There’s no doubt that, in 2017, cryptocurrency became a mainstream term. With Bitcoin, the most widely known cryptocurrency, reaching stratospheric valuations, regular consumers took note and wondered if there’s anything in this cryptocurrency lark.
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And those who delved deeper would have found that, yes, there’s plenty in it. Bitcoin might be the best-known cryptocurrency out there, but there are more than 1,400 others that you may or may not have heard about. The point is that they’re all taking a blockchain-based approach to creating digital ledgers of value.
If you’re unsure about how blockchain works, do check out our no-nonsense guide to Bitcoin. But if you’re fairly set on the fundamentals of blockchain and cryptocurrency, here’s a guide to the other cryptos that are making headlines.
Before we move on, though, do please understand that this article doesn’t constitute investment advice of any kind. What follows is merely informative. If you decide to play the cryptocurrency foreign exchange markets, take note that there’s plenty of risk involved in doing so. Indeed, many high-ranking business personalities have derided the whole idea of cryptocurrency, with people like Warren Buffet saying he’d never stake money on a cryptocurrency.
Still, if you’re interested, here’s what you need to know about some of the biggest Bitcoin alternatives.
Ethereum is probably the second-best known cryptocurrency out there. At the outset, Ethereum was initially a network that connected public nodes, and went live in 2015. It worked in a similar way to Bitcoin, with computers solving complex problems. The reward for this was the cryptocurrency Ether, which could be transferred between accounts and used to compensate users for performing the complex computations.
The thing is, in 2016, a massive cyber-attack that saw $50 million in Ether coins caused a rift in the organisation about how to deal with the security, so it split into two separate blockchains. The new version was called Ethereum, and the original one stayed the same, but went under the name Ethereum Classic. Ethereum came out on top in terms of valuation – the value of the coin grew by over 13,000% in 2017. Today, it’s just over $1,000 for a single Ethereum coin, while an Ethereum Classic coin will set you back around $30.
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The reason for this is because, when Ethereum split off with its new way of doing things, it took a lot of its top developers and nodes with it. The new blockchain had much-improved security on the old one, and it provided developers with more options for involvement. Some experts have been impressed with Ethereum’s approach to cryptocurrency and blockchain, and the network is certainly favoured among tech-types, with many smaller cryptocurrencies based on the Ethereum network.
Okay, technically, Ripple isn’t a cryptocurrency; it’s a company. The currency used by Ripple is called XRP, and that saw its value grow by 36,000% last year. Ripple the company uses its XRP tokens, and other technologies, to facilitate super-fast international payments. It’s had a whole bunch of financial institutions adopt its platform over the past year, and it claims to have many more coming on board in 2018. As for the currency, well, according to the experts, the price rise has been purely speculative. And indeed, while XRP reached a high of just over $3 per token at the beginning of January, it’s now trading for around $1.50.
The unique selling point behind Cardano is its security features – its founders say that it was built from the ground up with security in mind. Unlike Bitcoin, Cardano is actually built out of two layers. The first is similar in that it contains a digital ledger and the main blockchain, which handles transactions and new Cardano tokens. The second layer, however, is a sort of port that allows different technologies to interact with the blockchain. Separating these two layers means better security and anonymity for users, as well as greater flexibility to update the platform as and when required. Currently, Cardano is trading for around $0.60.
Much like Ripple, Stellar was designed to make exchanging money much easier. Servers run a software implementation of the Stellar protocol, and use the Internet to connect to and communicate with other Stellar servers, forming a global value exchange network. Each server stores a record of all “accounts” on the network. These records are stored in the Steller blockchain. Users can then exchange the Stellar currency on the network – across borders – without having to fork out loads of transfer fees. Currently, Stellar’s trading for around $0.50.
Neo’s an interesting one for a few reasons. It’s intended as a blockchain platform for the development of digital assets and smart contracts. But what’s really cool about it is that there are only 100 million Neo tokens in existence. You can’t ‘mine’ more NEO coins – that 100 million is fixed. This means that, when or if Neo becomes a popular cryptocurrency, its prices will go up, because there is a limited supply. Small wonder, then, that even now, Neo is trading for around $140.
Monero was founded in 2014 and it focuses on privacy as its main selling point. Its blockchain obscures the sender, recipient and amount of every transaction made, meaning that, if you transfer Monero to anyone, the details of that transaction will be kept anonymous. Monero also aims to take a more egalitarian approach to ‘mining’ – the method of creating new Monero tokens. According to its designers, Monero coins can be mined relatively efficiently using consumer-grade computers. It’s currently trading for around $360.