Comparison of Various Cryptocurrencies
What Other Cryptocurrencies Are Available?
Based on the free open-source code for bitcoin, thousands of variants are available. Some call themselves better than bitcoin, although that may not be the case. Bitcoin is certainly a trendsetter for other cryptocurrencies. Altcoins have the same framework as that of bitcoin. A few other more-known digital currencies after bitcoin are Bitcoin Cash, Dash, Ethereum, IOTA, Litecoin, Monero, NEM, Ripple, and Zcash. The transaction speed, transaction fee, unit price, active community, acceptance by users and retailers, and so on, are some of the various factors based on which the digital currencies make in the list.
Despite of the many current and upcoming digital currencies, bitcoin is still maintaining a great hold as a leader due to its acceptance, popularity, and market capitalization. Ethereum and Ripple are more accepted by the corporations and have their major backing.
Altcoins try to capture market by presenting themselves with some objective. These objectives are not just financial and penetrate into different business domains as well. Dentacoin is a good example where it is presented as a platform to provide solutions to benefit the users of the dental industry, ranging from dental professionals and patients. It offers an incentive to both the user groups. Dentacoin is built on top of the Ethereum blockchain. Dentacoin (DCN) is not minable, but pre-mined. The total DCN supply is 8 trillion that will be unlocked gradually as per the predefined schedule.
Thousands of cryptocurrencies have come up in a couple of years, as those are relatively easy to make from the open-source code by changing some parameters. Further, initial coin offerings (ICOs) appear to be the get rich quickly scheme. Most of the market capitalization is based on speculation and acceptance by the main stream. Government regulations, if any, affect the confidence in the digital currency. An experienced software programmer could make an own coin within 30 minutes to one day maximum. However, the step of programming is not considered the first step, if someone is interested to create own coin. There are many more other factors like interest and involvement from the community before taking such steps, instead of creating a coin first and then looking for the interested community.
On that note, such variants of bitcoin those are created by changing some insignificant parameter do not offer any economic or technological advantage to the users. However, a coin that fixes some problems in the original code and offers new functions certainly results into an innovation. Unfortunately, such innovations die a premature death if the user community, including miners, loses interest during its slump time. It is important that the user community stays motivated throughout for the success of an altcoin.
One may ask how many cryptocurrencies we need in the world, for which there is no answer, considering there is no government-issued currency all over the world, which may be called global, though some of those may be dominating and influencing other economies. There are 180 government-issued currencies in the world today.
What Are the Objectives Served by the Leading Cryptocurrencies?
Most of the variants of bitcoin serve the same objective, that is, financial transactions between two users. However, there are others, which present different and interesting objectives to the user community. In a way, it helps enticing the new users who hope to make big money by investing early in those startups.
The following information summarizes the leading cryptocurrencies and their objectives.
Bitcoin
The main objective of the bitcoin was to create digital money. To have a media of exchange without any third party and governing authority. The decentralization brings control back into the hands of the common man, with reduction in the expensive overheads due to banks, and ability to transfer funds internationally. Another feature of bitcoin is the anonymity of its users.
Ethereum
Ethereum is different from bitcoin in terms of a decentralized environment designed to run smart contracts. A smart contract is a computer protocol intended to digitally facilitate, verify, or enforce the negotiation or performance of a contract. Credible transactions can be run without a third party, which are trackable and irreversible. The objective of the smart contracts is to provide security much better than the traditional contract law, with reduced transaction costs. Ethereum presents the idea in the form of building unstoppable applications, that is, with no downtime, censorship, fraud, or third-party interference.
Ethereum apps run on a custom-built blockchain to facilitate moving value around and represent the ownership of the property. Ethereum Foundation is a non-profit Swiss organization contributing toward new innovation toward the Ethereum platform. Ethereum wallet allows the user to hold and secure ether (the basic unit of Ethereum). The wallet allows a user to secure other cryptocurrencies built on the Ethereum platform. Corporations find Ethereum attractive because of its ability to write, deploy, use, and manage smart contracts with increased security and lesser transaction costs.
Solidity is the programming language to write smart contracts. One can design own cryptocurrency or a digital asset of value on the Ethereum platform. For that, one should create a tradable digital token. The tokens use a standard coin function. This enables the contract become compatible with any wallet or contract. One can fix the total number of tokens in the beginning. These tokens do not have to be fixed, considering the coded software can have certain rules set to change the number. Other uses of Ethereum include kickstarting a project with a trustless crowdsale, to start an organization, transparent voting process, or to build a new kind of decentralized application.
Ether is the crypto-fuel for the Ethereum network that is used to operate the distributed application platform Ethereum. Visualize ether as a form of payment, or incentive to the developers, to ensure that useful productive code of high quality is written, keeping the network healthy. The supply of ether is finite. During the 2014 presale, the gathered donations decided the total amount of supply of ether and its rate of issuance.
Ethereum.org states the results of this presale as follows:
• In total, 60 million ether created to the contributors of the presale.
• About 12 million (20 percent of the preceding) were created to the development fund, most of it going to the early contributors and developers and the remaining to the Ethereum Foundation.
• Ethers are created every block (roughly 15 seconds) to the miner of the block.
• About 2–3 ethers are sometimes sent to another miner if they were also able to find a solution, but this block was not included (called uncle/aunt reward).
Ether and bitcoin do not serve the same purpose. Ether is more of incentive to the developers, and not intended to be used as a currency or asset. As mentioned earlier, it is a crypto-fuel to keep the network running. Wallets exist to perform an automatic conversion of ether and bitcoin.
Ripple
Ripple presents itself as the world’s only enterprise blockchain solution for global payments. As per ripple.com, it compares its RippleNet solution with conventional payments solutions those are projected as slow, unreliable, and expensive. Ripple captures the market by connecting banks, payment providers, digital asset exchanges, and corporates. This is achieved via RippleNet to provide one frictionless experience to send money globally.
Ripple is a real-time global settlement network offering instant, certain, and low-cost international payments. Ripple is different from bitcoin and other altcoins in the sense that it does not need mining. Ripple has been integrated into the payment networks of a handful of global banks, with a market capitalization of more than 1 billion U.S. dollars in 2017. Ripple offers various solutions such as xCurrent, xRapid, and xVia to process payments, source liquidity, and to send payments, respectively.
With Ripple, banks are able to tap into new opportunities. RippleNet processes international payments in real time with end-to-end tracking and certainty. The bank benefits with new revenue, lower costs, consistent experience, and one integration point. For payment providers, RippleNet offers increased payment volume, one integration for greater reach, and transparent predictable payments. Corporates benefit from RippleNet from payment tracking, delivery confirmation, capital efficiency, and significant improvement over data reconciliation. Digital asset exchanges attract global payments volume and benefits from the new and reliable volume with faster settlement.
Ripple is a privately owned company that makes it not decentralized enough, as there is company’s control over the system.
Bitcoin Cash
In mid-2017, a group of developers prepared a code change in the original bitcoin code. This change also known as a hard fork resulted into splitting of the original bitcoin blockchain. Any one owning bitcoin at the time of this hard fork also got possession of the same number of bitcoin cash units. The reason of this hard fork was a want to increase the blocksize. This want was not taken well by the user community, as the original source code was well maintained with a widely accepted set of rules. However, when the code change got in place, this hard fork resulted into this spin-off of bitcoin. This was mainly due to the failure to agree on the best approach by the leaders of the bitcoin user community regarding bitcoin’s global growth and presence.
Litecoin
Litecoin was among the first of the cryptocurrencies after bitcoin. It offers a global payment network without any central governing authority. Litecoin has faster block generation rate that means a faster transaction confirmation. Litecoin.com states that litecoin is fully compatible with the bitcoin API. This means that litecoin can be easily integrated into existing applications supporting bitcoin. Litecoin’s faster confirmation makes it more suitable for small purchases. Goods and services can be bought with litecoin similar to bitcoin.
Dash
As per Dash.org, Dash stands for digital cash. Dash can be used for instant and private payments online or in-store. One needs Dash wallet to do so. Payments are confirmed in less than a second. It protects one’s financial information in terms of the activity history and balances. The Dash website states regarding security—Transactions are confirmed by 200 TerraHash of X11 ASIC computing power and over 4,500 servers hosted around the world.
Dash has features in addition to those of bitcoin that speed up the payment processing. A small group of people decide the future of Dash, making it not decentralized enough. Dash was originally known as Darkcoin. It offers more anonymity making transactions almost untraceable.
EOS
EOS offers the infrastructure for decentralized applications. EOS has gained attention because of its ability to raise more than 1 billion U.S. dollars via initial coin offerings. The focus of EOS is future development of blockchain technologies. As per the ios.io site, EOSIO is software that introduces a blockchain architecture designed to enable vertical and horizontal scaling of decentralized applications.
NEM cryptocurrency attracts users based on its consensus mechanism and supernode program. The result of this is an open public blockchain that can grow without ever compromising the throughput or stability (Ref: nem.io). The NEM Smart Asset System allows one to customize how to use the NEM blockchain. The NEM technology allows multiple ledgers to coexist on one blockchain. The NEM blocktime is one minute.
Stellar
Stellar is known as an open-source protocol for value exchange. The business objective of Stellar cryptocurrency is to move money across borders quickly, reliably, and for fractions of a penny. Stellar.org states that it is a platform that connects banks, payments systems, and people. It expands access to low-cost financial services to fight poverty and maximize individual potential (Ref: Stellar.org).
Cardano
Similar to bitcoin, Cardano is a decentralized public blockchain and cryptocurrency project. As per cardano.org, Cardano is developing a smart contract platform that seeks to deliver more advanced features than any other existing protocol. Cardano is home to the Ada cryptocurrency that can be used to send and receive digital funds. Cardano states itself more than just a cryptocurrency and calls itself a technological platform with a capability of running financial applications. The layer-based development allows system flexibility in terms of maintenance.
Tronix
Tronix (TRX) is the official currency of TRON, which aims to be a decentralized entertainment content-sharing platform. The tron.network website presents the users the benefits of high throughput, scalability, and high reliability. The Tron website explains how these benefits are materialized. High throughput is achieved by improving the transactions per second (TPS) in TRON. TPS wise, it has surpassed bitcoin and Ethereum. TRX consistently handles 2,000 TPS, 24 × 7, whereas TPS is 25 for Ethereum and 3–6 for bitcoin.
Tether
Tether provides benefits of both the open blockchain technology and traditional currency. It converts cash into digital currency. The Tether platform is built on top of the open blockchain technologies. Every tether is backed 1–1, meaning that every tether dollar is equivalent to the government-issued dollar. Tether.to publishes the reserve holdings on a daily basis, subject to professional audits.
Binance
Binance is a combination of two words, binary and finance. Binance issued its own token called binance coin (BNB) from the initial coin offerings. The official website binance.com states that BNB runs natively on the Ethereum blockchain and follows the ERC20 token standard. The token was established with a total supply of 200 million. BNB can be used to pay for trading fees on the exchange. BNB has a discount and repurchasing plan in place to attract users. BNB plans to build a decentralized exchange, with BNB as one of the key assets and incentive.
VeChain
VeChain has its cryptocurrency VET, is a blockchain platform with a focus on financial services, supply chain management, and smart contracts. VET pioneered to partner with Chinese government and created a disaster recovery plan. VeChain is a blockchain platform for products and information. By leveraging on the blockchain technology, VeChain strives to build a trust-free and distributed business ecosystem, which is self-circulating and scalable. VeChain offers the API gateway service, third-party services, and distributed data storage. VeChain has implemented blockchain solutions across various industries such as luxury goods, liquor, and agriculture. It has deployed 111 nodes around the world (Ref: verchain.com).
The focus of Project PAI is on PAI, that is, personal artificial intelligence. As per the white paper on projectpai.com, it presents a utility network coin for using PAI, a 3D intelligent avatar designed to look, speak, and behave like a human being in the digital space. This is directly owned and managed by the original user. The user gets compensated for doing so. The PAI network is a decentralized platform and digital avatar repository to interact with decentralized applications.
The white paper defines a digital profile as any form of personal identifier that can be contributed to the creation or improvement of PAI. Some examples include: biometric, voice capture, facial recognition, semantics, social activity, and even personality.
Huobi Token
Huobi exchange is a leading cryptocurrency exchange by volume. Huobi exchange has created its own cryptocurrency Huobi Token (HT) similar to Binance (BNB). HT enables voting for coin listing, as well as being rewarded for doing so. Huobi offers subscription schemes in five tiers.
0x
0x (ZRX) is an open protocol for decentralized exchanges on the Ethereum blockchain. As per 0xproject.com, in the 0x protocol, orders are transported off-chain, massively reducing gas costs and eliminating blockchain bloat. Relayers help broadcast orders and collect a fee each time they facilitate a trade. Anyone can build a relayer. Benefits of 0x are trustless exchange, shared liquidity, and open source. It is built on Ethereum’s distributed network with no centralized point of failure and no downtime; each trade is settled atomically and without counter-party risk. The 0x protocol is a pluggable building block for dApps that require the exchange functionality. The goal of the 0x project is to address the inefficiencies of decentralized cryptocurrency exchanges, as well as the inability of various exchanges to work together.
As per ethereumclassic.org, Ethereum Classic (ETC) is a smarter blockchain; it is a network, community, and cryptocurrency that takes digital assets further. In addition to allowing people to send value to each other, ETC allows for complex contracts that operate autonomously and cannot be modified or censored.
This may be best explained with an analogy, imagine bitcoin as a landline phone—it does one thing very well. ETC is like a smartphone—it can do everything bitcoin can and much more (Ref: ethereumclassic.org).
NEO
NEO is a blockchain platform and cryptocurrency designed to build a scalable network of decentralized applications. NEO presents itself as an open network for smart economy.
As per Neo.org, it is a non-profit community-based blockchain project that utilizes the blockchain technology and digital identity to digitize assets, to automate the management of digital assets using smart contracts, and to realize a smart economy with a distributed network.
NEO uses a delegated Byzantine Fault Tolerance (dBFT) consensus mechanism and can support up to 10,000 TPS.
Neo.org further states its vision of the future in the following terms:
• Digital assets are programmable assets that exist in the form of electronic data. With the blockchain technology, digitization of assets can be decentralized, trustful, traceable, highly transparent, and free of intermediaries. On the NEO blockchain, users are able to register, trade, and circulate multiple types of assets. Proving the connection between digital and physical assets is possible through digital identity. Assets registered through a validated digital identity are protected by law.
• Digital identity refers to the identity information of individuals, organizations, and other entities that exist in the electronic form. The more mature digital identity system is based on the PKI (public key infrastructure) X.509 standard. In NEO, we will implement a set of X.509-compatible digital identity standards. This set of digital identity standards, in addition to a compatible X.509 level certificate issuance model, will also support the Web of Trust point-to-point certificate issuance model.
The NeoContract smart contract system is the biggest feature of the seamless integration of the existing developer ecosystem. Developers do not need to learn a new programming language, but can use C#, Java, and other mainstream programming languages in their familiar IDE environments (Visual Studio, Eclipse, etc.) for smart contract development, debugging, and compilation. NEO’s Universal Lightweight Virtual Machine (NeoVM) has the advantages of high certainty, high concurrency, and high scalability. The NeoContract smart contract system will allow millions of developers around the world to quickly carry out the development of smart contracts. NeoContract will have a separate white paper describing the implementation details.
IOTA
IOTA is a protocol that achieves consensus on the state of matters in a network. Iota.org states its vision to enable all connected devices through verification of truth and transactional settlements that incentivize devices to make available its properties and data in real time. This gives birth to entirely new general-purpose applications and value chains.
Monero
Monero is a decentralized cryptocurrency. It attracts users with its security, privacy, and untraceability. Monero is a secure digital cash operated by a network of users. Similar to bitcoin, the transactions are verified by consensus. Once transaction gets recorded on the blockchain, it can be reversed.
Zcash
Zcash targets to provide enhanced privacy to users. Similar to bitcoin, the transactions are published on a public blockchain. Zcash offers users an ability to hide sender or receiver information via an optional privacy feature. It has fixed 21 million units in total as bitcoin has.
What Makes Them Different From Each Other?
Cryptocurrencies discussed so far are different from each other in many ways. Most of the virtual currencies are copies of bitcoin with some changes in insignificant parameters, in an effort to look different from bitcoin. This is in the hope that users will show confidence in that digital currency one day, and the owners or users possessing those coin can make money out of that.
Ethereum evolves the game by bringing the Ethereum virtual machine. Similarly, other cryptocurrencies attract various communities with their unique objectives or focus on particular entity or business domain.
Which One Is Better?
Considering the acceptance, popularity, security, privacy, and market capitalization, bitcoin is certainly standing as the leader of all the cryptocurrencies. Ethereum with its presence with smart contracts is the immediate next one.
The aforementioned are just my opinions only, as there is no way to predict which way these two may go in the future.
If Bitcoin Is Already Gone So Wildly High, Should I Consider Investing in Other Cryptocurrencies?
One must not invest what they cannot afford to lose. There is no harm in becoming the early investors of another promising cryptocurrency that shows good user acceptance and confidence, and an active community supporting. Bitcoin took nine years to reach this level, which is actually not a very big duration. Remember a developer used 10,000 bitcoins to buy two pizzas in 2010. Considering the current value, the developer would have been a multimillionaire today.