Aug 10, 2020
Four Non-mineable cryptocurrencies
Non-mineable Cryptocurrencies with a domain focus are different. Staking is on the rise. In this post, I look at Ripple, Lumens, EOS and Tezos.
Seasoned & Centralized — A domain focus on Digital payments — Non-mineable
Ripple (XRP) is an example of a cryptocurrency that has a specific domain focus on payments. One can think of XRPs as a settlement token that makes moving money between financial institutions cheaper, nearly real-time, and more secure and transparent than the current banking and payment networks.
Ripple was launched in 2012[1] and has been viewed since as an alternative to the SWIFT payment network. The technology underpinning Ripple is not a blockchain but rather a shared cryptographic ledger with its own consensus process[2] that is not proof of work or some other energy-consuming mechanism. XRPs are not mined like Bitcoin. Instead, 100 billion XRP coins were pre-mined by Ripple (the private company) at launch. Ripple controls the circulating supply[3] which currently is estimated around 30 to 40 billion XRPs.
XRPs are used in the Ripple network to move currencies between banks efficiently. Banks that use the Ripple network technology (XRapid or xCurrent) don’t need to own XRPs themselves. Santander is one of the Ripple banking customers (more here)
Ripple Labs is a US-based tech company
XRP is a settlement coin that is not mineable
Currently 4th by market capitalization
Cloned & Open Source — A domain focus on Financial services — Non-mineable
Stellar (XLM) is another cryptocurrency with a domain focus on financial services. It is created from a fork or a rather a clone launched in 2014 as the Ripple cofounder Jed McCaleb[4] along with Joyce Kim, left to create an open source network focused more on micropayments, cross-border and financial inclusion. The non-for-profit Stellar Development Foundation (SDF) was created in collaboration with Stripe CEO Patrick Collison. SDF aims to build broader communities that use the Stellar network (whereas Ripple targets banks). Stellar partners using XLM, include Big tech (e.g. IBM) companies and startups (e.g. Saldo) (more here)
XLM — Stellar Lumens — is the coin used on the Stellar network. It is also non-mineable like Ripple. Unlike Ripple, the Stellar open-source network uses its own consensus mechanism, the “Stellar Consensus Protocol” — SCP. Also, users of the Stellar network need to hold some Lumens to process payments or exchange tokens. Lumens were pre-mined by the foundation and in several cases donated (via airdrop) to non-profits that focus on financial inclusion to incentivize adoption.
Originally, there were 100 billion Lumens. In November 2019, the SDF decided to burn 50 billion Lumens as airdrops were not having an impact on adoption. The current circulating supply of Lumens is estimated at around 15 to 30 billion Lumens.
Currently 14th by market capitalization
EOS and Tezos are two protocols that made headlines for their ICOs. The 4-year animated history of fundraising blockchain projects through Initial Coin Offerings — ICOs — from Elementus speaks.
Jan 2014-Aug 2018
EOS and Tezos are close on the market capitalization rankings in the 12th and 13th position.
Younger — High-performance Smart contract platform — Staking
EOS belongs to the younger generation of cryptocurrencies. One can think of EOS as a competitor of Ethereum. It is an open-source protocol with a focus on smart contracts and Decentralized Apps (Dapps). Its consensus mechanism and governance differ. EOS prides itself for prioritizing scalability and speed versus decentralization and censorship resistance.
EOS uses Delegated Proof-of-Stake (DPOs) as a consensus mechanism whereas Ethereum has been using Proof of work and is expected to transition soon to Proof of Stake[5] (the Casper upgrade).
You can think of Staking (partly) as similar to a term deposit. Staking means you lock your tokens for a certain period and you earn rewards (similar to interest). On the EOS protocol, staking your tokens, rewards you with voting power and power to access the EOS network (e.g. for smart contract deployment or a Dapp).
EOS is younger than Ethereum and second after Ethereum in terms of number of Dapps built on the EOS protocol (details around the world of Dapps can be found on StateoftheDapps).
EOS launched it infamous ICO in June 2017, the month that became a tipping point in the ICO craze, as the market realized that for the first-time funding early-stage Blockchain startups via ICOs surpassed early-stage VC funding. It qualifies for the longest ICO as it lasted for one entire year. The private company Block.One, behind the open-source EOS blockchain, issued 1 billion EOS tokens[6] which more or less are the current circulating supply of EOS tokens.
Currently 12th by market capitalization
Tezos
Efi Pylarinou is a global Fintech & Blockchain influencer — №1 Woman influencer in the finance sector by Refinitiv Global Social Media 2019.
[1] Ripple Labs, the technology company behind XRP, was founded by Chris Larsen and Jed McCaleb. Until 2015, it was OpenCoin and was renamed into Ripple Labs.
[2] Ripple uses a HashTree to summarize the data into a single value that is compared across its validating servers to provide consensus.
[3] Circulating supply has not been standardized. Therefore, reported supply metrics vary considerably as the methodologies varies. Circulating supply may refer to the amount of cryptocurrencies visible on-chain and may or may not include locked up or restricted tokens of founders, team members or the foundation; or token used by projects. In other cases, the circulating supply is what is reported by exchanges. The numbers may or may not reflect the programmed inflation rate over certain periods (5 or 10yrs).
[4] Jed McCaleb is a prominent seasoned figure in the cryptocurrency space. He was also the founder of infamous exchange Mt Gox back in 2006 in which he sold his majority interest early on.
[5] Protocols that use Proof of Stake (POS) don’t involve mining (which is connected to Proof of Work — POW as in the Bitcoin Blockchain).
[6] 200 million sold in the 1st 5-day period, 700 million distributed over the remaining year and 100 million held in escrow for Block.one.
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