Pros/cons of the top 10 cryptocurrencies in market cap everyone need to know (1)

Overview

This is an article for potential investors and people interested in the hottest ethereum/blockchain project recently. This can also serve as reminding notes to organize information as there are so many altcoins now and people are easily confused with.

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

  1. Bitcoin(BTC): The first successful cryptocurrency, Owning around 46% of the crypto market.

Pros:

  • The most accepted and easy to trade crypto in the current market, with sufficient resources online for everyone to learn more about.
  • Has a large community and unlikely to disappear suddenly or found as spam which have happened to other altcoins.

Cons:

  • High transaction fee and scaling problem: As average block ming time is 10 minutes and blocks in bitcoin are limited to 1MB in size, which allows only 3 transactions per second, number of transactions to be mined raises incredibly. Transaction fee thus increases while miners are prioritizing transactions with a higher fee. See the following transaction fee chart:
Bitcoin transaction fee chart
  • Consensus problem: Reaching agreement is also not easy in bitcoin due to its large community. There are always different supporters. A good example is the recent solution for scaling problem, SegWit and bitcoin cash(covered later in this article). Some even joke that bitcoin is the Nokia in the world of cryptocurrencies.

2. Ethereum(Ether, ETH): Ethereum is a decentralized platform that runs smart contracts written in Turing complete programming languages such as Solidity. Ether was created as a cost for programs to run in Ethereum.

Pros:

  • Ethers will always be needed to execute code on Ethereum, and most projects nowadays are built on top of Ethereum, which makes it the best long-term potential cryptocurrencies.

Cons:

  • The value of Ether ties to the success of Ethereum. It is possible that it can be replaced by future blockchain projects with similar features. One example is the NEM project(covered later).

*Interesting facts: There is no limit on Ether supply, whereas the bitcoin supply is fixed to 21 million tokens.

3. Bitcoin cash(BCC): A permanent fork of bitcoin, favoring supporters that don’t like SegWit. It means that you will have the same amount of bitcoin cash as the bitcoins you owned before the fork on August 1st, 2017(It’s like bitcoin was cloned since that time).

Pros:

  • Solves the bitcoin scaling problem by increasing the block size from 1MB to 8MB, speeding up mining time and lowering the transaction fee.
  • Miner can mine bitcoin cash as they mine bitcoin. (reference)

Cons:

  • Bring in a kind of mining difficulty adjustment faster than bitcoin(as explained here), which causes hash rate instability. The original thought of this adjustment is being able to lower the mining difficulty as maybe not as many miners will start mining bitcoin cash initially.

Interesting fact: Bitcoin’s mining difficulty’s changing time is about 2 weeks(2016 blocks).

4. Ripple(XRP): Private blockchain solutions for banks(youtube explain, official video), enabling exchange between real world currencies and cryptocurrencies. A simple use case is to use exchange currencies like USD with EUR at the cost of low XRP(name of Ripple’s coin).

Pros:

  • The bank market is huge and Ripple really is adopted by financial institutes. Compared to traditional bank services, the ripple network is secure and anonymous.
  • One key indication of a succeful project is it’s investors: Google Ventures and Standard Chartered Bank both invested in Ripple.

Cons:

  • It is centralized and private unike bitcoin and Ethereum. Ripple owns 70% of the coin, which implies the risk of manipulated inflation and deflation. Individuals don’t have full access of the ripple network.
  • Cost of XRP on the network will NOT be given to anyone. It will disappear instead, so the ripple’s coin is only getting fewer. Nonetheless, the time the coin to be used up is said to be hundreds of years later.

5. Litecoin(LTC): Initially just a clone of Bitcoin. It has the flexibility to implement technical improvements such as SegWit and the lightning network. In short, it can be said as an “improved” version of bitcoin. (reference)

Pros:

  • Faster and almost zero transaction fee compared to Bitcoin. Mining is easier on Litecoin since it uses a new Proof of Work algorithm than bitcoin.
  • It is created by former Google employee and lasts for 6 six years by now, which is more secure than many of the overnight coins.

Cons:

  • Since Segwit has recently been included in Bitcoin, the advantages in Litecoin over Bitcoin is reduced.
  • Litecoin is simply a modified version based on bitcoin. It does not introduce new ideas like other altcoins, which means that the market will surely be harmed if Bitcoin’s scaling issue is solved.

(The rankings from 6th to 10th will be continued in the next article.)

Conclusion

These are the top 5 cryptocurrencies in the market. We can observe that three of the five coins are related(or like a clone) to Bitcoin. The Ripple project is the most different one from these, which may indicate that cooperating with the traditional bank is still most accepted by the general public.

Any feedback or questions will be much appreciated :)