You can easily find dozens of cryptocurrencies worth tracking. Unfortunately, most people don’t have the time and patience to understand cryptocurrency. This piece breaks down the latest hype on the newest ICO (Initial Coin Offering).
Here’s a shortlist of five of the most significant cryptocurrencies to date:
What is Bitcoin?
Bitcoin is the first cryptocurrency to capture the attention of mainstream media pundits. It was borne from Satoshi Nakamoto’s white paper on a ‘Peer-to-peer electronic cash system’ written as a response to the 2008 financial crisis. Bitcoin is unlike traditional currencies because it is not controlled by any central bank. It uses a decentralized digital ledger (known as a ‘block chain’) to record every bitcoin transaction. In the past, many experts were skeptical towards the idea of a decentralized monetary system, but today bitcoin and block chain technology is considered the starting point to something much bigger. People are seeing the potential to develop a new global currency system independent of central banks and monetary policy.
What is the Difference Between Ethereum and Bitcoin?
Ethereum is the second largest cryptocurrency, and is predicted to overtake Bitcoin in the future. Both Bitcoin and Ethereum utilize blockchain technology. However, Ethereum’s block chain is far more advanced. Where Bitcoin is only a digital currency, Ethereum allows for the creation of smart contracts. Smart contracts can be described as highly programmable digital money; imagine being able to automatically send money from one person to another but only after a certain set of conditions are fulfilled. The potential impact for this technology is far-reaching when you consider all the existing intermediaries that utilize this logic to connect you with others (for example Airbnb, eBay, Uber). Most centralized systems which we use today could be built as a decentralized system on Ethereum, where transactions can be completed without an intermediary and the costs associated with them.
Ripple is the 4th largest cryptocurrency in terms of market capitalization. It was created for banks to make faster, global payments of any size at low costs. Traditional cross-border transactions are needlessly complicated and can take days or sometimes weeks to settle. In addition, it requires banks to go through intermediaries, which further delays the completion of the transaction. Ripple is an alternative which aims to be both faster and more direct. For consumers sending money around the world, it simplifies regular bank transactions. In addition, it allows for banks to offer improved payment products.
Released in 2014, IOTA is currently the 5th largest cryptocurrency by market capitalization. It is a completely new distributed ledger technology and aims to function as the backbone of the Internet of Things. “We want to enable companies to explore new business-2-business models by making every technological resource a potential service to be traded on an open market in real time, with no fees”.
IOTA runs on a more advanced technology than blockchain. Its network structure is known “Tangle” and is derived from blockchain technology. It hopes to overcome some of the existing issues
currently facing blockchain technology in terms of mining, transactions speed and scalability.
Formerly known as Darkcoin and XCoin, Dash is the 6th largest cryptocurrency today. Originally based on Bitcoin’s software, Dash aims to improve upon its predecessor by providing instant, private transactions with a high degree of anonymity. In addition, it also offers its users a decentralised funding and governance system. Dash is widely considered the cryptocurrency replacement for PayPal. It was made for shopping, but it can also be used for consumer-to-consumer transactions. Business owners who use Dash, will discover that transactions are faster and there’s no delay in waiting to see the payment charged to their account. In addition, a further benefit of using Dash is that transaction costs are relatively low.