The Difference Between the Top Five Cryptocurrencies
Over the past year, Bitcoin has become one of the biggest buzzwords in tech and business, but Bitcoin alone is just the tip of the cryptocurrency iceberg. There are hundreds of different cryptocurrencies, and each cryptocurrency has its own spin on the blockchain technology and serves a unique function.
The purpose of this article is to briefly explain the basic history and purpose of the top five currencies on CoinMarketCap at time of writing.
Bitcoin
Bitcoin was the first decentralized peer-to-peer payment network and was first created in 2009 after the mysterious Satoshi Nakamoto first published his white paper proposing the digital currency.
It’s meant to be used by anyone as a replacement for traditional currency, but in the past nine years since it was created, an increasing amount of users see Bitcoin as more of an investment asset rather than a cash replacement, due to the possible earnings that come if the price of Bitcoin increases.
Ethereum
Ethereum was released in 2015 and was created by Vitalik Buterin, Gavin Wood, and Joseph Lubin. Rather than a just a cash replacement, Ethereum is primarily a platform that allows developers to create peer-to-peer contracts and distributed applications, or dapps. Dapps allow things like digital rights management, crowdfunding, online gambling, and financial exchanges to take place on the blockchain.
The actual cryptocurrency, ether, is used to facilitate and monetize the work of the the Ethereum platform, so people can use it to either create or join smart contracts.
XRP
Ripple Labs launched Ripple in 2012 in order to allow financial institutions to send money and other assets across borders easily, quickly, and cheaply. Created for both businesses and consumers, banks use the Ripple software to transfer money between various foreign currencies.
It isn’t technically blockchain technology, and has much more control from a middle man than other cryptocurrencies, but that hasn’t stopped Ripple from becoming one of the top coins traded on crypto markets. The actual currency is called XRP and is used to allow consumers to use any of the Ripple payment products.
Bitcoin Cash
Bitcoin Cash is a hard fork of Bitcoin, which means that it was originally created from the Bitcoin ledger. Due to scalability and fee problems with Bitcoin, developers made changes to the Bitcoin blockchain that would run concurrently with the bitcoin ledger after August of 2017, and called it Bitcoin Cash.
It increased the blocksize (or number of transactions that can be processed on the blockchain) from 1 MB to 8 MB, and doesn’t use the SegWit protocol to process transactions (an extra layer to the Bitcoin network that allows transactions to be made faster). Bitcoin Cash, like the name suggests, is meant to be used for smaller, everyday transactions.
EOS
Released in January of 2018, EOS is the newest of the top five cryptocurrencies. The original authors, Dan Larimer and Brendan Blumer, created the currency to allow app developers and users to use the EOS.IO platform to develop, host, and execute decentralized applications (dapps), similar to Ethereum. They’ve focused on offering services like cloud storage, server hosting, and user authentication.
EOS has a unique economy, where users simply need to own the tokens rather than spend them to take advantage of network resources. EOS concentrates their effort of solving common blockchain problems such as speed, scalability, and flexibility.
Conclusion
Bitcoin, Ethereum, XRP, Bitcoin Cash, and EOS all offer unique ways to utilize cryptocurrency and blockchain technology. If you’re considering investing in any type of cryptocurrency, it’s vital to understand the purpose of the currency and how the token is used within the network. Even if you aren’t planning on investing in a currency, a basic knowledge of the top tokens will help you have a better understanding of the crypto markets.
Disclaimer: Buying cryptocurrencies is not appropriate for everybody. Cryptocurrencies are not regulated. They are not backed by governments or central banks. Cryptocurrencies are technology based. You will not benefit from protections available to clients receiving regulated investment services from licensed brokers.
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Cryptocurrency investment is an exciting world of opportunity, growth, and potential, and represents the future. Entering the cryptosphere is as much about learning as it is investing, and the important thing is not to invest more, but to invest smarter.
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