A cryptocurrency is a virtual currency used as a medium of exchange to make payments and transactions virtually using powerful cryptography, monitor the production of additional units, and validate the exchange of property. All types of crypto currencies use decentralized control as compared to centralized virtual and central banking systems. The decentralized ownership of each type of cryptocurrency operates via a distributed general ledger, generally a blockchain, which serves as a database for finance transactions made by the public. Many other types of cryptocurrencies will be discussed below:
Bitcoin was released in 2009 for the first time as software for which the original source code is made freely available. Moreover, it is usually said to be the first decentralized cryptocurrency. More than 6,000 altcoins (a substitute form of bitcoin, or other cryptocurrencies) and different types of cryptocurrencies have been created since the release of bitcoin.
A blockchain establishes the authenticity of the coins of each cryptocurrency. Blockchains are a rapidly increasing list of records called blocks linked and protected using cryptography. Usually, every block comprises a hash pointer to be more of a reference to the initial block, timely recorded transaction information. Blockchain as a software cannot be easily altered by design. It is an open-ended, shared ledger that can efficiently with accuracy and transparency record transactions between two parties.
Operated by a person to person network, blockchain mutually validates new blocks for use as an open, shared, distributed ledger. If registered, it is not possible to retroactively modify the data in any of the existing blocks without making changes to all the later ones, and this is possible through network cooperation from the majority. Different types of cryptocurrencies use blockchain software.
As an example of a high Byzantine fault resistant shared computing system, blockchain is secure due to its layout and structure. Therefore, a distributed consensus has been accomplished with a blockchain.
A distributed consensus is data consensus between nodes in a shared system or reaches a proposed mutual agreement. Any technicians working with shared systems such as HDFS, MQ, ZooKeeper, Kafka, Redis, and Elasticsearch may be acquainted with this subject. Theoretically as well as practically, in accordance with the constant evolution and greater complexity of the challenging shared networks, makers have been seeking core solutions to resolve this recurring problem.
First, with the emergence of blockchain technology, specifically public blockchain in open networks and private blockchain in permitted networks, this consensus concern has again gained a lot of attention. It needs to be considered from a new perspective.
Blockchain removes the factors to worry about extensive expenditures and relying on authorities or central database, assuming no 51 percent attack (which operated against several cryptocurrencies).
The media’s insistence on Bitcoin and different types of cryptocurrencies were overwhelming. It does not seem to be overlooked by business experts and Fintech professionals. In every city, there are blockchain conferences, lectures and meetings.
Around three years down the lane, a Bitcoin was worth $300; Bitcoin was traded around $16,700 on the first week of January 2018. Subsequently, for the last 5 years, the whole worth of all Bitcoin (i.e., “market capitalization”) has fully-fledged from less than $1 billion to more than $262 billion with a everyday theoretical turnover of more than $21 billion as reported on December 8, 2017. Now (January 2018), all the outstanding cryptocurrency tokens are about $423.7 billion.
For the past few years, only the value of bitcoins and other currencies haven’t been increasing rapidly. It is the rate of increase in excitement of the introduction of the world of technology to the people that has been increasing.
It is very probable for us to be turning a new page in the financial industry with a massive transformation. Its rightly said that bitcoin with different types of cryptocurrencies might take financial marketing by a storm.
Essentially, Bitcoin and its importance may have been talked about. But, there are so many other types of cryptocurrencies that vary however they all use dissimilar technologies, and hold dissimilar startegies towards virtual monetary transactions. We understand how important it is to be updated, knowing that the financial market can be overturned soon. This post describes the most common types of cryptocurrencies being used today and highlighting the unique features they have. You might also get an idea about the best cryptocurrency to buy now.
- Bitcoin (BTC)
Let’s talk about Bitcoin. The initial emerging cryptocurrency was Bitcoin (BTC), founded on the algorithm of SHA-256. This vritual money was invented by a pseudonymous maker who went by the name of Satoshi Nakamoto in a white paper written in 2009. Over the first four decades of the Bitcoins invention, one Bitcoin’s market cost has risen from under $0.01USD to $250USD. The very unpredictable prices have made Bitcoin a relatively interesting investment opportunity for traders trying to earn from market variations and shortfalls by speculation, and simultaneously the uncertainty of the industry has made long-term investors and daily users reluctant to invest in bitcoin.
It is possible to buy a single bitcoin at minimal rates that can be as small as 0.00000001 BTC per payment. A Bitcoin’s smallest share is popularly referred to as a Satoshi, named due to the original creator. This feature gives an opportunity to trades incase BTC’s value increases till where micro trades becomes a ordinary. An increase in BTC’s price is predicted. Upon completion of the Bitcoin blockchain, users will spread the coin on the network that will remain there.
Currently, being the oldest, most used, bitcoin is one of the most reliable currencies. As a result to the quick marketplace variations and ground-breaking technical concept, it has become the topic of mainstream media coverage. Theoretically, Bitcoin could be viewed as the cryptocurrency’s’ gold standard’ as all other types of cryptocurrencies had market prices balanced to match BTC’s value.
- Bitcoin’s first distinctive character is that it’s an E-cash bearer. Meaning it can be treated as monetary cash in hand. Bitcoin transactions are permanent. You’re making a payment; it’s over. You will not be able to get it back.
- Bitcoin can be divided into about eight decimal places and could be further expanded if necessary. It can have divisibility down to $0.0000001 in the current exchange rate of 100.
- Very low processing fee.
- Litecoin (LTC)
Launched in 2011, Litecoin is another type of cryptocurrency, just like bitcoin. A graduate of MIT and former Google engineer named Charlie Lee created Litecoin. Litecoin is built on a shared, universal network of transactions that are not centrally controlled. Litecoin differs from Bitcoins in ways such as the faster rate of block creation and the use of script as a proof of the scheme of operation.
Litecoin, launched in 2011, was one of Bitcoin’s original cryptocurrencies and was usually called as “silver to Bitcoin’s gold.” They have gained a great deal of attention since its introduction. Litecoin is an online currency that works on a person to person basis. It is a universally shared payment network which is totally free of control. Litecoin was created to strengthen the limitations of Bitcoin. Over the years has gained support from the industry along with a high volume of trade and liquidity.
Although in many respects, Litecoin is similar to bitcoin with a rapid rate of block increase and production and thus provides a speedier verification of transactions. There is a rise in the number of merchants that embrace Litecoin. Litecoin had a market cap of $2.63 billion and a token value of $43.41 as of February 9, 2019.
- A simplified cryptographic algorithm that allows 4x faster block generation.
- Litecoin has recently been used to execute an atomic cross-chain swap that allowing traders to trade cryptocurrencies directly by using a smart contract without third party intervention for exchange purposes for instance.
- Ethereum (ETH)
Ethereum is a virtual place that allows the construction and operation of smart contracts and distributed applications (DApps) without any third party downtime, fraud, interference or control. Ethereum had set up a pre-sale of ether in 2014 that had received a greatly encouraging response. Its runs its app on a platform-specific cryptographic token, Ether. Ether is more like running car on the Ethereum scheme, and most developers are looking for programs within Ethereum to progress and work.
As per Ethereum, it can be used to “codify, decentralize, exchange and protect just about anything.” Ethereum was divided into Ethereum (ETH) and also Ethereum Classic (ETC) subsequent the attack on the DAO in 2016. Ethereum (ETH) has a $4.46 billion market capitalization, second amid all cryptocurrencies after Bitcoin.
- Ethereum may be used as a forum for building blockchain and new tokens
Zcash is a distributed, open-source cryptocurrency that was released in the second half of 2016, moreover, it seems quite reliable. As Bitcoin is for money, Zcash is https, that’s how Zcash describes itself. Zcash provides confidentiality and clarity in company discernment. Therefore, like https, Zcash provides extra caution with handling data and protection to all transactions which are registered and printed in a ledger. Regardless, information of customer and supplier are kept hidden. Zcash offers ‘ shielded’ transactions that permit the data to be encoded with the help of advanced cryptographic or zero-knowledge proof structure called a zk-SNARK created by their team.
- To protect the network or construct a proof, Zcash requires specific proof. This contributes to managing the system without revealing participants or amounts involved in transactions with a safe balance sheet.
Dash (formerly referred to as Darkcoin) is like an unofficial Bitcoin variant. Working on a decentralized master code system which leaves no traces of transactions Dash offers more anonymity and thus privacy of transaction. Launched in January 2014, after a short period, Dash experienced growing popularity like all types of cryptocurrencies does. Evan Duffield made and created this cryptocurrency mined easily by a CPU or GPU. The rebranding never affected any of its advanced IT functions like Darksend, InstantX.
- Dash makes use of a double ended system to operate its network which is known as the Decentralized Autonomous Organization (DAO)
- Competing to be the first privacy-centric cryptographic currency using encrypted transactions and anonymity in block transactions, DASH uses this feature called PrivateSend.
No other type of cryptocurrency has been able to replicate it.
- Ripple (XRP)
Another type of cryptocurrency is Ripple. Ripple is an international network of real-time transactions offering fast, stable and less costly global payments. Ripple “enables financial institutions to pay back overseas payments at the very moment, along with shuttering accountability and decreased prices.” Released in 2012, Ripple’s currency has a $1.26 billion market capitalization rate. Ripple has a system of conformation for the ledger consensus. Ripple does not require mining, a value that diverges from both the bitcoin and altcoins. Since the design of Ripple does not need mining, the use of computer power is decreased, and network delay is minimized.
Ripple considers that being able to distribute value is an important method of encouraging some transactions and therefore seeks to distribute XRP. Ripple aims to do so mainly ‘ by development of business by agreements, giving motives to liquidity providers offering lesser payment spreads, and the sale of XRP to the buyers considering investing in XRP. ‘
- With Ripple, only by purchasing the currency from different exchanges can you get Ripple.
- Provided by many financial institutions and banks.
- Ripple does not require mining.
- Monero (XMR)
Monero is a type of cryptocurrency which is stable, confidential and undetectable. Like all different types of cryptocurrencies. This cryptocurrency open source was released in 2014 and very quickly attracted the world of cryptography and fans. This cryptocurrency’s creation is entirely charity based and public-driven. Monero provides great security by using a unique tool called ‘ circle signatures.’ By this method, a lot of cryptographic signs looks like a minimum of one real player— but as they seem genuine, the actual signature is unidentifiable.
- Monero is based on the CryptoNight PoW hash algorithm from the CryptoNote protocol.
- Using Monero, a different unit can replace each currency unit.
Namecoin (symbol: N or NMC) is a type of cryptocurrency just like bitcoin. It is created on the bitcoin code and makes use of the very same proof-of-work procedure. Unlike bitcoin, it is restricted to 21 million cryptocoins only. In comparison with bitcoin, Namecoin can store data in its database of blockchain transactions, which Bitcoin cannot. A shared proof-of-work (POW) scheme was introduced to acquire new types of cryptocurrencies with specific usage circumstances in anticipation of increasing difficulties with this former method.
Similar to Bitcoin, a person to person network handles the transactions, balances and issuance of Namecoin through SHA256. Moreover, it also handles the proof-of-work scheme (issued when an adequate hash value is initiated to create a block which is mining). The rate of issue is a geometric sequence, with the frequency halving per 210,000 frames, for about every four years, hitting an ultimate total of NMC 21 million.
- It can also be used as an alternative, decentralized DNS.
Launched by an anonymous hacker and peercoin developer Sunny King on July 7, 2013, Primecoin is a type of cryptocurrency which was the very first digital asset to have a realistic usage proof-of-work framework. Older cryptocurrencies, such as Bitcoin, are mined using algorithms that resolved arbitrary issues, resulting in no benefit or use other than mining the cryptocurrency itself. Primecoin’s algorithm, however, has calculated prime number chains (Cunningham and bi-twin chains), the findings of which have been posted on the public ledger of its blockchain, free for use by scientists, mathematicians and anyone else.
Using a proof-of-work method to measure prime number chains was an invention which yielded reliable results while also meeting the requirements for a proof-of-work system: it required a calculation that was hard to perform but easy to check, and the complexity was adjustable. Soon after its release, some trade newspapers reported that there was a rush of more than 18,000 new operators to mine Primecoin.
Unlike Bitcoin or any other type of cryptocurrency, Primecoin targets a one-minute block generation period instead of every ten minutes, changes each block’s complexity instead of every 2016 block, and has a dynamic block reward that is a function of the difficulty. Primecoin transactions are roughly 8 to 10 times as quicker than Bitcoin transactions.
- Uses the finding for proof-of-work of prime chains consisting of Cunningham chains and two-twin chains.
NEM was launched on March 31, 2015, as a person to person cryptocurrency and blockchain network. Written in Java, NEM has a target of mass distribution structure with a C++ form in the works. This type of cryptocurrency has brought new aspects to cryptocurrency for example its, encrypted messaging multi-signature accounts, proof-of-importance (POI) algorithm, and an Eigentrust++ reputation framework.
This type of cryptocurrency enables the coexistence of multiple ledgers on one blockchain. NEM Smart Assets helps operators generate montages capable of representing any asset (e.g. currency). All NEM payments are correlated with transaction fees and the currency used for payment of transactions is a matrix called ‘ XEM. ‘
The NEM Foundation opened a Blockchain center in Kuala Lumpur, Malaysia in July 2018 to act as an incubator, accelerator, co-working space and global NEM headquarters in the country in Southeast Asia. It is 11,000 square feet and is regarded as the largest blockchain center in the Southeast Asian region.
- The first public / private, hybrid blockchain solution created from scrape.
- First to use the EigenTrust++ credibility framework to use the Proof of Importance algorithm.
NEO (previously known as Antshares) is a decentralized application platform open-source blockchain founded by Da HongFei and Erik Zhang in 2014. This type of cryptocurrencies vision has been to acknowledge a “smart economy” by using blockchain technology and smart contracts to issue and manage digitized assets since its rebranding to NEO from Antshares in 2017.
The network operates on a proof of stake, byzantine decentralized fault-tolerant (dBFT) consensus mechanism between various centrally authorized nodes and can allow up to 10,000 transactions per second. The NEO blockchain’s base asset is the undivisible NEO token that creates GAS tokens. Such GAS tokens could be used as payment for fees of transaction as a separate asset on the network. The GAS inflation rate is driven by a decreasing half-life formula that will release around GAS 100 million over 22 years.
In the Genesis Block, a total of 100 million NEOs were formed. Early investors sold 50 million NEOs and the remaining 50 million NEOs were locked into a smart contract. Every year, the NEO development team uses 15 million NEO tokens to finance long-term development goals.
The center of the NEO function a group of tools that permits makers to create genuine contract applications on the NEO blockchain efficiently and scale them up. X.509 Digital Identities allow developers to connect to real-world identity tokens that help meet KYC / AML and other regulatory requirements.
- Its aim is a “smart economy” through the use of blockchain technology and intelligent contracts to issue and manage digital assets.
This type of cryptocurrency tried to implement a “Proof-of-Research” (POR) scheme that rewards Gridcoin users for using the Berkeley Open Network Computing Infrastructure (BOINC). BOINC is a distributed computing network used to perform useful scientific computing. Gridcoin uses a more energy-efficient proof-of-stake method, although it does not directly discuss the energy costs of computing power. Gridcoin aims to ease the effect of cryptocurrency mining on the ecosystem through its proof-of-research and proof-of-stake protocol.
- This type of cryptocurrency is connected through the Berkeley Open Network Computing Infrastructure to citizen computing.
As predicted, cryptocurrency has leapt as the years passed. Many people who discouraged cryptocurrency now use it for their transactions and investments. However, given the different types of cryptocurrencies that have taken birth, it is important to know which cryptocurrency is the best to buy now. We suggest that Bitcoin and Ethereum are the best cryptocurrencies to buy now due to their ever-growing rates.