The Exploration of Cryptocurrencies: What Exists Besides Bitcoin? Part 1
Published on: 23 Oct 06:11
We mentioned in our previous blog that many people believe that Bitcoin is the only cryptocurrency in existence. This is understandable since Bitcoin was the first cryptocurrency, and it continues to dominate the markets. However, there are many cryptocurrencies in existence that are important to know and understand as well.
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A cryptocurrency is a digital currency that is exchanged using blockchain technology in a decentralized manner. It’s a peer-to-peer trading network, using money (often called tokens) that is intangible. Transactions are coded into blocks that when verified (in a process known as mining), are added to a chain that everyone in the network can see. It’s value is based on supply and demand.
Bitcoin was the first cryptocurrency and continues to lead the cryptocurrency market in terms of capitalization, user base, and popularity. However, anyone can create their own cryptocurrency, which has led to there being over 2,200 cryptocurrencies in existence today.
Cryptocurrencies began as a decentralized form of currency; however, governments, including the Securities and Exchange Commission (SEC) in the US are trying to put parameters on cryptocurrencies in an effort to control them. Altcoins are the collective name for cryptocurrencies outside of Bitcoin. There are pros and cons to these. Some are easier to trade, but they do have less liquidity than Bitcoin and less value retention. Below are some of the more popular altcoins.
Litecoin is probably the second-most popular cryptocurrency after Bitcoin. It was launched in 2011, a short two years after Bitcoin, by a former Google engineer named Charlie Lee. Litecoin mirrors Bitcoin, but it has a faster block generation rate, which makes transactions faster. Like all cryptocurrencies, Litecoin utilizes the open-source, decentralized global payment network that uses cryptography to verify its transactions. Some merchants do accept Litecoins and is predicted to continue to grow.
Ether is a popular cryptocurrency because of its uses. It can be used with Smart Contacts and Distributed Applications (DAapps). These mediums are agreements between buyer and seller written into codes using blockchain technology that prevents fraud and tracks transactions that, once executed, are irreversible. These transactions are carried out anonymously in a decentralized manner under no legal authority, which is the very essence of cryptocurrencies themselves. Ethereum is the name of the platform that runs Ether, and is mainly used by developers who use it to create more applications. However, more investors are seeing the value of Ether and purchasing Ether as well, ironically, to use to purchase other cryptocurrencies. Ether is also the form of payment users make when using Ethereum technology.
Ether was one of the first to launch an ICO (initial coin offering) back in 2014, which has such a great response that many other cryptocurrencies did the same thing. Ethereum itself claims that it can be used to “codify, decentralize, secure and trade just about anything.” cDuel believes this is the very essence of cryptocurrency. However, the greater the computation power required to use Ethereum, the greater the cost will be in Ether, which is one way that Ether differs from Bitcoin. Ether also does not limit the number of tokens, or coins, that can be mined in one year like most other cryptocurrencies. Miners earn five Ether tokens for every transaction they verify on the blockchain. With so many comings and goings of Ether, it can be hard to determine how many Ether actually exist at any given time. This can cause problems with valuation and the like. Currently, miners are trying to implement proof of stake versus proof of work for Ether creation, which is a whole other can of worms cDuel will explore at a later time.
Zcash is a relatively new addition to the cryptocurrency landscape. It hopes to differentiate itself by claiming it provides extra security and privacy to its transactions. Thus, all transactions are recorded on blockchains; however, the sender, recipient, and amount are private. In normal blockchain entries, this information is recorded as well, just with coded names. This selective transparency of transactions does have its followers. Zcash uses a proprietary encryption technique it developed named zk-SNARK, which offers zero-knowledge proof, which was developed back in the 1980s. However, cDuel notes that zk-SNARK is quick to verify.
Zcash has modeled itself off Bitcoin, still following Bitcoin’s three requirements to be called Bitcoin: the coin has never been spent, the senders are authorized, and the input amount equals the output. Zcash also treats all of its tokens as equal. Zcash hopes to appeal to the financial realm where having their financial transactions made public is problematic. Using Zcash’s shielded transactions, this problem allows personal information to be kept private, which is important when it involves your investments. This idea of private transactions in a public blockchain appeals to many businesses and financial institutions, which could help propel cryptocurrencies into the mainstream marketplace.
HOW YOU CAN EXPLORE CRYPTOCURRENCIES IN A SAFE MANNER
The use of cryptocurrencies is only growing. According to CoinMarketCap, the total value of all cryptocurrencies in 2019 was about $246 billion. For Bitcoin alone, this stands at about $136 billion. There is no denying that cryptocurrencies are here to stay; the only question that remains is when will it make the leap to the mainstream. That is totally dependent on people like you who use cDuel, our online cryptocurrency trading simulator, to learn about cryptocurrencies and then begin to take that knowledge into the real world. cDuel uses real time values of major cryptocurrencies so you can experience what it’s like to trade them. You can compete against your friends to maximize your portfolio with no risk. Our trading simulator game is easy, fun, and informative. Visit us online today to sign up!