Although the word Bitcoin may sound familiar, many other cryptocurrencies certainly do not. That is easily explained: nowadays there are countless digital cryptocurrencies. Most have a short lifespan. Yet, there are a few major cryptocurrencies that – like the Bitcoin – are gaining popularity very rapidly.
The most well-known among them are the Litecoin, Ripple, Dash, IOTA, Ethereum and Ethereum Classic. Together with the Bitcoin these are the largest cryptocurrencies of the moment. Below you find an infographic explaining and comparing the most important figures about these digital coins.
Cryptocurrency for dummies
Cryptocurrencies are types of money based on encrypted mathematical algorithms that make payment possible. No bank is involved in the process. That keeps the costs low and makes payments anonymous. Also, it obviously cannot be printed.
Many cryptocurrencies have a short lifespan. It is suspected that some cryptocurrencies are merely created by scammers to make quick money. Many people are hoping to get into a cryptocurrency at a low price, expecting its price to soar very quickly. Indeed, there are already many Bitcoin millionaires.
The infographic below gives a good overview of the 6 most important cryptocurrencies of the moment. The image was made by eToro, an online broker where you can trade in cryptocurrency.
Below we have summarized the most important information from the infographic.
The first and most famous cryptocurrency, which was created in 2009. Transactions with the Bitcoin are recorded in the ‘blockchain’, making duplicate payments impossible. There is no central authority or server, all control takes place within the network of users. Bitcoins can be earned by solving increasingly complex algorithms. This process is called mining and is comparable to the winning of gold. More and more merchants accept the Bitcoin as a payment method, which benefits its stability.
Created as an alternative to the Bitcoin in 2011. For the ‘normal’ user it is impossible to ‘mine’ Bitcoins. The formulas and calculations are so complicated that huge computers are required. The Litecoin was created to participate in this process even with a normal computer. The algorithm is less complicated, making the transactions go faster. Whereas the Bitcoin is often compared with gold, the Litecoin is often referred to as silver.
Unlike the previously described currencies, the Ripple does not require mining. The network (founded in 2012) mediates in currency trading. By that we mean not only the Dollar and Euro, but also units like Bitcoins or Airmiles. For each transaction a small fee must be paid in XRP: the currency of Ripple. This cryptocurrency is being traded because exactly 100 billion XRP are in circulation.
Large banks such as Santander and UBS are experimenting with Ripple’s technology.
Dash was founded in 2014 in an effort to improve the Bitcoin on two points: faster transactions and more anonymity. In addition to the regular users, there are also masternodes. These can be seen as moderators guaranteeing the quality of a forum.
Ethereum was founded in 2015 and focuses on developers. Applications can be developed within the Ethereum platform, such as shares, debt certificates and testaments. This creates an entirely new economic system within this network. In exchange for their work, developers receive the digital currency.
A year later, the Ethereum community faced a difficult decision. An investment company in venture capital, completely built in the Ethereum network, lost some $50 million due to a security breach in the network. The majority of the community helped the investment company by working hard together: they changed the algorithm and managed to reverse the transaction.
A small group of users did not agree with this. They continued with the cryptocurrency as it was once created, under the name Ethereum Classic.
Do you want to invest in cryptocurrencies?
You can trade cryptocurrencies in various ways. For example, by simply buying the currency and selling it at a later time with a profit. In that case you must make sure your money is kept safe. Lately, there have been many incidents where digital currencies have been stolen by hackers.
Do you want to benefit from price fluctuations, but do not wish to make actual purchases with the currency? Then it is recommended to trade cryptocurrencies with a broker. For example, at one of these online brokers.