What are Cryptocurrencies?
Let’s take a look at these alternatives to Bitcoin before we get into detail. A cryptocurrency is a form of virtual money or digital money. Some cryptocurrencies have been introduced to the real world using credit cards and other financial instruments, but the vast majority are still intangible.
Cryptography is complex cryptography that permits the creation and processing of digital currencies as well as their transactions across decentralized systems. This important “crypto” feature is also present in these currencies. Typically, cryptocurrencies are developed by code teams that include mechanisms for issuance (often through “mining” and other controls.
Although cryptocurrencies are designed to be independent of government manipulation and control, they have come under fire as a result. Altcoins are also known as shitcoins. They often present themselves as improved or modified versions of Bitcoin. Altcoins have yet to match the level of security achieved by Bitcoin’s networks, although some may have impressive features.
We’ll be looking at some other digital currencies that are more important than Bitcoin. A caveat first: This list is not complete. This is because more than 4,000 cryptocurrencies exist as of January 2021. Although many of these cryptos are not popular or have little trading volume, they enjoy great popularity with dedicated investors and backers.
The field of cryptocurrency is constantly growing, and there may be a new great digital token released today. Although Bitcoin is widely considered to be the pioneer of cryptocurrency, analysts use many other approaches to evaluating tokens. Analysts often place a lot of importance on ranking coins concerning each other in terms of market capitalization. This has been taken into consideration. However, there may be other reasons for a digital token to be included in this list.
1. Ethereum (ETH)
Ethereum, the first Bitcoin alternative, is a decentralized platform that allows smart contracts and decentralized apps (dapps), to be built without downtime, fraud, or control from a third party. Ethereum’s goal is to provide a global suite of financial products that can be accessed by anyone, regardless of nationality, religion, or ethnicity. This makes the implications even more important for people living in certain countries since those without state infrastructure or state identifications can access bank accounts, loans, and insurance as well as a range of financial products.
Ethereum’s platform-specific cryptographic token, ether, is used to run applications. Ether can be used as a vehicle to move around on the Ethereum platform. It is most commonly sought by developers who want to create and run applications within Ethereum or by investors looking for ether to purchase other digital currencies. Although Ether was launched in 2015 it is the second-largest cryptocurrency by market capitalization, after Bitcoin. However, it still trails the dominant cryptocurrency by quite a bit. As of January 2021, ether’s market capitalization is approximately 19% of Bitcoin’s.
The 2014 Ethereum presale was a huge success. This helped usher in the initial cryptocurrency offering (ICO). According to Ethereum, it can be used to “codify and decentralize, secure, and trade just about everything.” Ethereum (ETH) had a market capitalization in the range of $138.3 million and a per-token price of $1,218.59.
Ethereum will change its consensus algorithm to go from proof-of-work to proof-of-stake in 2021. This will enable Ethereum’s network to run with much less energy and improve transaction speed. Proof-of-stake is a method that allows network participants to “stake” their Ethereum to the network. This helps secure the network and processes transactions. This is similar to an interesting account, where those who do it are rewarded with ether. This alternative to Bitcoin’s proof of work mechanism allows miners to be rewarded with more Bitcoin for processing transactions.
2. Litecoin (LTC)
Litecoin was launched in 2011 and was one of the first cryptocurrencies that followed in the footsteps of Bitcoin. It was also created by Charlie Lee (MIT graduate, former Google engineer).
Litecoin is based upon an open-source global payment system that is not controlled or regulated by any central authority. It uses “scrypt”, which is a proof-of-work and can be decoded using consumer-grade CPUs.
Although Litecoin has many similarities to Bitcoin, it has a faster block creation rate and therefore a quicker transaction confirmation time. Litecoin is being accepted by a growing number of merchants, not just developers.
Litecoin is the sixth-largest cryptocurrency worldwide, with a market capitalization of $10.1 billion and a per token value of $153.88, as of January 2021.
3. Cardano (ADA)
Cardano, an “Ouroboros proof-of-stake” cryptocurrency, was developed using a research-based approach. It was created by engineers, mathematicians, and cryptography specialists. Charles Hoskinson was one of the original five founders of Ethereum. He left Ethereum after disagreeing with the direction it was heading and later joined Cardano.
Cardano’s team created the blockchain through extensive experimentation and peer review. Over 90 papers have been written by the researchers involved in this project on a variety of blockchain topics. Cardano’s research is its backbone.
Cardano appears to be a leader among proof-of-stake peers and other large cryptocurrencies due to this rigorous process. Cardano is also known as the “Ethereum Killer,” due to its ability to do more than its blockchain. Cardano is still very much in its infancy. Although it beat Ethereum to the proof of stake consensus model, Cardano still has a lot to do in terms of decentralized financial applications.
Cardano is a global financial operating system. It offers decentralized financial products that are similar to Ethereum, as well as solutions for voter fraud, chain interoperability, and legal contract tracing. Cardano’s market capitalization is $9.8billion and one ADA trades at $0.31.
4. Polkadot (DOT)
Polkadot, proof-of-stake crypto that aims to provide interoperability between other blockchains, is unique. Its protocol connects permission and non-permissioned blockchains to make it possible for systems to work together.
Polkadot’s core component, its relay chain, allows for interoperability between different networks. It allows for “parachains”, or parallel blockchains that use their native tokens to support specific use cases.
Polkadot is different from Ethereum in those developers can create their blockchains while still using the security provided by Polkadot. Developers can create new blockchains with Ethereum but must create their own security measures. This can make it vulnerable to attacks on smaller projects. The larger the blockchain, the greater the security. This is called shared security in Polkadot.
Gavin Wood, another of the Ethereum core founders who had different opinions about the future of the project, created Polkadot. Polkadot’s market capitalization is $11.2 billion, and one DOT trades at $12.54 as of January 2021.
5. Bitcoin Cash (BCH)
Bitcoin Cash (BCH) is a significant part of altcoin history. It was one of the most successful hard forks. A fork is a result of arguments and debates between miners and developers in the cryptocurrency world. Because digital currencies are decentralized, it is necessary to make wholesale changes to code that underlies the coin or token at hand. The mechanism for doing this varies depending on the cryptocurrency.
Sometimes, digital currencies are split when different factions don’t get along. The original chain will remain true to its original code, while the new chain will begin life as a new version with any changes to its code.
BCH was created in August 2017 by one of these splits. BCH was born out of the need to scale. The Bitcoin network limits the block size to one megabyte (MB). BCH increases the block size from 1 MB to 8 MBs. This is because larger blocks can hold more transactions and therefore the transaction speed will increase. Other changes are also made by BCH, such as the elimination of the Segregated Witness protocol which has an impact on block space. BCH’s market capitalization is $8.9 Billion and its token value is $513.45 as of January 2021.
6. Stellar (XLM)
Stellar, an open-source blockchain network, connects financial institutions to facilitate large transactions. Huge transactions between investment firms and banks used to take several days and involve many intermediaries. These transactions were expensive and took a lot of time. Now, the transaction can be completed almost instantly with no intermediaries.
Stellar is a blockchain designed for institutions, but it can still be used by anyone. It allows cross-border transactions between any currency. Stellar’s native currency, Lumens (XLM), is to be able to transact through the network, users must have Lumens (XLM).
Jed McCaleb was a founder of Ripple Labs and the developer of the Ripple protocol. He founded Stellar. After leaving Ripple, he co-founded the Stellar Development Foundation. Stellar Lumens are worth $0.27 and have a market capitalization above $6.1 billion.
Chainlink, a decentralized Oracle network, bridges the gap between smart contracts, such as the ones on Ethereum and data outside it. Blockchains cannot connect to external applications in a trusted way. Chainlink’s decentralized Oracles enable smart contracts to connect with external data, so contracts can be executed using data that Ethereum cannot access.
Chainlink’s blog outlines a variety of uses for its system. One example of such a use case is to check for illegal siphoning or pollution in water supplies. To monitor water consumption at work, the water tables, and levels in local water bodies, sensors could be installed. This data could be tracked by a Chainlink oracle and fed directly into a smart contract. With the data from the oracle, the smart contract can be used to issue fines, flood warnings to cities or to invoice companies that use too much water in a city.
Sergey Nazarov and Steve Ellis developed Chainlink. Chainlink’s market capitalization was $8.6 billion as of January 2021. One LINK is valued at $21.53.
8. Binance Coin (BNB)
Binance Coin can be used to pay fees for trading on Binance Exchange. Trades can be discounted for those who use the token to pay for the exchange. Binance Coin’s blockchain also serves as the platform on which Binance’s decentralized exchange runs. Changpeng Zhao founded Binance, which is one of the most popular exchanges based on trading volume.
Binance Coin started as an ERC-20 token, but it was later able to operate on the Ethereum blockchain. It was eventually able to launch its mainnet. The proof-of-stake consensus network uses this model. Binance’s market capitalization is $6.8 Billion as of January 2021. One BNB has a value of $44.26.
Tether is one of the most well-known of a group called stable coins. These cryptocurrencies aim to link their market value with a currency or another external reference point to decrease volatility. Tether and other stable coins aim to reduce volatility in digital currencies. Even major ones like Bitcoin have had periods of extreme volatility. Tether’s value is directly tied to the U.S. Dollar. Users can make faster transfers to U.S. Dollars from other cryptocurrencies than when they convert to regular currency.
Tether was launched in 2014. It is described as “a blockchain-enabled marketplace designed to facilitate fiat currencies being used digitally.” Tether, which has a market cap of $24.4 million and a token value of $1, is the third-largest cryptocurrency in terms of market capitalization as of January 2021.
10. Monero (XMR)
Monero can be used to create a secure, private, and untraceable cryptocurrency. The open-source cryptocurrency Monero was launched in April 2014. It quickly gained a lot of interest from the cryptography community as well as enthusiasts. This cryptocurrency was developed entirely through community donations. Monero was launched with a strong emphasis on decentralization, scalability, and privacy. It uses a special technique called “ring signings” to allow complete privacy.
This technique creates a group of cryptographic signatures, each with at least one participant. However, the true one cannot be separated since all of them appear to be valid. Monero’s exceptional security features have earned it an unpleasant reputation. It has been linked with criminal operations all over the globe. Monero’s anonymity makes it a great candidate for criminal transactions. However, this privacy is also beneficial to dissidents from oppressive regimes. Monero’s market capitalization is $2.8 billion, and its per-token price is $158.37 as of January 2021.