What is Cryptocurrency?
Cryptocurrency is a virtual currency that uses a digital file as money. These files are usually created through cryptography, hiding the information system, and digital signature safeguards the transaction. The earlier several types of cryptocurrencies appeared to break the obligation of the government-issued currencies.
Cryptocurrencies are the decentralized networks that do not owe to one person or government. Unlike traditional currencies, these digital currencies are based on blockchain technology that works as a public financial transaction database. The control of each cryptocurrency process under a distributed ledger, enforced by a disparate network of computers. A distributed ledger is a list of transactions shared by everyone under the blockchain system.
8 Popular Types of Cryptocurrencies Excluding Bitcoin
Bitcoin is the first-ever cryptocurrency, developed in 2009. Since then, more than 2,000 types of cryptocurrencies are available in the market as of January 2020. And the number of cryptocurrencies still is expanding. Following is a list of 10 popular types of cryptocurrencies curated from research.
Bitcoin Cash (BCH)
Bitcoin Cash emerged from Bitcoin in 2016 to solve some of the existing problems of Bitcoin, especially regarding scalability and transaction fees. It was a disagreement in the developer community regarding the changes required in Bitcoin’s code, that gave birth to BCH.
Bitcoin Cash is one of the popular types of cryptocurrencies that are split out of Bitcoin. BCH started its journey in 2017 and it quickly grew popular with its new changes. Transactions of BCH are faster than that of Bitcoin due to the recently made changes in block size. BCH increased to 8MB as compared to the 1MB of Bitcoin.
Developed by Vitalik Buterin in 2015, Ethereum is one of the types of cryptocurrencies by market cap after bitcoin. Unlike Bitcoin, Ethereum is a platform that allows users to develop dApps, tokens, and smart contracts. This cryptocurrency has Ether or ETH value or currency.
Ethereum blockchain runs through dapps, and users must need it to carry out transactions. Multiple projects can be built using Ethereum. Unlike Bitcoin that takes 10 minutes for transactions, ETH completes it within a second.
Akin to Bitcoin, Litecoin is an open-source, global payment network that has no central authorities. In fact, it was built on the blockchain of Bitcoin. LTC was developed in 2011 by Charlie Lee, an ex-Google engineer. The prime purpose of creating LTC was to solve the prevalent issues in Bitcoin, such as scalability.
After an improved version, Litecoin became much faster and much cheaper than Bitcoin. While process transactions, it would take 2.5 minutes, whereas Bitcoin consumes the whole 10 minutes to complete the task. The coin limit for Bitcoin is 21 million, but Litecoin’s coin goes up to 84 million. LTC exists because it has improved features. But if Bitcoin manages to improve its network and system, there will be no need for LTC.
Ripple is known as bankers’ coin due to its heavy focus on International Payment Transfers. It was created in 2012 to make international transactions both fast and cheap.
Ripple works faster than traditional banks in processing transactions. If the traditional banks take a week to complete an international transaction, Ripple will finish it within a second. Due to its credibility, Ripple has become one of the leading types of Cryptocurrencies and has grown a new face for several financial institutions. Even governments also support their terms. But Ripple is not without defect. Unlike other cryptocurrencies, Ripple is a centralized network. It means that the price and sale of a token can be abrupt by central authorities.
Like Ripple, Stellar also focuses on money transfers. Stellar is the open-source network founded by Jed McCaleb in 2014. Stellar’s network is designed to make cross-border payments faster and more efficient.
Stellar is different from other cryptocurrencies in the sense that the Stellar Development Foundation is a non-profit organization. As Stellar runs through a non-profit motive, it does not charge users or institutions for using its network. It aims to uplift the developing economies that may not have access to traditional banks and investment opportunities.
EOS was developed by Dan Larimer, who is also the founder of Bitshares and Steemit. EOS token was introduced in June 2017 through an ICO. EOS is compared with Ethereum, and it has much more scalability than Ethereum. It uses an advanced mechanism to verify transactions. It is claimed to receive 10,000-100,000 transactions per second. Also, EOS supports multiple languages.
EOS faces incomplete launch itself, so nobody knows the future of EOS—how good or bad it will be.
NEO is one of the types of cryptocurrencies from China, which was created by Da Hongfei in 2014. NEO was originally called AntShares, and later it got rebranded to NEO in June 2017. NEO is also known as the “Chinese Ethereum” due to some similarities. NEO is a blockchain-based platform that assists in developing Smart contracts and launching ICOs.
While comparing NEO and Ethereum, NEO is faster. NEO can complete 10,000 transactions per second, whereas Ethereum does only 15 transactions. Besides, NEO supports multiple programming languages. But due to its dependence on the Chinese government, NEO can be criticized for being centralized.
Cardano was developed in September 2017 by Charles Hoskinson, who is the co-founder of Ethereum. Cardano and Ethereum are compared to each other as the popular types of cryptocurrencies due to having similar features. In fact, Cardano has been built over Ethereum’s technology. It offers a platform for decentralized apps and smart contracts.
The big standpoint of Cardano is that an academic community of global researchers and scientists contributes to its blockchain development. Cardano has better scalability than Ethereum’s. It can complete 257 transactions per second. Besides, Cardano has some challenges.