Digital currencies (Altcoin or cryptocurrencies as they are otherwise known) are making waves in the world of money. They are, in case you weren't aware, a series of decentralized peer-to-peer digital currencies. The de facto one that started it all is, of course, Bitcoin, but there are over 700 more.
Some of these digitalcurrencies are easier to mine than others but of course, there are tradeoffs. Some are a greater risk due to their low liquidity and others suffer from problems with acceptance as well as issues with value retention. These are real issues you should be aware of before thinking of flirting with them.
In the following article, we'll look at Bitcoin, of course, and six other popular digital currencies out there.
We'll focus on:-
- Bitcoin (of course),
- Monero and;
So without further ado, let's get stuck in shall we?
Bitcoin - BTC
Bitcoin is, to most, the de facto digital currency. It launched in 2009 and has grown from strength to strength. Bitcoin offers the promise of low transaction fees when compared to traditional online payment mechanisms.
The great appeal of Bitcoin lies in the fact that it is operated by a decentralized authority. This flies in the face of traditional government-issued fiat currencies. To date, Bitcoin has a market capitalization of around $45 Billion.
Bitcoin recently split after a two-year feud by users. Bitcoin Cash and Bitcoin are now officially competing currencies. Which one will win out, only time will tell.
Litecoin - LTC
Litecoin was launched in 2011 and was one of the first digital currencies that launched after Bitcoin. They like to think of themselves as the silver to Bitcoin's gold. Created by Charlie Lee, an MIT Graduate and former Google engineer, Litecoin has become very popular.
As all cryptocurrencies, it is based on an open source global payment network with no central control. It is very similar to Bitcoin but has a faster block generation rate.
This allows Litecoin to provide faster transaction confirmation at near-zero cost. A growing number of merchants have started to accept it too.
Zcash - ZEC
Zcash launched in the latter half of 2016 and has gone from strength to strength. These chaps define themselves as “If Bitcoin is like HTTP for money, Zcash is HTTPS". Cute.
This digital currency comes with all the benefits of open-source, decentralized transactions.
Zcash offers great privacy and selective transparency of transactions. This is the reason why it considers itself the HTTPS to HTTP of Bitcoin. It claims to offer greater security and privacy with all transactions recorded on blockchain. User information like the sender and recipient and amount are all kept private.
This digital currency does offer its users the choice of "shielding" transactions. Transaction content is encrypted using advanced cryptographic techniques, which is nice.
Dash - DASH
Once known as Darkcoin, Dash is supposed to be more secretive than Bitcoin. This digital currency offers great anonymity than others owing to its decentralized master code network. This makes transactions almost untraceable, of course.
Since its launch in 2014, Dash has developed quite a following. Developed by Evan Duffield, you can mine Dash using a CPU or GPU.
Darkcoin became Dash in 2015 which is an abbreviated construction from Digital Cash.
Ripple - XRP
Ripple is a real-time global settlement network. It offers instant, certain and low-cost payments worldwide. It "enables banks to settle cross-border payments in real time, with end-to-end transparency, and at lower costs", according to Ripple.
Ripple launched in 2012 and currently has a market capitalization of around $6 Billion.
Ripple uses a consensus ledger as a method of conformation. What is unique about Ripple is that you don't need to mine it. Because of this, Ripple reduces the strain on your computer and minimizes latency.
Ripple believes that "distributing value is a powerful way to incentivize certain behaviors". It does, therefore, currently plan to distribute itself mainly "through business development deals, incentives to liquidity providers who offer tighter spreads for payments, and selling XRP to institutional buyers interested in investing in XRP".
Monero - XMR
Monero is another secure, private and untraceable digital currency. It launched in 2014 and, as you'd expect, it is open source. It quickly attracted a lot of attention from cryptocurrency aficionados and fans.
Monero, unlike others, is completely donation based and community driven, which is nice. This digital currency prides itself on its strong focus on decentralization and scalability. Monero enables complete privacy through using a special technique called "ring structures".
This technique uses a group of cryptographic signatures that includes at least one real participant. As they all appear equally valid it is difficult to find the real one. Hiding in plain sight if you like.
Ethereum - ETH
Ethereum launched in 2015 and is a decentralized software platform that allows Smart Contracts and Distributed Applications to be built. This digital currency provides these services without any downtime, fraud, centralized control or interference from third parties.
During its pre-sale launch in 2014, Ethereum received a massive amount of interest. Ethereum applications run on its platform-specific cryptographic token, ether. Ether can be likened to a vehicle for traveling the roads of the Ethereum platform.
According to Ethereum, ether can be used to "codify, decentralize, secure and trade just about anything". Ethereum did suffer a cyber-attack in 2016 and subsequently split into Ethereum Classic (ETC) and Ethereum (ETH). Moreover, to date, Ethereum has a market capitalization of around $18 Billion.
This makes it the second biggest cryptocurrency after Bitcoin.
The final word
Whilst Bitcoin is likely to be the most popular cryptocurrency for a while yet, upstarts like Ethereum and Ripple are hot on its heels. Many are even touted as being superior or more advanced than Bitcoins.
Whichever one of these digital currencies takes your fancy, the current trend seems to suggest that they will be with us for a while. Which one will win out is anyone's guess but it'll certainly be interesting to watch or even speculate on.
Sources: Investopedia, Hongkiat, TopTenReviews