressure on Ethereum in the long term.
More on Ethereum here.
Enterprise payment network.
Currently it takes days and massive fees for international payments to go through. Ripple (or the token XRP) is intended to be used by banks and payment providers for rapid, cross-border payments with incredibly low fees.
Distributed ledger (but not a blockchain) owned and operated by Ripple Labs, using a ‘proof-of-correctness’ consensus algorithm.
Ripple is the name of the company that created and owns most of the XRP token. It is not considered a decentralised cryptocurrency, as Ripple owns over 50% of all XRP tokens in circulation, as well as the majority of validator nodes in the XRP network.
This is not to say that Ripple the company won’t be successful with their technology, but it should not be considered in the same category as true cryptos such as Bitcoin and Ethereum, and has a long way to go to prove that it’s a reliable, trustworthy platform for international payments.
More on Ripple here.
Source/More: The top 10 cryptos explained – Good Audience