The difference between major digital currencies in the market
The future of digital currencies is taking off and many cryptocurrencies have been experiencing unprecedented growth as a result. Just one year ago, on December 31, 2016, Bitcoin closed at USD 968.42 and is now trading at USD 16,010, a massive jump in market value. Standing on the shoulders of giants, many other altcoins have begun to etch their way into the Internet of money and the top 5 five cryptocurrencies — Ethereum, Ripple, Litecoin, Monero and Dash — now make up 20 percent of the market. With so many new contenders, what exactly sets each one apart from the other? Below we break down the major differences for you.
Bitcoin
2009 marked the birth of cryptocurrencies with the introduction of Bitcoin. Based on blockchain technology which uses cryptography and distributed public ledgers, it is the first digital currency of its kind. To encourage peer to peer (P2P) transactions and prevent double spending, transactions are published on a public ledger and hundreds of copies of this ledger are stored online so they can be checked and updated. Each new version of the ledger, called a block, collects new cryptographically protected transactions and adds them to the earlier ledger.
Globally distributed Bitcoin miners who have the necessary computing power and software are tasked with checking the validity of each block. To do so, they must solve a complex mathematical formula to produce a 64-digit solution called a ‘hash’. As each block is verified, a blockchain begins to form. If anyone attempts to alter a block, its hash number will change along with the following hash sequence. In this way, any fraudulent attempts will be quickly detected.
While Bitcoin has been around for 8 years, its skyrocketing prices have caused it to be increasingly seen as a store-of-value like gold rather than a currency. Its scalability, lengthy transaction settlement times and lack of buyer-seller protections have also been major downfalls.
Ethereum
Just like Bitcoin, Ethereum runs on blockchain technology, although it is more than a cryptocurrency. It enables Smart Contracts and Distributed Applications (DApps) to be instantaneously and securely built without third party intermediaries. Ethereum’s digital currency, ether (ETH), is used by application developers to pay for fees and services and can also be traded as a digital currency through exchanges.
At the start of 2017, Ethereum was trading at USD 7.98 and is now valued at USD 872.61 — an enormous 10835% increase. According to Ethereum, it can be used to “codify, decentralize, secure and trade just about anything.” One of Ethereum’s biggest projects is Microsoft’s partnership with ConsenSys which offers “Ethereum Blockchain as a Service (EBaaS) on Microsoft Azure so Enterprise clients and developers can have a single click cloud based blockchain developer environment.”
Ripple
Ripple (XRP) departs considerably from Bitcoin as its primary purpose is to serve as a payments network that can efficiently replace credit cards, bank transfers and costly P2P platforms like Paypal. The network aims to cut down on processing times, with transactions closed in 3–5 seconds compared to Bitcoin’s 45-minute settlement times.
Ripple closed the second quarter of 2017 valued at USD 0.263 and is now trading at USD 0.819, a 211% jump. “What we have seen is an embracing of digital assets broadly by really established institutions. When you have folks like the [Bank of England], which did a [proof of concept] with us, as well as the Bank of Japan coming out and saying, we are considering this as legal tender at some point — when you see those developments, you can’t help but feel that we are on the right path, that interest is going to continue to grow,” said Miguel Vias, Ripple’s head of XRP markets.
Litecoin
Litecoin (LTC) was launched in 2011 shortly after Bitcoin. At the time, mining software was quite expensive, which made it increasingly difficult for many people to participate as miners. Litecoin’s algorithm was an attempt to open up mining opportunities to more people around the world.
Monero
Launched in 2014, Monero is a cryptocurrency much like Bitcoin, but offers enhanced privacy features and anonymity. When sending Bitcoins to another user, the recipient’s public address will reveal how many Bitcoins they own; with Monero transactions, however, a recipient’s balance is not shown. Monero also has a feature known as the ring signature, which makes the source of any funds untraceable unlike Bitcoin’s transparent ledger.
Dash
Dash emerged to improve Bitcoin in two main areas: transaction settlement times and anonymity. It accomplishes this through a two-tier architecture with miners and ‘masternodes’ that enable near-instant payments and coin-mixing for greater privacy.
COTI
COTI is a payments transaction network supported by a native digital currency that can process tens-of-thousands of transactions per second. With zero fees for buyers, low-to-zero fees for sellers, and full buyer protection, COTI combines the best of traditional payment methods with the best of traditional digital currencies.
What really sets COTI apart from the rest, is its decentralized mediation system that provides buyer-seller protections in the event of billing errors, unauthorized charges, or undelivered goods or services. COTI’s Trust Scoring engine takes it one step further by rewarding highly-trusted users with low-to-zero fees and levying higher fees on users with a higher risk profile.
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