Pros/cons of the top 10 cryptocurrencies in market cap everyone need to know (3): Monero, IOTA, and ETC

Overview

This is to introduce and compare the top 8th to 10th cryptocurrencies in market cap.

Current market cap rankings and information can be found here. Note that this is my personal view and observations and should not be considered as financial advice.

Story begins

8. Monero(XMR): A fully private and untraceable blockchain (reference)

Pros:

  • Full privacy: uses 3 different technologies to hide sender, receiver, as well as the amount transferred. A quote from the official website: “In monero, there is no way to accidentally send a transparent transaction.” It seems to be the number one privacy blockchain option currently.
  • No blocksize limit: The blocksize can be increased based on demand. The only restriction is the blocksize growth rate, indicating that there will be little scalability issue.
  • There are similar projects (ZCash & PIVX) that are also accepted by the public (top 20 and top 40 in market cap), showing that the security problem is really an issue that the market is interested in.
  • Only takes about 2 minutes to verify a transaction

Cons:

  • Does not have a standard voting system for the project changes: Suggestions for the network can be posted on the forum, but Monero developers will decide themselves on which to adopt.
  • The official forum is not active. Screenshot of the forum: Last update is June 2016

However, the Monero forum on reddit is more active. This also implies a lack of structure in terms of project management.

  • Still uses the Proof of Wrok algorithm. However, it utilizes another mining algorithm that is designed for CPU mining, which means individuals can mine and centralized mining pool is unnecessary. (referenced from wiki)

9. IOTA: A completely different structure from the original blockchain which requires no transaction fee. (referenced from IOTA official FAQ page)

Pros:

  • It’s biggest selling point: no transaction fee. This makes micro-payment more feasible. This is realized by using a new concept called “Tangle”. Traditional miners are replaced by each network participant, which means you cannot mine IOTA and get rewards from doing it. Every participating blocks are required to verify two transactions in order to join the network. (See a good visualization of the Tangle network here) Screenshot:
  • No centralized mining in IOTA: It is completely decentralized since transactions are verified by merely individuals.
  • The only scalability problem I can see is the transaction processing time. This can be solved as more users join this network and help validating transactions as they should do. A simple illustration:
source: https://otland.net/threads/iota-cryptocurrency-giveaway.245265/
  • It is quantum-secure: Quantum computer is only a theory now but it is said to be able to break every cryptography by its fast computing performance. (The most powerful computer now is supercomputer) As said in the official website, IOTA uses a different Proof of Work algorithm called “Winternitz signature”, that is resistant to quantum computers.
  • It is designed for IoT(Internet of Things): Since there is no transaction fee, it allows data transfer with no cost, which enables machines to communicate with each other by exchanging data. A simple example is a sensor selling data to machines in need.
  • Instant transactions can be done: Using the tangle network, one doesn’t have to wait for others transactions to be verified first like what it is in a traditional blockchain.
  • currently no competitors

Cons:

  • No smart contracts in IOTA: We can think of smart contracts are codes to define a set of rules/functions that is accepted by everyone and can be called later by authorized parties. Since the Tangle network doesn’t have strongly ordered transactions(We can see this from the above screenshot), no such rules can be defined and make use of as not all participants agree or have validated the same transactions before. However, it is said in the forums that IOTA is going to implement smart contracts based on other protocols.
  • There will be no incentive for extra nodes to help verifying the transactions, as there will be zero reward for validating each transaction. That is, the network depends fully on its users.

10. Ethereum Classic(ETC): This is a coin that is related to the history of Ethereum. (can be viewed as an old Ethereum)

A short summary referenced from an exhaustive and well-explained article here:

A hard fork of Ethereum happened in July 2016 due to an attack, known as the DAO attack, that hacked around 50 million dollars. Main community supporters including Vitalik proposed to change the code of Ethereum to invalidate the hack and refund the victims. However, some held the belief that the code of a blockchain should be immutable no matter what. The solution is to “fork” the original Ethereum into Ethereum and Ethereum classic.

Pros: (reference)

  • People can save money cost by Ethereum projects(“gas”, which should be paid by ether, is needed to run programs in Ethereum) simply by switching to Ethereum Classic. After all, Ethereum Classic and Ethereum uses the same protocol and they are running the same code.
  • The price of ETC will skyrocket if people start switching to Ethereum Classic. Note that the reason why Ethereum takes a large portion in the market now is because there are tons of projects that are built on top of Ethereum and they need to pay ethers in order to run their programs. Currently, price of ETC is 23 times lower than ETH.

Cons:

  • Most major developers are supporters of the new hard forked Ethereum. The communicty of ETC is quite small, and most people buying it are not real users that uses the token to execute programs.
  • Ethereum Classic may not follow the future changes made to Ethereum. An example is the possible future move from PoW to PoS(Proof of Stake), a proposed algorithm in which the nodes validating transactions are chosen randomly by its wealth rather than the computing power it has.
  • It is said that many ETC buyers are Bitcoin supporters that don’t want Ethereum to succeed. (reference)

Wrap up

These are the top 10 cryptocurrencies that are known by most people/investors. Having a basic understanding of these altcoins will be the first step to catch up with the fast-changing world of cryptocurrencies. However, please also note that the top 10 may change as there are still many great projects going on and many of them have strong developer team and community.

On the other hand, although market cap can be viewed as an indicator of the most trending projects, we still have to take into account that it takes time for the public to understand and accept new technologies. The only thing we can guarantee is that these projects received most attention and met the largest market demand in the past. New projects that are rapidly growing and intensively raising discussions are also something we should take a look at and evaluate the solutions it proposes to solve the issues of existing blockchain projects.

Lastly, we should always do our own research and think about this question before diving into anything: “Is it really a long term project or people are just holding/buying it by convention or purely for investment purpose?”

Hope we can all be good supporters of blockchain and cryptocurrencies that are not easily affected by trolls and sudden news which makes the price of cryptos fluctuates so severely now.

Thank you so much for your patient reading! Any suggestions on how to improve or on the next topic will be much appreciated:)