You have probably heard about them and you know they could make you a millionaire or broke – cryptocurrencies represent a hype these days. Despite their popularity, they can be quite confusing and not always crystal clear. Some people claim they can get you broke, but they have no clue what they are or how they work – the classic misconception from those skeptical about new things.
Some others claim your wealth could skyrocket overnight, but this is also a myth. A cryptocurrency can make you money if you know what you are doing – pretty much like everything else in the trading history. You go online and try to find some answers to your questions, but most explanations out there are still confusing.
All in all, this guide will give you everything you need to know. Moreover, you are about to understand things as they are, in a way that every novice could understand.
At this point, it is important to know that the inability to steal cryptocurrency does not mean that it is perfectly safe. You could still get scammed into losing cryptocurrency, but common sense can prevent such problems. It is one thing to have it stolen and another thing to be tricked into giving it away.
When it comes to cryptocurrency, you may find it under different names too. For example, some banks or governments refer to cryptocurrency as cyber currency, virtual money or just digital cryptocurrency. This is because of the way this system works. It is all online and it does not exist in a physical way – just like the money printed by governments.
In a less formal environment, cryptocurrency can be defined as a token, coin or just crypto.
The beginning of cryptocurrency
Some people – mostly newbies with no experience at all – refer to cryptocurrency as Bitcoin. Bitcoin is, indeed, the most popular form of cryptocurrency. It is easy to tell why – it is the first cryptocurrency on the market. It came to life in 2009, as the last major financial crisis was reaching to an end.
Some say particular governments invented the Bitcoin and there are many conspiracy theories about it – maybe because the world does not know too much about the man who invented it, named Satoshi Nakamoto.
More than a decade after Bitcoin came out, Nakamoto is still a mystery. The Bitcoin white paper, emails and forums may provide some details about him, but no one can really track him. No one has ever worked with him in person either. He stopped posting and disappeared in December, 2010.
Does his identity really make a difference? Yes, it does. Nakamoto is estimated to own more than a million Bitcoins. It is plenty. If sold now, it would be around $10 billion. Besides, experts estimate there will only be 21 million Bitcoins in circulation, so the owner has a pretty good share of it.
This aspect is important because if he decides to sell everything, the overall value of Bitcoin would drastically drop. This is why some critics claim that Bitcoin is some sort of a Ponzi scheme, as the founder owns a massive share. On another note, you should know that Bitcoin has not really moved a lot since the founder's disappearance.
Since 2009, the world has seen more than 2,000 different cryptocurrencies following a similar profile. In fact, some of them are nothing but different clones of the traditional Bitcoin. Of course, they come with a few changes – some upgrades or extra features, but nothing really special.
Any other cryptocurrency is referred to as altcoins. Most experts believe they will never be able to reach the status of Bitcoin, so they keep coming out and vanishing. Of course, some of them manage to stand out in the crowd and gain some notoriety, such as Litecoin, which was introduced in 2011.
How altcoins are actually created
Altcoins can be created in a few different ways – most usually, through a hard fork. The hard fork involves splitting a blockchain into two different blockchains, so a new one is created. One such example implies the creation of Bitcoin Cash, which came to life through this process – splitting the Bitcoin blockchain. This is one of the most popular hard forks out there.
While there are voices claiming that hard forks are pretty dramatic and can alter the security of the blockchain, this is not always the initial purpose. In fact, splitting the blockchain is very likely to boost the speed and scalability, so it is also seen as an upgrade.
A different phenomenon in this segment includes the soft work. It is an update to the blockchain, but it is performed in a backwards compatible way.
Trying to understand the purpose of cryptocurrency
No one really asks themselves – why were cryptocurrencies invented? What is their primary role? You obviously want to know more about the purpose of cryptocurrency if you are thinking to invest in it.
Cryptocurrency comes with an interesting philosophy. The primary role? Becoming a solid alternative to the classic currency, which fluctuates a lot. Currencies come and go. Imagine the Deutsche marks in the 1990s and look where they are now – extinct. American dollars were pretty strong for a few decades, but they are far behind euros and British pounds. Moreover, cryptocurrencies are also seen as an alternative to a traditional banking system that seems to fail every now and then.
This is why the cryptocurrency came out in 2009. The financial crisis from 2008 was a nightmare due to a failing banking system, so this new system aims to provide more stability.
On another note, cryptocurrencies do not involve middlemen. These are only some third parties that can make an easy and solid profit by facilitating money transactions. You do not need them when dealing with cryptocurrencies, so you can kiss commissions and fees goodbye. But then, most people fail to understand how difficult it is for a banking institution to facilitate such a money transaction. Plus, these banks are the actual middlemen.
Imagine a friend of yours has given you some money to fix your car. You want to pay them back and you do it through a bank transfer. Your friend has an account with a different bank. Your money will not go directly to them. Instead, your bank takes the money out of your account. The money is then passed on to the other bank, while the other bank will put it in your friend's account. You will usually have to pay some fees. Banks make this transfer simple and efficient, so they are the middlemen making some money.
Trying to pay someone internationally? It will take even more and may involve a few different banks.
Cryptocurrency tries to clear out these middle men. Transferring cryptocurrencies is faster and involves little to no fees at all. There is no such thing as a central bank or authority. No one is in control of it. No one will create a new cryptocurrency. Most of the current cryptocurrencies are created as nonprofit solutions.
Founded by nonprofit companies and organizations, cryptocurrencies can also be destroyed. It is sometimes destroyed to keep the price under control and regulate it – a technique known as token burning.
A blockchain can be used in a wide variety of industries and it is not related to cryptocurrency only. It can be useful for hospitals and records, as well as financial institutions and logistics companies. A blockchain is fairly simple to describe though. Simply put, specific information is thrown into a block, then locked – encrypted.
Once the information is unlocked or decrypted by someone else, it can join a chain of other similar blocks. When it comes to cryptocurrency, such information is basically related to the transactions.
Plenty of cryptocurrencies that rely on this blockchain will also feature a ledger, which is publicly distributed. The ledger is used to store all the transactions and can be viewed by others too. But then, different cryptocurrencies may come with different working principles. Most importantly, they feature major differences between the proof of work and the proof of stake.
Confused already? Keep reading, as it is fairly simple to understand.
Disclosing the concept of proof of work
Proof of work is practically an algorithm based on the blockchain. It is said to be the most secure algorithm when it comes to cryptocurrencies. Blocks must be mined – the main component of this aspect.
You might have heard about mining – people mine cryptocurrencies, but you have no idea how it works. Mining is a process that validates blocks by doing some sophisticated exercises and equations. Practically, a computer (also known as a node in the process) will complete the equation and receive a reward – some coins. Miners will also make cryptocurrencies as they validate their own transactions.
While efficient, mining is not perfect. These are not some quadratic equations that advanced students could do. Instead, a computer has to work hard in order to solve them, so it will require plenty of energy. Some experts believe the Bitcoin mining industry requires as much energy as the whole Colombia – a South American country with around 50 million inhabitants.
Mining is also about the environment and the amounts of energy consumed are likely to harm it. Furthermore, while mining is not supposed to be centralized, it actually is. There are some big mining pools out there and some of the largest ones are based in China.
Most cryptocurrencies come with a maximum limit of coins to be created – 21 million coins for Bitcoin. As the world gets closer to this limit, the mining difficulty obviously goes higher. Once the world gets there, miners will only make money as they validate transactions – nothing else.
Disclosing the concept of proof of stake
Proof of stake is the second most popular algorithm when it comes to cryptocurrency. The main difference between proof of work and proof of stake? Proof of stake does not require mining. Some experts say it represents a more effective solution, but there are all kinds of opinions out there.
So, how does it work? Proof of stake targets the stake associated with a validator. Someone with little cryptocurrency will not have a good stake of the network, so they cannot validate too much. On the other hand, someone with plenty of cryptocurrency obviously has a large stake.
More algorithms in the process
Apart from proof of work and proof of stake, you also have other algorithms in cryptocurrency. At the end of the day, both proof of work and proof of stake have some pros and cons, as well as some limitations. Therefore, developers have developed new ideas to get rewards.
A less popular type of proof of stake is known as delegated proof of stake. It is most commonly used by EOS, so its goal is to centralize a bit of extra control. All in all, no matter what other algorithm you run into, it is worth noting that they are relatively new. Their development is not perfect. They still have some flaws and no one can really tell how efficient they are.
Plus, there are a few cryptocurrencies out there that do not even rely on the blockchain technology.
Some other cryptocurrencies try to do the same things, while others go way further than that.
Ethereum is one of the popular alternatives to Bitcoin and it gained notoriety because it was the first cryptocurrency to bring some extras to this virtual game. The so called smart contracts are among the most innovative features. Smart contracts are like scheduled operations – similar to artificial intelligence, if it helps you understand better.
They are basically written in the code associated with the blockchain and their role is to execute specific operations when particular conditions are observed or met. It was a relatively new – and required – thing. Ever since Ethereum came out, other new cryptocurrencies have tried to do the same thing, which is quite efficient after all.
Apart from the smart contracts, Ethereum brought in another innovation – the so called decentralized applications. Their name is self explanatory. They are not centralized and they rely on the blockchain technology to operate.
Now, what are the most common types of cryptocurrencies out there and how do they work?
Utility tokens are considered to be pretty standards, as they do not provide access to sophisticated or advanced features. For example, they do not use any of Ethereum's smart features.
This volatility is one of the main reasons wherefore so many people avoid cryptocurrencies. You always have to be on guard and ready to buy or sell. You need to have some disposable income to invest. If you rely on it, you might have an unpleasant surprise when your cryptocurrency loses its price – and yes, it will happen at some point or another.
People look at what happened to Bitcoin over the past few years and choose not to get involved. There are safer currencies out there – at least for now – and assets to invest now. These days, Tether is one of the most popular stablecoins on the market. Tether is related to the American dollar. Its value is tied to the value of the dollar. While flat currencies are also volatile, they do not grow and fall that badly. There are other cryptocurrencies tied to the American dollar though.
Privacy coins
Privacy coins represent another popular category when it comes to cryptocurrencies. A privacy coin is all about privacy. It is built to be private and anonymous – as private as cryptocurrency can get. Most cryptocurrencies in this category allow you to choose the transaction mode – it could be a public one, as well as an anonymous one.
People associate anonymity with illicit operations though. There is a bit of skepticism about these cryptocurrencies, but there is nothing wrong with trying to be anonymous in a world where everyone watches you – from your Internet provider to your government. Sure, there is nothing to be concerned about if you are not doing anything illegal.
From a different point of view, lots of people like privacy coins because they do not like the idea of having their transactions public on a distributed ledger. They want privacy because they want to keep safe. After all, such information can be used in the wrong way. Safety prevents unexpected situations and problems.
Those who like privacy coins often associate them with cash. In terms of anonymity, they are quite close and they cannot really be traced. Some of the leading names in this group include Monero, Zcash and Dash. Monero is among the most popular options. It is fully anonymous, safe and without a public ledger.
Given the anonymous profile, privacy coins are not entirely accepted by all governments. On the same note, since they are sometimes associated with illicit transactions, people feel a bit skeptical about them too, yet they have a fair share of users.
Legal considerations associated with cryptocurrencies
Cryptocurrencies represent a gray area, meaning people are not 100% sure of how they work. If you are new to this field, you should double check the regulation and law in your country before getting involved with them. Cryptocurrencies are illegal in many countries in North Africa, as well as some countries in South America.
On the other hand, Europe and North America are cryptocurrency friendly in general. For instance, people in Switzerland can pay governmental agencies in cryptocurrencies as well. But then, the regulation is still trying to catch up – things have definitely progressed over the past 10 years, but there is still lots of room for improvement.
Believe it or not, even government officials and banking professionals feel a bit confused when it comes to cryptocurrency. This is the main reason wherefore many central banks advise against the risks of trading cryptocurrency. Moreover, given the anonymous profile of cryptocurrencies, central banks associate them with money laundering and even terrorism.
In Asia, cryptocurrencies are gray, meaning the regulation is confusing and they are not fully accepted or rejected.
Taxes associated with cryptocurrencies
Taxes could represent a challenging aspect for lots of cryptocurrency newbies. Most commonly, they depend on the country you live in. They vary widely from one country to another, so it pays off researching local laws and regulations.
Generally speaking, the taxing system depends on how cryptocurrencies are regulated and defined. For example, cryptocurrencies could be defined as commodities in some parts of the world. In other countries, they could be named financial instruments, so you will have to pay certain taxes on your profit.
Cryptocurrencies and illegal activities
Just like flat money, cryptocurrencies are not always used with clean purposes. They are also used by plenty of criminal to purchase specific products or services. While not official, it is believed that about one in four Bitcoin users relies on the cryptocurrency with illegal purposes. At the same time, over 40% of all transactions could be illicit.
The Silk Road case is one of the most popular cases that involved crime and Bitcoin. Silk Road was a hidden place on the dark web. The owner used it to create a solid marketplace for all kinds of crime, from murder for hire to child pornography. Everyone had to pay in Bitcoin, as he was trying to stay anonymous.
A few rookie mistakes in the webmaster's past brought him out, so he is now serving a life sentence for it. Cryptocurrency has also been used in illicit drug transactions.
Despite all these, it is worth noting that flat money is more commonly used for criminal purposes. Besides, it is more traceable than almost every cryptocurrency out there. What makes Bitcoin and other cryptocurrencies so popular is the possibility to make transactions over the Internet – there is no need to see someone face to face.
Newbies should definitely not be put off by the illegal aspects associated with cryptocurrencies, as they affect almost every type of currency out there.
Then, there are people that believe cryptocurrencies keep growing, while others claim they represent investors' toys and do not make too much sense in today's society. Some traders do not even believe in them, but they still trade because they imagine buying low and selling at higher prices in the future.
Prolific investors like the Winklevoss twins think the Bitcoin is underrated. Sooner or later, it will get to the same valuation as gold, which is around $7 trillion. Then, there are also some skeptical critics who put cryptocurrencies in a bubble and expect it to burst at any random time.
Bitcoin has been through a plethora of changes. The cryptocurrency has gone up and down all the time. But today, more than a decade since it came out, it is still around and more popular than ever. It has opened the door to over 2,000 other cryptocurrencies,
The problem is that many cryptocurrencies are relatively similar. They try their best to dominate the exact same aspects and areas. They come with decentralized apps, privacy, blockchain system operations and so on.
So, will cryptocurrencies survive after all? Will they be similar to the Tulip Mania that boosted the Netherlands in the 17th century or the British Railway Mania from the 19th century? Whether or not they represent a bubble, one thing is for sure – they are hot right now and everyone wants a piece of that pie.
Now that cryptocurrencies make more sense and you know what to expect from this industry, it pays off researching the top rated cryptocurrencies for a few better decisions. Whether you want to invest in a certain cryptocurrency or you want to start trading, it pays off doing your homework. You want a stable and efficient cryptocurrency with a good potential for the future.
So, what are the most popular cryptocurrencies in the world? What are their pros and cons and more importantly, what makes them so special? Are they really worth your time and money?
Bitcoin is the first cryptocurrency out there and this is one of the main reasons behind its popularity. People from all over the world back it up in order to push its growth first. The most interesting part about it is that no one really knows much about who created it.
Bitcoin is based on a blockchain. It clears out the necessity for centralized middlemen when making an electronic transaction – different from banks and other financial institutions. Its primary goal is to come up as an alternative to flat currencies.
Bitcoin is fairly simple to purchase, even if you are a complete newbie. Given its popularity, it is also supported by all kinds of online wallets. Furthermore, you may even be able to pay with Bitcoin in more traditional stores as well.
Its performance skyrocketed in the 2010s. Practically, you could buy a Bitcoin for less than $1 USD in 2010. By the end of 2017, one Bitcoin was worth $17,900. Most of its growth occurred in 2017 only – up by about 2000%.
When it comes to negatives, Bitcoin transactions are not instant, as it faces some difficulty with scalability. A transaction at the moment takes around 10 minutes, so it is not that bad. Besides, the network can handle about seven transactions per second.
Ethereum is the second most popular cryptocurrency in the world after Bitcoin. Put out by Vitalik Buterin, this is more than just a modern cryptocurrency. It also operates on a blockchain and brings in some extras, such as smart contacts and decentralized apps. It is the main digital currency used for transactions on its blockchain.
Smart contracts allow the currency to perform specific operations based on certain conditions. In other words, if you have a specific idea for a project involving the blockchain technology, you do not have to create a different blockchain – use Ethereum's blockchain instead.
In terms of positives, Ethereum's popularity goes even further. It is the main platform out there to come up with smart contracts, which is a major upgrade from Bitcoin. Then, it offers excellent solutions to come up with the initial coin offerings from other similar projects. As for the transaction speed, it takes a few seconds only.
Just like Bitcoin, Ethereum uses proof of work to check transactions, so demands on electricity are pretty high, but developers are trying to find better solutions. It is based on one language only – Solidity, so many developers would have to learn it. Other than that, it has a solid competition based on its features.
Ethereum's price also saw a massive growth. It was set at $9 in the beginning of 2017, only to grow up to $1389 within a single year only. These days, it keeps fluctuating and tends to stabilize at a much lower value.
There are a few reasons wherefore Ripple stands out in the crowd – the aim to solve problems related to various financial industries. For example, it has managed to take international payment transfers to another level. Created in 2012, it can make transfers relatively fast and for very low fees. Overall, there will be 100 billion Ripple coins out there and the company behind it owns 50 billion of them. It is quite different from other cryptocurrency, where there is a lack of central identities.
Speed and fees are some of the main pros of Ripple. While a bank can do an international transfer in around a week, Ripple will take seconds. Then, fees are so much lower that transfers almost feel free. The primary aim of Ripple is crystal clear – easing international payments with innovative solutions in the long run.
Compared to other digital currencies, Ripple has a major advantage, as it has a few ties with major institutions out there, meaning it is relatively recognized and supported by them. At the moment, it is backed up by Santander and American Express.
Ripple has one major disadvantage – it kills the initial concept of cryptocurrencies, which aim to be decentralized. Most coins in this digital currency are owned by the developer. While it is not necessarily a bad idea, the coin is often criticized for this aspect.
In terms of trading, the currency is quite stable. It noticed a significant growth in the spring and summer of 2017 – from nothing to $3.65. Like most other cryptocurrencies, it went down soon after. These days, it seems pretty stable from a financial point of view.
Bitcoin Cash has a self explanatory name. It was forked from the more famous Bitcoin and came out in 2016. The new cryptocurrency has undergone some technological improvements, while the split was a direct consequence of the developer community not being able to reach an agreement regarding Bitcoin's code.
Bitcoin Cash has, therefore, a pretty specific role – the need to solve some of the main problems associated with Bitcoin. Since scalability is a bit of an issue with Bitcoin, the new currency tries to sort it out. Furthermore, transaction fees are a bit lower, but they also fluctuate. Since the block size is eight times bigger than in Bitcoin, transactions are significantly faster. As for transaction fees, they cost a few cents.
On a more negative side, Bitcoin Cash can also be mined. Mining is an expensive process that takes its toll on the environment. When compared to Bitcoin mining, it does not provide such great rewards, so it is not a top choice for miners, yet there is a decent community working on it.
Other than that, compared to other famous cryptocurrencies, Bitcoin Cash is not as common on the exchange market. In other words, purchasing Bitcoin Cash would be a bit more difficult than purchasing other major digital currencies, but not impossible.
Just like other cryptocurrencies, Bitcoin Cash has experienced an impressive growth in 2017. It grew by 10,000% within half a year only. However, it keeps fluctuating since then and it goes slightly lower in price with every new year.
Get the latest news about this cryptocurrency:
Bitcoin Cash News
EOS has come out in 2017. It is one of the main competitors for Ethereum. Its own platform came out in 2018 and it comes with a few extra benefits. The token was established by Dan Larimer, who is also behind Steemit and Bitshares – a popular blogging website and a cryptocurrency exchange portal.
While Ethereum is quite scalable and better than many other competitors at this level, EOS is supposed to be even better. It relies on a superior mechanism to check transactions. It can take anywhere between 10,000 and 100,000 transactions within one second only. It uses delegated proof of stake, as well as Byzantine Fault Tolerance.
EOS also works with more languages, so it represents an attractive choice for developers. It also supports the popular C++. Simply put, developers would not have to become familiar with new and less known languages.
On another positive note, EOS is known for having a reliable and professional team behind it. The developers behind the digital token are extremely experienced and their professional backgrounds are transparent.
When it comes to its historical performance, EOS is one of the few digital currencies that were not seriously affected by the market crash from 2018, so its value is quite stable and does not fluctuate too much.
Then, Cardano is also similar to EOS from other points of view. These days, it is said to run on one of the world's most advanced blockchain technologies. It is superior to other similar technologies and is also used by NEO and EOS.
Cardano has a few major pros. One of them is its support. The digital currency is backed up by a prolific community with solid academic backgrounds. It is supported by scientists and researchers that keep upgrading its blockchain development on a regular basis – you can leave yourself in good hands there.
Then, Cardano also has a better scalability than Ethereum and can take 257 transactions in a second. It is rumoured that developers are working on its interoperability, so it can easily interact with other digital currencies without causing any issues whatsoever.
While Cardano is extremely promising, some of its potential updates are still under development. Therefore, it is hard to tell whether or not it will become a top player on the market. Its price is not massive, but it has grown during 2017 and 2018 by 500%. It has suffered a downfall, but it seems to go up again.
Litecoin has proven that it can last. It has successfully managed to resist for almost a decade. But then, just like Bitcoin, it lacks a few technologies that more and more people look for these days – such as smart contracts and an associated platform for them.
Transactions in Litecoin are not instant, but they take just under three minutes to complete – about four times less than Bitcoin transactions. This is one of the reasons wherefore this digital currency is referred to as the lite coin. On the same note, transaction fees are way smaller compared to Bitcoin's fees.
Mining is the main option to come up with more coins. It is expensive and not really energy efficient, but it is also restricted to users with superior hardware. Then, on another negative note, Litecoin does not provide access to smart contacts, meaning its competition is quite harsh.
Litecoin has managed to climb among the top 10 digital currencies on the market and stay there for years. It had a great run during the 2017 boom, when it went from $4 to $350. As the market crashed in 2018, its price has gone down, but it is showing signs of improvement – fluctuations are not that high.
The Stellar Development Foundation behind this cryptocurrency makes it unique because it operates as a nonprofit organization. It is run by financial experts and technology professionals and it provides access to inexpensive financial support. Its mission implies fighting poverty and providing excellent individual potential support.
Stellar has a few major benefits. Since it is more decentralized than Ripple and other similar currencies, it inspires a bit more trust. Then, the nonprofit profile makes it even more trustworthy, as people are less likely to criticize the team behind it. It has managed to secure some interesting partnerships with more than 30 financial institutions.
But then, just like other cryptocurrencies, Stellar faces a tough competition. It aims to ease international payments. In fact, most digital currencies have the same purpose, so its overall competition can seriously weigh in the process.
Stellar has grown from a low value of $0.0039 in the spring of 2017 to $0.85 in the beginning of 2018. It is an impressive return and its value is quite stable. Its plans to support financial inclusion to every part of the world keeps it on the floating line.
IOTA is based on IoT – you might be aware of it, as it stands for the Internet of Things. This technology allows the communication between different things based on sensors. IOTA aims to make this technology more secure.
What makes IOTA so attractive? Transaction fees are null. You will never have to pay anything for a transaction, regardless of its profile – local or international. Other than that, IOTA promises infinite scalability.
IOTA is not perfect either because it is based on the Internet of Things, so it depends on another technology. At the same time, if big IoT companies decide to come up with their own digital currency, IOTA is likely to face serious competition.
IOTA grew from $0.55 in the summer of 2017 to $5.34 in the wintertime. It was established in 2015, but it was launched on digital currency exchanges in 2017 only. It was an instant success and although it dipped in 2018, it seems stable these days.
The cryptocurrency was founded by Da Hongfei in 2014, so it is relatively new. It became NEO in the summer of 2017. Prior to that, it was known as AntShares. From some points of view, it is superior to
Ethereum.
The digital currency can take 10,000 transactions per second – way more than Ethereum. Also, it supports more than just one programming language, including the popular Java, C# and C++, among others.
Unlike other cryptocurrencies, this one benefits from support from the Chinese government. While this is a plus, it could be a drawback as well. If the Chinese government decides to change its policy towards it, the cryptocurrency will suffer as well.
Other than that, just like other alternatives, NEO has seen a tremendous growth in 2017 – probably one of the fastest growing digital currencies in the world, with an impressive 111,400% growth. These days, it is pretty stable.
It’s important to understand that digital coins tend to go through a continuous update. New coins pop up on a regular basis, with some others falling and losing their popularity. Some of them dominate the industry, indeed, offering more stability. But when it comes to money, it’s usually the less known newcomers making a boom.
Some others claim your wealth could skyrocket overnight, but this is also a myth. A cryptocurrency can make you money if you know what you are doing – pretty much like everything else in the trading history. You go online and try to find some answers to your questions, but most explanations out there are still confusing.
All in all, this guide will give you everything you need to know. Moreover, you are about to understand things as they are, in a way that every novice could understand.
Becoming familiar with the concept of cryptocurrency
Cryptocurrency is a mix of two different words. One of them is a shortcut for cryptography, while the other one is classic – currency. After all, this is what cryptocurrency is – a different type of currency that does not relate to one country or another. The first part of the word relates to the fact that everything is encrypted. In other words, cryptocurrency is almost impossible to manipulate. Hacking it is just as difficult, not to mention stealing it.At this point, it is important to know that the inability to steal cryptocurrency does not mean that it is perfectly safe. You could still get scammed into losing cryptocurrency, but common sense can prevent such problems. It is one thing to have it stolen and another thing to be tricked into giving it away.
When it comes to cryptocurrency, you may find it under different names too. For example, some banks or governments refer to cryptocurrency as cyber currency, virtual money or just digital cryptocurrency. This is because of the way this system works. It is all online and it does not exist in a physical way – just like the money printed by governments.
In a less formal environment, cryptocurrency can be defined as a token, coin or just crypto.
The beginning of cryptocurrency
Some people – mostly newbies with no experience at all – refer to cryptocurrency as Bitcoin. Bitcoin is, indeed, the most popular form of cryptocurrency. It is easy to tell why – it is the first cryptocurrency on the market. It came to life in 2009, as the last major financial crisis was reaching to an end.
Some say particular governments invented the Bitcoin and there are many conspiracy theories about it – maybe because the world does not know too much about the man who invented it, named Satoshi Nakamoto.
More than a decade after Bitcoin came out, Nakamoto is still a mystery. The Bitcoin white paper, emails and forums may provide some details about him, but no one can really track him. No one has ever worked with him in person either. He stopped posting and disappeared in December, 2010.
Does his identity really make a difference? Yes, it does. Nakamoto is estimated to own more than a million Bitcoins. It is plenty. If sold now, it would be around $10 billion. Besides, experts estimate there will only be 21 million Bitcoins in circulation, so the owner has a pretty good share of it.
This aspect is important because if he decides to sell everything, the overall value of Bitcoin would drastically drop. This is why some critics claim that Bitcoin is some sort of a Ponzi scheme, as the founder owns a massive share. On another note, you should know that Bitcoin has not really moved a lot since the founder's disappearance.
Since 2009, the world has seen more than 2,000 different cryptocurrencies following a similar profile. In fact, some of them are nothing but different clones of the traditional Bitcoin. Of course, they come with a few changes – some upgrades or extra features, but nothing really special.
Any other cryptocurrency is referred to as altcoins. Most experts believe they will never be able to reach the status of Bitcoin, so they keep coming out and vanishing. Of course, some of them manage to stand out in the crowd and gain some notoriety, such as Litecoin, which was introduced in 2011.
How altcoins are actually created
Altcoins can be created in a few different ways – most usually, through a hard fork. The hard fork involves splitting a blockchain into two different blockchains, so a new one is created. One such example implies the creation of Bitcoin Cash, which came to life through this process – splitting the Bitcoin blockchain. This is one of the most popular hard forks out there.
While there are voices claiming that hard forks are pretty dramatic and can alter the security of the blockchain, this is not always the initial purpose. In fact, splitting the blockchain is very likely to boost the speed and scalability, so it is also seen as an upgrade.
A different phenomenon in this segment includes the soft work. It is an update to the blockchain, but it is performed in a backwards compatible way.
Trying to understand the purpose of cryptocurrency
No one really asks themselves – why were cryptocurrencies invented? What is their primary role? You obviously want to know more about the purpose of cryptocurrency if you are thinking to invest in it.
Cryptocurrency comes with an interesting philosophy. The primary role? Becoming a solid alternative to the classic currency, which fluctuates a lot. Currencies come and go. Imagine the Deutsche marks in the 1990s and look where they are now – extinct. American dollars were pretty strong for a few decades, but they are far behind euros and British pounds. Moreover, cryptocurrencies are also seen as an alternative to a traditional banking system that seems to fail every now and then.
This is why the cryptocurrency came out in 2009. The financial crisis from 2008 was a nightmare due to a failing banking system, so this new system aims to provide more stability.
On another note, cryptocurrencies do not involve middlemen. These are only some third parties that can make an easy and solid profit by facilitating money transactions. You do not need them when dealing with cryptocurrencies, so you can kiss commissions and fees goodbye. But then, most people fail to understand how difficult it is for a banking institution to facilitate such a money transaction. Plus, these banks are the actual middlemen.
Imagine a friend of yours has given you some money to fix your car. You want to pay them back and you do it through a bank transfer. Your friend has an account with a different bank. Your money will not go directly to them. Instead, your bank takes the money out of your account. The money is then passed on to the other bank, while the other bank will put it in your friend's account. You will usually have to pay some fees. Banks make this transfer simple and efficient, so they are the middlemen making some money.
Trying to pay someone internationally? It will take even more and may involve a few different banks.
Cryptocurrency tries to clear out these middle men. Transferring cryptocurrencies is faster and involves little to no fees at all. There is no such thing as a central bank or authority. No one is in control of it. No one will create a new cryptocurrency. Most of the current cryptocurrencies are created as nonprofit solutions.
Founded by nonprofit companies and organizations, cryptocurrencies can also be destroyed. It is sometimes destroyed to keep the price under control and regulate it – a technique known as token burning.
How cryptocurrencies work
Pretty much every cryptocurrency out there relies on a blockchain. Just like the Bitcoin, the blockchain is another new aspect introduced by Nakamoto at the same time. Whether you want to know more about cryptocurrency or you want to start trading, you have to understand what a blockchain is and how it works too.A blockchain can be used in a wide variety of industries and it is not related to cryptocurrency only. It can be useful for hospitals and records, as well as financial institutions and logistics companies. A blockchain is fairly simple to describe though. Simply put, specific information is thrown into a block, then locked – encrypted.
Once the information is unlocked or decrypted by someone else, it can join a chain of other similar blocks. When it comes to cryptocurrency, such information is basically related to the transactions.
Plenty of cryptocurrencies that rely on this blockchain will also feature a ledger, which is publicly distributed. The ledger is used to store all the transactions and can be viewed by others too. But then, different cryptocurrencies may come with different working principles. Most importantly, they feature major differences between the proof of work and the proof of stake.
Confused already? Keep reading, as it is fairly simple to understand.
Disclosing the concept of proof of work
Proof of work is practically an algorithm based on the blockchain. It is said to be the most secure algorithm when it comes to cryptocurrencies. Blocks must be mined – the main component of this aspect.
You might have heard about mining – people mine cryptocurrencies, but you have no idea how it works. Mining is a process that validates blocks by doing some sophisticated exercises and equations. Practically, a computer (also known as a node in the process) will complete the equation and receive a reward – some coins. Miners will also make cryptocurrencies as they validate their own transactions.
While efficient, mining is not perfect. These are not some quadratic equations that advanced students could do. Instead, a computer has to work hard in order to solve them, so it will require plenty of energy. Some experts believe the Bitcoin mining industry requires as much energy as the whole Colombia – a South American country with around 50 million inhabitants.
Mining is also about the environment and the amounts of energy consumed are likely to harm it. Furthermore, while mining is not supposed to be centralized, it actually is. There are some big mining pools out there and some of the largest ones are based in China.
Most cryptocurrencies come with a maximum limit of coins to be created – 21 million coins for Bitcoin. As the world gets closer to this limit, the mining difficulty obviously goes higher. Once the world gets there, miners will only make money as they validate transactions – nothing else.
Disclosing the concept of proof of stake
Proof of stake is the second most popular algorithm when it comes to cryptocurrency. The main difference between proof of work and proof of stake? Proof of stake does not require mining. Some experts say it represents a more effective solution, but there are all kinds of opinions out there.
So, how does it work? Proof of stake targets the stake associated with a validator. Someone with little cryptocurrency will not have a good stake of the network, so they cannot validate too much. On the other hand, someone with plenty of cryptocurrency obviously has a large stake.
More algorithms in the process
Apart from proof of work and proof of stake, you also have other algorithms in cryptocurrency. At the end of the day, both proof of work and proof of stake have some pros and cons, as well as some limitations. Therefore, developers have developed new ideas to get rewards.
A less popular type of proof of stake is known as delegated proof of stake. It is most commonly used by EOS, so its goal is to centralize a bit of extra control. All in all, no matter what other algorithm you run into, it is worth noting that they are relatively new. Their development is not perfect. They still have some flaws and no one can really tell how efficient they are.
Plus, there are a few cryptocurrencies out there that do not even rely on the blockchain technology.
Different types of cryptocurrencies
Cryptocurrencies are quite different and they feature all kinds of characteristics. They work in different ways and while Bitcoin is the most popular one, it is not similar to others. Bitcoin is quite easy to understand though and perhaps this is what makes it so popular – its main role is to replace traditional flat currency.Some other cryptocurrencies try to do the same things, while others go way further than that.
Ethereum is one of the popular alternatives to Bitcoin and it gained notoriety because it was the first cryptocurrency to bring some extras to this virtual game. The so called smart contracts are among the most innovative features. Smart contracts are like scheduled operations – similar to artificial intelligence, if it helps you understand better.
They are basically written in the code associated with the blockchain and their role is to execute specific operations when particular conditions are observed or met. It was a relatively new – and required – thing. Ever since Ethereum came out, other new cryptocurrencies have tried to do the same thing, which is quite efficient after all.
Apart from the smart contracts, Ethereum brought in another innovation – the so called decentralized applications. Their name is self explanatory. They are not centralized and they rely on the blockchain technology to operate.
Now, what are the most common types of cryptocurrencies out there and how do they work?
Utility tokens
Utility tokens are quite attractive because of the way they work. Whenever you use a utility token, chances are you get a reward. Binance Coin is an excellent example. Go do some transactions on the Binance exchange and you will get a discount. The operating principle is easy to understand and similar to classic methods out there – you can get cash back from certain credit card companies when you use their cards in particular stores.Utility tokens are considered to be pretty standards, as they do not provide access to sophisticated or advanced features. For example, they do not use any of Ethereum's smart features.
Stablecoins
Stablecoins also feature a self explanatory name. They are meant to be stable, so their main role is to reduce the risks associated with them to a minimum. Cryptocurrencies are quite volatile – you can see how much Bitcoin has grown, only to go down a bit. Stablecoins aim to prevent such major upgrades or downgrades, so they feel less risky.This volatility is one of the main reasons wherefore so many people avoid cryptocurrencies. You always have to be on guard and ready to buy or sell. You need to have some disposable income to invest. If you rely on it, you might have an unpleasant surprise when your cryptocurrency loses its price – and yes, it will happen at some point or another.
People look at what happened to Bitcoin over the past few years and choose not to get involved. There are safer currencies out there – at least for now – and assets to invest now. These days, Tether is one of the most popular stablecoins on the market. Tether is related to the American dollar. Its value is tied to the value of the dollar. While flat currencies are also volatile, they do not grow and fall that badly. There are other cryptocurrencies tied to the American dollar though.
Privacy coins
Privacy coins represent another popular category when it comes to cryptocurrencies. A privacy coin is all about privacy. It is built to be private and anonymous – as private as cryptocurrency can get. Most cryptocurrencies in this category allow you to choose the transaction mode – it could be a public one, as well as an anonymous one.
People associate anonymity with illicit operations though. There is a bit of skepticism about these cryptocurrencies, but there is nothing wrong with trying to be anonymous in a world where everyone watches you – from your Internet provider to your government. Sure, there is nothing to be concerned about if you are not doing anything illegal.
From a different point of view, lots of people like privacy coins because they do not like the idea of having their transactions public on a distributed ledger. They want privacy because they want to keep safe. After all, such information can be used in the wrong way. Safety prevents unexpected situations and problems.
Those who like privacy coins often associate them with cash. In terms of anonymity, they are quite close and they cannot really be traced. Some of the leading names in this group include Monero, Zcash and Dash. Monero is among the most popular options. It is fully anonymous, safe and without a public ledger.
Given the anonymous profile, privacy coins are not entirely accepted by all governments. On the same note, since they are sometimes associated with illicit transactions, people feel a bit skeptical about them too, yet they have a fair share of users.
Legal considerations associated with cryptocurrencies
Cryptocurrencies represent a gray area, meaning people are not 100% sure of how they work. If you are new to this field, you should double check the regulation and law in your country before getting involved with them. Cryptocurrencies are illegal in many countries in North Africa, as well as some countries in South America.
On the other hand, Europe and North America are cryptocurrency friendly in general. For instance, people in Switzerland can pay governmental agencies in cryptocurrencies as well. But then, the regulation is still trying to catch up – things have definitely progressed over the past 10 years, but there is still lots of room for improvement.
Believe it or not, even government officials and banking professionals feel a bit confused when it comes to cryptocurrency. This is the main reason wherefore many central banks advise against the risks of trading cryptocurrency. Moreover, given the anonymous profile of cryptocurrencies, central banks associate them with money laundering and even terrorism.
In Asia, cryptocurrencies are gray, meaning the regulation is confusing and they are not fully accepted or rejected.
Taxes associated with cryptocurrencies
Taxes could represent a challenging aspect for lots of cryptocurrency newbies. Most commonly, they depend on the country you live in. They vary widely from one country to another, so it pays off researching local laws and regulations.
Generally speaking, the taxing system depends on how cryptocurrencies are regulated and defined. For example, cryptocurrencies could be defined as commodities in some parts of the world. In other countries, they could be named financial instruments, so you will have to pay certain taxes on your profit.
Cryptocurrencies and illegal activities
Just like flat money, cryptocurrencies are not always used with clean purposes. They are also used by plenty of criminal to purchase specific products or services. While not official, it is believed that about one in four Bitcoin users relies on the cryptocurrency with illegal purposes. At the same time, over 40% of all transactions could be illicit.
The Silk Road case is one of the most popular cases that involved crime and Bitcoin. Silk Road was a hidden place on the dark web. The owner used it to create a solid marketplace for all kinds of crime, from murder for hire to child pornography. Everyone had to pay in Bitcoin, as he was trying to stay anonymous.
A few rookie mistakes in the webmaster's past brought him out, so he is now serving a life sentence for it. Cryptocurrency has also been used in illicit drug transactions.
Despite all these, it is worth noting that flat money is more commonly used for criminal purposes. Besides, it is more traceable than almost every cryptocurrency out there. What makes Bitcoin and other cryptocurrencies so popular is the possibility to make transactions over the Internet – there is no need to see someone face to face.
Newbies should definitely not be put off by the illegal aspects associated with cryptocurrencies, as they affect almost every type of currency out there.
Will cryptocurrency survive?
It is too early to tell whether or not cryptocurrencies will manage to succeed. At the same time, it is hard to tell whether or not they will become the future. Some experts believe cryptocurrencies will take over at some point, while others have constantly opposed them.Then, there are people that believe cryptocurrencies keep growing, while others claim they represent investors' toys and do not make too much sense in today's society. Some traders do not even believe in them, but they still trade because they imagine buying low and selling at higher prices in the future.
Prolific investors like the Winklevoss twins think the Bitcoin is underrated. Sooner or later, it will get to the same valuation as gold, which is around $7 trillion. Then, there are also some skeptical critics who put cryptocurrencies in a bubble and expect it to burst at any random time.
Bitcoin has been through a plethora of changes. The cryptocurrency has gone up and down all the time. But today, more than a decade since it came out, it is still around and more popular than ever. It has opened the door to over 2,000 other cryptocurrencies,
The problem is that many cryptocurrencies are relatively similar. They try their best to dominate the exact same aspects and areas. They come with decentralized apps, privacy, blockchain system operations and so on.
So, will cryptocurrencies survive after all? Will they be similar to the Tulip Mania that boosted the Netherlands in the 17th century or the British Railway Mania from the 19th century? Whether or not they represent a bubble, one thing is for sure – they are hot right now and everyone wants a piece of that pie.
Now that cryptocurrencies make more sense and you know what to expect from this industry, it pays off researching the top rated cryptocurrencies for a few better decisions. Whether you want to invest in a certain cryptocurrency or you want to start trading, it pays off doing your homework. You want a stable and efficient cryptocurrency with a good potential for the future.
So, what are the most popular cryptocurrencies in the world? What are their pros and cons and more importantly, what makes them so special? Are they really worth your time and money?
1. Bitcoin
Bitcoin is the first cryptocurrency out there and this is one of the main reasons behind its popularity. People from all over the world back it up in order to push its growth first. The most interesting part about it is that no one really knows much about who created it.
Bitcoin is based on a blockchain. It clears out the necessity for centralized middlemen when making an electronic transaction – different from banks and other financial institutions. Its primary goal is to come up as an alternative to flat currencies.
Bitcoin is fairly simple to purchase, even if you are a complete newbie. Given its popularity, it is also supported by all kinds of online wallets. Furthermore, you may even be able to pay with Bitcoin in more traditional stores as well.
Its performance skyrocketed in the 2010s. Practically, you could buy a Bitcoin for less than $1 USD in 2010. By the end of 2017, one Bitcoin was worth $17,900. Most of its growth occurred in 2017 only – up by about 2000%.
When it comes to negatives, Bitcoin transactions are not instant, as it faces some difficulty with scalability. A transaction at the moment takes around 10 minutes, so it is not that bad. Besides, the network can handle about seven transactions per second.
2. Ethereum
Ethereum is the second most popular cryptocurrency in the world after Bitcoin. Put out by Vitalik Buterin, this is more than just a modern cryptocurrency. It also operates on a blockchain and brings in some extras, such as smart contacts and decentralized apps. It is the main digital currency used for transactions on its blockchain.
Smart contracts allow the currency to perform specific operations based on certain conditions. In other words, if you have a specific idea for a project involving the blockchain technology, you do not have to create a different blockchain – use Ethereum's blockchain instead.
In terms of positives, Ethereum's popularity goes even further. It is the main platform out there to come up with smart contracts, which is a major upgrade from Bitcoin. Then, it offers excellent solutions to come up with the initial coin offerings from other similar projects. As for the transaction speed, it takes a few seconds only.
Just like Bitcoin, Ethereum uses proof of work to check transactions, so demands on electricity are pretty high, but developers are trying to find better solutions. It is based on one language only – Solidity, so many developers would have to learn it. Other than that, it has a solid competition based on its features.
Ethereum's price also saw a massive growth. It was set at $9 in the beginning of 2017, only to grow up to $1389 within a single year only. These days, it keeps fluctuating and tends to stabilize at a much lower value.
3. Ripple
There are a few reasons wherefore Ripple stands out in the crowd – the aim to solve problems related to various financial industries. For example, it has managed to take international payment transfers to another level. Created in 2012, it can make transfers relatively fast and for very low fees. Overall, there will be 100 billion Ripple coins out there and the company behind it owns 50 billion of them. It is quite different from other cryptocurrency, where there is a lack of central identities.
Speed and fees are some of the main pros of Ripple. While a bank can do an international transfer in around a week, Ripple will take seconds. Then, fees are so much lower that transfers almost feel free. The primary aim of Ripple is crystal clear – easing international payments with innovative solutions in the long run.
Compared to other digital currencies, Ripple has a major advantage, as it has a few ties with major institutions out there, meaning it is relatively recognized and supported by them. At the moment, it is backed up by Santander and American Express.
Ripple has one major disadvantage – it kills the initial concept of cryptocurrencies, which aim to be decentralized. Most coins in this digital currency are owned by the developer. While it is not necessarily a bad idea, the coin is often criticized for this aspect.
In terms of trading, the currency is quite stable. It noticed a significant growth in the spring and summer of 2017 – from nothing to $3.65. Like most other cryptocurrencies, it went down soon after. These days, it seems pretty stable from a financial point of view.
4. Bitcoin Cash
Bitcoin Cash has a self explanatory name. It was forked from the more famous Bitcoin and came out in 2016. The new cryptocurrency has undergone some technological improvements, while the split was a direct consequence of the developer community not being able to reach an agreement regarding Bitcoin's code.
Bitcoin Cash has, therefore, a pretty specific role – the need to solve some of the main problems associated with Bitcoin. Since scalability is a bit of an issue with Bitcoin, the new currency tries to sort it out. Furthermore, transaction fees are a bit lower, but they also fluctuate. Since the block size is eight times bigger than in Bitcoin, transactions are significantly faster. As for transaction fees, they cost a few cents.
On a more negative side, Bitcoin Cash can also be mined. Mining is an expensive process that takes its toll on the environment. When compared to Bitcoin mining, it does not provide such great rewards, so it is not a top choice for miners, yet there is a decent community working on it.
Other than that, compared to other famous cryptocurrencies, Bitcoin Cash is not as common on the exchange market. In other words, purchasing Bitcoin Cash would be a bit more difficult than purchasing other major digital currencies, but not impossible.
Just like other cryptocurrencies, Bitcoin Cash has experienced an impressive growth in 2017. It grew by 10,000% within half a year only. However, it keeps fluctuating since then and it goes slightly lower in price with every new year.
Get the latest news about this cryptocurrency:
Bitcoin Cash News
5. EOS
EOS has come out in 2017. It is one of the main competitors for Ethereum. Its own platform came out in 2018 and it comes with a few extra benefits. The token was established by Dan Larimer, who is also behind Steemit and Bitshares – a popular blogging website and a cryptocurrency exchange portal.
While Ethereum is quite scalable and better than many other competitors at this level, EOS is supposed to be even better. It relies on a superior mechanism to check transactions. It can take anywhere between 10,000 and 100,000 transactions within one second only. It uses delegated proof of stake, as well as Byzantine Fault Tolerance.
EOS also works with more languages, so it represents an attractive choice for developers. It also supports the popular C++. Simply put, developers would not have to become familiar with new and less known languages.
On another positive note, EOS is known for having a reliable and professional team behind it. The developers behind the digital token are extremely experienced and their professional backgrounds are transparent.
When it comes to its historical performance, EOS is one of the few digital currencies that were not seriously affected by the market crash from 2018, so its value is quite stable and does not fluctuate too much.
6. Cardano
Cardano is similar to Ethereum from multiple points of view. For example, it was put out by Charles Hoskinson – a co-founder of Ethereum. It came to life in 2017 and was originally designed to follow Ethereum's profile and provide convenience in terms of decentralized apps, as well as smart contracts.Then, Cardano is also similar to EOS from other points of view. These days, it is said to run on one of the world's most advanced blockchain technologies. It is superior to other similar technologies and is also used by NEO and EOS.
Cardano has a few major pros. One of them is its support. The digital currency is backed up by a prolific community with solid academic backgrounds. It is supported by scientists and researchers that keep upgrading its blockchain development on a regular basis – you can leave yourself in good hands there.
Then, Cardano also has a better scalability than Ethereum and can take 257 transactions in a second. It is rumoured that developers are working on its interoperability, so it can easily interact with other digital currencies without causing any issues whatsoever.
While Cardano is extremely promising, some of its potential updates are still under development. Therefore, it is hard to tell whether or not it will become a top player on the market. Its price is not massive, but it has grown during 2017 and 2018 by 500%. It has suffered a downfall, but it seems to go up again.
7. Litecoin
Created in 2011 by Charlie Lee – a former Google employee, Litecoin has become pretty popular and it is often ranked among the most popular digital currencies out there. It was developed on Bitcoin's blockchain, but it aims to solve some of the issues associated with the world's most famous digital currency.Litecoin has proven that it can last. It has successfully managed to resist for almost a decade. But then, just like Bitcoin, it lacks a few technologies that more and more people look for these days – such as smart contracts and an associated platform for them.
Transactions in Litecoin are not instant, but they take just under three minutes to complete – about four times less than Bitcoin transactions. This is one of the reasons wherefore this digital currency is referred to as the lite coin. On the same note, transaction fees are way smaller compared to Bitcoin's fees.
Mining is the main option to come up with more coins. It is expensive and not really energy efficient, but it is also restricted to users with superior hardware. Then, on another negative note, Litecoin does not provide access to smart contacts, meaning its competition is quite harsh.
Litecoin has managed to climb among the top 10 digital currencies on the market and stay there for years. It had a great run during the 2017 boom, when it went from $4 to $350. As the market crashed in 2018, its price has gone down, but it is showing signs of improvement – fluctuations are not that high.
8. Stellar
Established by Jed McCaleb in 2014 – the same person who founded Ripple, Stellar features a few interesting aspects that contribute to its popularity. The digital currency came out as Ripple was hard forked though, so it follows some similar principles – such as increasing the efficiency and speed of cross border payments.The Stellar Development Foundation behind this cryptocurrency makes it unique because it operates as a nonprofit organization. It is run by financial experts and technology professionals and it provides access to inexpensive financial support. Its mission implies fighting poverty and providing excellent individual potential support.
Stellar has a few major benefits. Since it is more decentralized than Ripple and other similar currencies, it inspires a bit more trust. Then, the nonprofit profile makes it even more trustworthy, as people are less likely to criticize the team behind it. It has managed to secure some interesting partnerships with more than 30 financial institutions.
But then, just like other cryptocurrencies, Stellar faces a tough competition. It aims to ease international payments. In fact, most digital currencies have the same purpose, so its overall competition can seriously weigh in the process.
Stellar has grown from a low value of $0.0039 in the spring of 2017 to $0.85 in the beginning of 2018. It is an impressive return and its value is quite stable. Its plans to support financial inclusion to every part of the world keeps it on the floating line.
9. IOTA
IOTA stands out in the crowd because it is not based on the blockchain technology. Instead, it relies on a new protocol referred to as Tangle, so it aims to do things a bit differently – a great choice for those who want something else.IOTA is based on IoT – you might be aware of it, as it stands for the Internet of Things. This technology allows the communication between different things based on sensors. IOTA aims to make this technology more secure.
What makes IOTA so attractive? Transaction fees are null. You will never have to pay anything for a transaction, regardless of its profile – local or international. Other than that, IOTA promises infinite scalability.
IOTA is not perfect either because it is based on the Internet of Things, so it depends on another technology. At the same time, if big IoT companies decide to come up with their own digital currency, IOTA is likely to face serious competition.
IOTA grew from $0.55 in the summer of 2017 to $5.34 in the wintertime. It was established in 2015, but it was launched on digital currency exchanges in 2017 only. It was an instant success and although it dipped in 2018, it seems stable these days.
10. NEO
NEO is one of Ethereum's main competitors. In fact, it is known as the Chinese Ethereum because there are many similarities between them. It also supports launching ICOs and the development of smart contracts, which is a plus.The cryptocurrency was founded by Da Hongfei in 2014, so it is relatively new. It became NEO in the summer of 2017. Prior to that, it was known as AntShares. From some points of view, it is superior to
Ethereum.
The digital currency can take 10,000 transactions per second – way more than Ethereum. Also, it supports more than just one programming language, including the popular Java, C# and C++, among others.
Unlike other cryptocurrencies, this one benefits from support from the Chinese government. While this is a plus, it could be a drawback as well. If the Chinese government decides to change its policy towards it, the cryptocurrency will suffer as well.
Other than that, just like other alternatives, NEO has seen a tremendous growth in 2017 – probably one of the fastest growing digital currencies in the world, with an impressive 111,400% growth. These days, it is pretty stable.
Conclusion
Bottom line, you should now be able to make more informed decisions regarding cryptocurrencies and digital currency trading. While cryptocurrencies keep fluctuating, they represent an appealing market for many traders and investors. It is up to you to decide whether or not you have the time and dedication to involve with this industry.It’s important to understand that digital coins tend to go through a continuous update. New coins pop up on a regular basis, with some others falling and losing their popularity. Some of them dominate the industry, indeed, offering more stability. But when it comes to money, it’s usually the less known newcomers making a boom.
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