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Cryptocurrencies. We hear of them all the time, even in the financial media. It’s worth noting that they’ve only been around for less than a decade. But despite that short history, hundreds of cryptocurrencies have arrived on the scene.
In fact, the website Cryptocurrency Market Capitalizations reports that, with a total market capitalization approaching half-trillion dollars (both figures as of January, 2018).
Were not even going to attempt to describe all 1,500 cryptocurrencies, or even to list them. But below is a list of eight of the most popular cryptocurrencies, and a brief description of each.
Bitcoin
Bitcoin is the most widely traded of cryptocurrencies, and easily the most popular. Its become unusual to read the front page of a major financial publication and not see at least one article on this crypto. One of the reasons for the BTC surge is that it’s now easily traded in the United States, and can be bought and sold with ease.
Bitcoin is also the first cryptocurrency. It came into existence in 2009, and is credited to someone who goes by the pseudonym Satoshi Nakamoto. It has become so popular that some large companies have begun accepting it for payment. Major companies include Microsoft, Expedia and Overstock.com.
Coin ATM Radar.com reports that there are more than 1,400 Bitcoin ATMs across the US, and the number is growing rapidly.
Related: 6 Ways to Track Your Bitcoin Investments
Litecoin (LTC)
Litecoin is based on an open-source global payment network, and was founded in 2011. Like most cryptocurrencies, it’s a peer-to-peer Internet currency. The currency was actually developed to improve on weaknesses in Bitcoin, but Bitcoin remains by far the largest player in the cryptocurrency market.
One of the benefits of Litecoin is that it actually has more currency units than Bitcoin (84 million versus 21 million). Though that benefit is largely offset by the fact that Bitcoin can be split into smaller units, known as satoshi. (If all of this seems confusing, it’s because cryptocurrencies are still in their infancy, and both the field and the details are changing rapidly.)
Ethereum (ETH)
Ethereum is probably the second most well-known cryptocurrency, behind Bitcoin. The currency was rolled out in 2015, and started in Switzerland. However, it has since split into two separate blockchains, Ethereum (ETH) and Ethereum Classic (ETC). Ethereum Classic is actually the continuation of the original.
Ethereum is sometimes considered to be Bitcoin’s chief competitor, and even heir apparent to the dominant position. Its shown a similar price pattern to Bitcoin over the past couple of years, and the two seem to be moving largely in tandem.
Zcash (ZEC)
Zcash is a Bitcoin competitor that provides higher levels of privacy and fungibility. It’s hoped that it will provide greater anonymity for its users. This is in response to privacy concerns over big data becoming more easily accessible. Zcash supposedly enables its users to operate within the network while being completely anonymous.
Anonymity is provided by the fact that transactions are encrypted and can only be viewed by users who have access to the information. Bitcoin, by contrast, operates using an open ledger system.
The currency has only been around since October, 2016, which makes it about middle-aged in the cryptocurrency scheme of things.
Bitcoin Cash
Bitcoin Cash is a derivative of Bitcoin Classic, and came into existence in August, 2017. Its main benefit is that it increases the size of blocks (as in blockchains), and allows more transactions to be processed. It was designed to avoid situations in which transaction times could be delayed as more blocks reached maximum capacity. Technically speaking, it increases the block size from 1MB to 8MB.
The increase in transaction capability–it is hoped–will enable Bitcoin Cash to compete with PayPal and Visa, in handling large numbers of transactions. At the moment, it seems to be more of a concept than a common currency.
Related: How to Spend Bitcoin and Other Cryptocurrencies
Dash
Like Bitcoin Cash, Dash provides faster service to its users. And like Zcash, it offers greater anonymity. Launched in January 2014 as Xcoin, it was rebranded as Dash in 2015. Like other cryptocurrencies, Dash duplicates Bitcoins code, but seeks to offer improvements on its weaknesses.
For example, while it can take several minutes to complete a transfer through Bitcoin, the same transfer could be run through Dash in a matter of seconds. The additional speed also prevents multiple uses of the same cryptocurrency. Its believed that longer transaction times open the possibility that a user could make simultaneous purchases with the same currency. Should that happen, one of the recipients would not receive payment. Dash seeks to remedy that problem.
Ripple (XRP)
Ripple is one of the older cryptocurrencies, having been launched in 2012. But it’s actually better known for its digital payment protocol, than as a standalone cryptocurrency. It operates as an open-source, peer-to-peer, decentralized platform. It allows seamless transfers of money in any form, including global currencies like the US dollar, and competing cryptocurrencies.
The downside of this cryptocurrency is that trust is a major factor among the network participants. The system uses, Gateway, to act as the credit intermediary. It receives and sends currencies to public addresses over the Ripple network. Anyone can register and open a gateway, authorizing the registrant to act as a middleman for exchanging funds.
Holding balances with a gateway opens counterparty risk. This is similar to the concern that many have with traditional banks. If the gateway doesn’t honor a liability, the user can lose the currency held at that gateway.
Monero (XMR)
Manero is a digital currency, and one that also offers a high level of anonymity. It’s a decentralized peer-to-peer cryptocurrency but is characterized as private digital cash. The currency was started in April, 2014, as a fork of another cryptocurrency. A fork is when an original cryptocurrency is split into two. In the case of Monero, it’s a fork of Bytecoin.
It’s still one of the smaller cryptocurrencies, but it’s been growing due to its high level of anonymity. Monero, unlike Bitcoin, doesn’t enable a sender to view the recipient’s holdings, even if the sender has the recipient’s public address. Currency sent to the recipient is rerouted through an address that’s randomly created, specifically for that transaction. It makes it impossible for anyone to track the addresses and individuals involved in past transactions.
Learn More: 5 Ways to Invest in Bitcoins
Final Thoughts on Available Cryptocurrencies
My thought is that we shouldn’t get locked into any of the above cryptocurrencies, even though they’re currently the most popular. This is a fast-changing environment, and we’re likely to see a changing of the guard (or several) in the coming years. In fact, it’s probable that this list will look very different one or two years from now. The entire cryptocurrency concept is in the very early stages of its evolution.