June 11, 2019
VirtualFinancePedia

Twelve digital currencies types you should be aware of

Digital Currency Awareness

Yes, you probably already know about Bitcoin for sure. As a matter of fact, a lot of people who are not involved with the cryptosphere even as observers believe that Bitcoin and cryptocurrency are interchangeable terms (so, for them, BTC is the only digital asset in the world).

Nothing could be further from the truth, of course. While Bitcoin was indeed the project that started everything and created a previously unexisting trend, the current market includes hundreds of different tokens.

Bitcoin created (and after that a lot of new projects followed suit), the blockchain-based decentralized networks that keep the cryptocurrencies working and create new blocks for the chain and, in the case of mineable coins, new coins too.

It remains the most essential and valuable cryptographic asset, and it holds significant influence over the rest of the coins because it’s usually the base currency you need to get if you want to acquire almost any of the other assets available in the market.

In this article we’ll remind you about BTC’s importance but we will also tell you about eleven other cryptocurrencies that are in the market right now and that hold some promise because they have sound technology or specific use cases that could make them valuable in the future because of authentic demand and not just speculative pressure, which remains the dominant engine for crypto-economics.

But before we delve into the specific projects we want to show to you, let’s quickly review some basic facts about cryptocurrencies.

Digital assets: What are they, anyway?

We’re so glad you asked! Without getting very technical and keeping everything in plain English, we can tell you that a cryptocurrency (or an altcoin, a digital asset, a crypto coin, a digital token, those terms are all used within the cryptoverse in the same sense) is a new kind of money, or at least that’s the idea in the long run.

It’s not physical money that you can hold in your hand as a bunch of coins or bank notes but digital (some of the projects we’ll describe to you are going more or less physical by issuing debit cards and other means of payment, more on that later). Every cryptocurrency issues coins or tokens, which are the units of that currency that you can buy, trade, store or use. It’s all virtual and intangible for the most part.

And why are they called “crypto”? Because all the technology that has allowed the development of this new kind of money is based in cryptography. Cryptography is all about ensuring security, and that’s how altcoins are created, stored, transacted, and deployed (deployed is just a smart way to say you spend them in the end).

And, in some cases, the cryptographic protocols allow for 100% privacy and anonymity in every transaction. Crypto math is not the only thing common to almost all of these projects; a core value (and resource) is decentralization.

Decentralization is all about freedom. If no central authorities have a say about a given token, then its price cannot be manipulated or controlled.

It will all come down to the way in which users use a given token, and nobody in the world will be able to do anything about it (unless they can get control over more than half of the network, which is possible in principle but not really viable in practical terms).

Why does it matter?

Because it means that governments can’t mess cryptocurrencies up the way they sometimes do with their local fiat currencies, and that feature in cryptocurrencies has not been so popular lately.

Yes, it seems that investors (institutional investors in particular) like to have the governments of the world interfering at some points in time.

Bitcoin remains the model. Most other projects are altered Bitcoin versions which, supposedly, have some advantage or improvement over the initial protocol. Some others have taken the original blockchain idea and have run with it making some real changes and innovations.

A widespread “improvement” has to do with mining which is very difficult in Bitcoin. Some of the currently available coins (like Tron or XRP) don’t have any mining process at all. Blockchain purists prefer coins that need mining, but time will tell if mining is really that important.

So, now, let’s go for the beef. But before we do, keep this in mind. There are too many coins in the market right now. We will talk to you about those we think best in terms of fundamentals and future potential, but no crypto expert in the world could ever give you a truly comprehensive list.

Understanding the fundamentals and operations in all of the first hundred coins by market capitalization would be reflective material for several Ph.D. theses, letting alone the fact that the market has 1,600 coins right now.  We operate on the assumption that you don’t have that much time.

Some of the projects we will mention are the market’s darlings. Some are not, but they have the undivided attention from an enthusiastic and committed community of very dedicated experts and able people, even if they’re not that many.

And, on top of everything, the cryptosphere keeps growing so, if you read this article one year from now, it will probably be hopelessly outdated. Not to worry, my boss will ask me to write this again sooner or later, and you’ll find a new version when the time comes, I’m just giving you a bit of a heads up.

So let’s get started. Don’t pay too much attention to the order; every coin in the list matters in some way.

Litecoin (LTC)

It was conceived as a Bitcoin without all the fuzz. By that, we mean that the mining process was simplified so it would remain safe but manageable. This project was started by Charlie Lee, who was a Google software engineer captivated by Bitcoin’s potential, and who remains the project’s leader. This is a coin known as “silver to Bitcoin’s gold.”

It’s an open source project. That shouldn’t scare you at all. Linux, Android, and many other successful software projects are open sourced, and they don’t pose any danger to any user. On the contrary, development philosophy attracts many competent developers from all over the planet.

Like Bitcoin, Litecoin is a global payments network without any central authorities. It resembles Bitcoin in most ways, which is no surprise because it’s meant to be exactly that: a version of Bitcoin that doesn’t need so much work to create new blocks for the chain. And it’s succeeded in that regard. It has faster transaction speeds, and it’s been pushing for mass adoption for the last year.

Not only that. This is one of the cryptocurrencies that has been trying to be physically available for users. That’s why the Litecoin Foundation bought a German Bank last year (not all of it, just enough equity to have a say).

It’s expected that the aforementioned bank will start issuing debit cards that will allow you to use Litecoin tokens to pay for anything you’d like as you would with any Visa or Mastercard debit card.

As we write this, LTC is traded at USD 45, and it’s in green numbers. It’s one of the few coins that’s been gaining value over the last week.

Ethereum (ETH)

Ethereum changed the game when it arrived.

It was launched in 2015 by Vitalik Buterin who found the way to use a blockchain as an operating system and not just a way to support a ledger for a digital asset.

As a result, Ethereum is not about the coin only. It’s a programmable platform that allows to develop and deploy decentralized applications and smart contracts. That’s what we call “Blockchain 2.0”. It was revolutionary in its own way.

The network’s token is called Ether. And it’s not just a coin. It’s something of a passport that allows you to travel around the Ethereum network, use the apps, hire smart contracts, play games, or anything else you would like to do within the network.

The Ethereum Virtual Machine (EVM) is decentralized and allows for the creation of peer-to-peer smart contracts. But you need to know how to write code in Ethereum’s native programming language so the learning curve for that can be rather steep.

But, even so, you can still do business with somebody you don’t know or trust because the smart contract technology ensures the terms of every contract are honored by all the parties involved.

It’s been incredibly useful as a platform. Tron, EOS and many other blockchain projects came to life running over Ethereum’s network. Ethereum even has a technology that allows you to deploy tokens based on Ether (which Tron and EOS also did). It’s been an incubator of sorts for the cryptoverse, the crypto sandbox if you will.

For a very long time, and because the innovative force it was, it was unrivaled by any coin (except Bitcoin) so it held the second spot by market capitalization for years. And then it lost it to Ripple’s XRP.

That happened because Ethereum’s leadership has been unable to keep up with the times. The network has become slow, and the gas cost (the amount of Ethereum tokens you need to spend to use an app) is high, so many of Ethereum’s projects have recently been moving to greener pastures. Tron’s pastures, to be specific.

But it remains the third coin by market capitalization, trading at USD 140, and it still holds prestige and influence.

Zcash (ZEC)

It’s nowhere as popular or respected as Litecoin of Ethereum, but you shouldn’t let that fool you. Fame isn’t everything.

Zcash appeared in late 2016 as a secure alternative to Bitcoin. The project likes to describe itself like this: “If bitcoin is like HTTP for money, zcash is https” So if you think Bitcoin lacks ambition, just think about Zcash!

It’s all about finding a balance in which absolute transparency also allows for perfect privacy in transfers. This is permitted by a ledger that publishes some of the details in every transfer but keeps the sender, recipient and amounts private. How is that possible? Well, that’s the kind of magic that cryptography allows for. So it all remains private but still reliable. The blockchain knows.

And there’s even more. Zcash has “shielded” transactions. This kind of transaction uses a cryptographic technique known as “zero-knowledge proof.” That kind of technology is so amazing that’s nothing short of magic.

It means that I can prove to you I know something without actually letting you know what I know. No, really! The standard implementation of this technology is known as ZK-Snark. Tron is also implementing this technique to ensure privacy (keep reading, more on that later).

So you want value and privacy and anonymity? This is a good option, then.

A Zcash token will set you back by 48.31 USD, and it’s 21st by market capitalization. So it may not be all that impressive by market performance, but it has very solid fundamentals and real-world use cases so just wait and see how it works out.

Dash (DASH)

It was initially known as “darkcoin.” It was supposed to be the secretive version of Bitcoin. Dash is among the oldest projects in the cryptoverse (if such a word applies at all to a technology that’s barely a decade old). It appeared in January 2014, and it had a huge fan base as it came to life.

Evan Duffield started the project. And it has some advantages. Transactions in Dash are basically untraceable, and if you want to mine it you don’t need specialized ASIC hardware as it happens with Bitcoin or Ethereum. You very own humble (and probably beloved, especially if it includes a GPU card) is enough for you to join the network and mine some tokens.

Dash stands for “digital cash” because Darkcoin was probably not the best move in terms of PR and marketing. But it’s every bit as useful and practical as it was when it appeared. Even more so. DarkSend and InstantX are among the project’s features. They facilitate transfers and remove friction and, yes, they keep things very anonymous and private.

Dash trades at about $80 (stable for some time now) which is not a small price as things go in Crypto. It’s 15th by market capitalization so it holds a place in the market.

Ripple’s XRP

This is a different animal. Unlike all the other projects, Ripple doesn’t want you to use the token (XRP) to buy stuff at Amazon or to keep your private details unknown, or anything of the sort. Ripple and its coin are designed to make the money flow all around the world frictionless, quick, and painless. It’s a different project for a different market, and it’s succeeding.

It got started in 2012 by the same guy who created eDonkey and then went forward to form Stellar Lumens. It’s meant to “enables banks to settle cross-border payments in real time, with end-to-end transparency, and at lower costs.”

It uses a different consensus protocol from all other cryptocurrencies because of two reasons: firstly, because it can, it makes everything faster; secondly, because XRP is not a mined currency, all the tokens were mined already when it came online.

So this network is very efficient when it comes to power consumption (Bitcoin burns as much energy as Ireland) because nothing is used for mining, but just for keeping the network online.

“Distributing value is a powerful way to incentivize certain behaviors” Does that sound a bit romantic? It isn’t. It’s Ripple philosophy, and it’s probably the most pragmatic blockchain project in the cryptoverse.

More on that: Ripple distributes XRP “primarily through business development deals, incentives to liquidity providers who offer tighter spreads for payments, and selling XRP to institutional buyers interested in investing in XRP.” That’s worked out fine for Ripple and XRP so far. It’s been trying to bring the blockchain into the traditional financial world, and it’s had a high degree of success.

Oh, proof of success, you ask? It’s already the second cryptocurrency by market capitalization already. It was the most profitable coin during 2017 (year of all profitable coins), and it’s managed to grow during 2018, which was the year that saw the whole market lose 80% of its value.

Ripple is here to stay. Just keep an eye on it.

Monero (XMR)

Monero has been around since April 2014. It’s an open-source project that emphasizes security, privacy, and non-traceability. It’s one of the most altruistic blockchain projects in the world in the sense that no private company or foundation supports it but, instead, it’s been totally based on donations and the community’s activity.

Decentralization and scalability have been central values for XMR since the beginning, and the protocol includes a special technique called “ring signatures” which enables total privacy in transfers. It works like this: for every transfer you have several signatures, which include at least one of the real participants. But they’re all validated by the blockchain, so there’s no way to tell which one is the real participant.

Monero’s security is so effective indeed that it’s given the token something of an ill reputation as a resource to settle criminal operations all around the world.

That is doubtful since, according to some studies, no more than 10% of the value in the crypto market is actually used in criminal activities. In any case, this currency, as any other currency (fiat or digital) can be used as the owners want, it’s not inherently good or bad.

But the unquestionable thing about Monero is that it’s introduced and developed new ways to take advantage of the blockchain that were previously unexplored.

XMR trades at USD 49 currently and it’s 13th by market capitalization. Which is no mean feat for a coin that has no support other than from community members?

Bitcoin Cash SV

This is a coin with some history. A complicated one. It’s been like soap operas meet crypto.

Bitcoin Cash SV is a derivative project. Only a few months ago, there was Bitcoin Cash (no SV appended). That was an important cryptocurrency because it was one of the earliest (and most successful) hard forks on the original Bitcoin project and protocol.

The fork came about because of disagreements among Bitcoin community members. We’d explain to you why but it was really technical stuff, and we promised you to keep all things in plain English so we’ll skip it (but we’ve covered that material in other articles in our website).

The thing was: some Bitcoin community members wanted to alter Satoshi Nakamoto’s (Bitcoin’s creator) original scheme. And some others didn’t. As they became unable to meet at the middle, the dissenters opted to create a whole new cryptocurrency based on Bitcoin which was baptized as Bitcoin Cash.

Because decentralization is such a core value in blockchain projects, changes in any cryptocurrency or network need the consensus from the whole network (or at least from a majority).

So whenever there is a serious disagreement that cannot be agreed upon by the whole network, it comes a fork. And that’s how some new cryptocurrencies are created: side effects of disagreement. That happened at Bitcoin, and thus Bitcoin Cash went online. It’s not a unique case, but it’s more dramatic than most (more on that a tiny bit later on).

That’s how Bitcoin cash started in August 2017, which was an auspicious time for the market in general, so it was a good year for the new token (as it was for everybody).

Ok, we’ll get a bit technical, just keep reading on, it’s not so esoteric. The contention point was the block size. Bitcoin limits the block size to 1 megabyte, strictly. The people behind the split wanted larger blocks (8 megabytes), and they argued that such an increase would allow for better scalability and faster transaction speeds.

But that was just the beginning of the story.

Even within the new Bitcoin Cash, there was again dissension among factions. The infamous Craig Wright led one of those. Never heard of him?

Well, this is the guy who frequently attacks blockchain projects with solid fundamentals (such as Ripple and Tron) and, as if that didn’t give him enough attention, this is the man (or one of the men) who claims to be none other than Satoshi Nakamoto himself.

The issue was, again, scalability. And Mr. Wright led the dissenters. So there was yet another fork (a fork of the fork, if you will) that resulted in Bitcoin Cash SV (SV stands for “Satoshi’s Vision” because this is what Satoshi wanted from the beginning, according to Mr. Wright). The new coin plummeted as it went online after the fork, but it’s been recovering somehow.

We’re not reporting on this particular project because we believe it holds such a bright future as the other coins in the list, but because it’s a prominent project in the cryptoverse, whether we like it or not.

It trades at $61 currently, and it’s the tenth by market capitalization. It’s a very good performance for a currency with no clear use cases, but it’s there, and you still should know about it (even if it should be to stay as far away as you can).

Neo (NEO)

It came online in 2014 under the name AntShares. But Da Hongfei (the coin’s creator) had second thoughts on that name, so it opted for “NEO” instead.

It originated in China, and it remains the largest blockchain project ever to start in that country. Which is rather weird because China is the most active place on Earth when it comes to cryptocurrencies. That’s why it’s been called “Chinese Ethereum” on occasion because it also allows for the creation of smart contracts, like Ethereum.

2017 has been the best year for NEO regarding market performance. Which is not exactly a surprise if you take into account that it’s been the best year for every single cryptocurrency project so far.

So that bit of data is as true as it’s irrelevant, but we’re mentioning it because it’s often quoted as a great thing for the project. But for completion’s sake we’ll tell you that, during 2017, it went from $0.16 to $162 in fewer than 12 months. That was a 111,000% increase in price. But it wasn’t even the most profitable coin of that year (that was Ripple’s XRP, by far).

But that’s not to say it’s not a good project. It is, and it’s made many good moves. For instance, NEO supports the development of apps and contracts in standard programming languages such as Go, Java, C++, and others like that.

This is not as common as you would think. Many blockchains have a proprietary programming language of their own, and that doesn’t make life easier for anybody. Languages like Java, on the other hand, are tools that any competent computer programmer worth his or her salt already knows fluently.

That opens up NEO’s platform to many new developers who don’t need to face a steep learning curve assimilating a new, obscure, and otherwise useless programming language.

Additionally, NEO has a good relationship with the Chinese government. Bitcoin would like that, but it doesn’t have it. It’s something of a rarity since China has been a tiny bit hostile towards cryptocurrencies in general, despite the thriving activity crypto enjoys in the country.

Cardano (ADA)

Cardano is a third generation blockchain that has achieved great prestige among crypto connoisseurs and the academic world. It’s a rather young project created by Charles Hoskinson (who had co-founded Ethereum a couple of years before). It allows for the creation of decentralized apps and smart contracts. It’s a young blockchain that’s been around since September 2017, only.

Anything you can do in Ethereum you can do in Cardano. But you can do it quicker, faster, more reliably, and much more cheaply.

Cardano and ADA are something of a meta-cryptocurrency. By that, we mean that they’ve been studying, noticing and working on many problems present in most cryptocurrencies and trying to solve them while everybody else kind of just ignores those same problems. They are mostly related to interoperability and scalability.

Another problem that Cardano is working on has to do with international payments (like Ripple and Stellar Lumens) which are slow, expensive and unreliable.

And it also happens that Cardano’s leadership has more vision than most other projects. This is illustrated in the fact that Cardano is trying to bring cryptocurrency financial solutions to Africa while most other coins are looking for use cases (when they are which is not all that common) in Western Europe, Japan, China, and North America.

Why is this a sign of vision? I hear you ask? Because those markets are already overcrowded with fintech options while in Africa there is a disturbing lack of financial services (traditional or digital) so it’s a fertile ground for the innovative and effective alternatives that the blockchain can offer. And that’s one of the reasons for which, being one of the crypto’s best networks, it’s not very often in the spotlight in this side of the world.

Cardano’s token is called ADA and, in our opinion, is one of the most promising networks and tokens in the cryptoverse today.

EOS (EOS)

EOS was created by Dan Larimer who has a lot of experience in cryptocurrencies. He was the man behind Bitshares (a cryptocurrency exchange and marketplace) and Steemit (a publishing platform based on crypto which rewards content with a token instead of “likes”).

He invested all that expertise and prestige in EOS which came online last June 2017 running over Ethereum. And as Ethereum, it’s a programmable platform that allows community members and developers to deploy smart contracts and decentralized applications.

EOS started with an initial coin offering that turned out to be the longest and most lucrative in history. It lasted a year, and it raised four billion dollars.

That could be great news except that coins with ICO’s will probably be declared as securities and not currencies by regulatory authorities. That’s not a sure thing yet, but we’ll have to see how it goes and how it affects crypto.

Among EOS’ innovations, there is a consensus mechanism called proof-of-stake. It’s much lighter than other protocols, and that will hopefully allow for higher scalation and faster transaction speeds. EOS works on EOS.IO which is a blockchain operating system that resembles a standard operating system (except this one is decentralized and based on blockchain technology).

The mining process designed by EOS is also quite innovative. Block producers get EOS tokens proportionally to the production rate they can prove. The governing system s quite complex (but reliable), but it’s designed to guarantee democracy and decentralization at a superior level than most other blockchains have.

EOS and Cardano have been hailed as “Ethereum killers” since they came online, and they could just achieve that in a few more months. It’s one of the big players.

Tron (TRX)

Tron has been around for fewer than two years. Like EOS it started as a project running on Ethereum and with a token based on Ether’s token technology. As Ripple and some other projects in this list, this is a blockchain with a very definite purpose: to use blockchain technology to decentralize the web.

That’s ambitious in epic proportions, but the way Tron’s network has grown, and the way in which the community and the leadership have delivered on every promised milestone makes you think it could indeed succeed in that goal, given enough time.

It was founded by Justin Sun who is Jack Ma’s most famous protegé (yes, that Jack Ma, the Chinese millionaire who created and still owns Alibaba) who already had credibility as a technology tycoon because he’s the man behind Peiwo which is China’s most popular communications mobile app.

Out of the top ten decentralized applications in the world, five are running on EOS while the other five are running on Tron’s network and blockchain. Both networks (and both started as Ethereum projects, but are now independent) have driven Ethereum out of the dApp market which is quite remarkable.

Tron’s plans for the future include “Project Atlas” which will see the BitTorrent network (the world’s largest decentralized network) consolidated into Tron’s blockchain. This includes a new token (called BitTorrent Token) which will reward users for seeding their files and content which went live at Binance and other crypto exchanges just a couple of days ago. An airdrop is on the work for TRX holders.

Tron probably has the most committed community in crypto. They are bullish about the token, and they buy it and use it to support the network’s apps.

And Tron’s market’s performance has been very interesting as well. It had a great year in 2017, which is no news. But in 2018 it also had a good year that allowed it to keep growing as the rest of the market was shrinking and losing value.

Over the last two months, Tron went from 11th to 7th in market capitalization. As we write this, it’s at 8th, which is still quite impressive, even if it went down a spot over the last week.

Stellar Lumens (XLM)

This project was started by Jed McCaleb who lacks no experience in technology or in cryptographic technology. He’s the man who started eDonkey, the file-sharing network that changed the world (along with Napster) and he later also founded Ripple (which is also in this list).

As he disagreed with Ripple’s priorities, he went forward to create a fork for a new blockchain network, and that became Stellar Lumens.

Like Cardano, Tron, or EOS, this is a third generation blockchain that allows for smart contracts and decentralized applications. Stellar Lumens is also trying to eliminate the friction in the international money flow using its native currency (XLM) and technology, so it’s considered to be Ripple’s most direct competitor.

And if you want credibility and support, know this: IBM is joining the cryptoverse, and it has chosen Stellar Lumens as its platform of choice. It means that every project developed by IBM regarding crypto will use Stellar Lumens’ technology and tokens as its native development tools.

And if you are old enough to remember what IBM did for Microsoft or for Intel, you’ll have to conclude that the IBM partnership alone will give Stellar a competitive advantage that very few projects will be able to match.

Conclusions

Bitcoin is still king. If you want to go by value, prestige, fame, market capitalization or any other reasonable standard, no cryptocurrency is more important than Bitcoin. That’s the present.

But the future is not written in stone. Ethereum, Ripple, Tron, XLM have found real-life use cases that can solve problems for people in the streets and on the web. They’re becoming popular and gaining value, users and market capitalization by the day.

The trend is set for the most part. Cryptocurrencies are here to stay, Bitcoin and many others (it’s arguable that all of the currently available 1600 tokens will be around for long, but that’s a subject for another article).

Will digital currencies displace fiat money and the planetary financial system as Satoshi wanted as he deployed Bitcoin at first? We can’t really know for sure. Time will tell. And you’ll find out as you keep reading our articles.

[Image courtesy of pixabay.com]

Disclaimer: All information provided through this article should not be regarded as investment advice, nor should be taken for granted for crypto trading purposes. Before making any investment or trading plans, make sure to inquire about the information diligently by carrying out your very own research. Thank you.

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