Cryptocurrencies are an exciting new technology poised to disrupt the way financial transactions occur. Whether money is sent, spent, invested, or more, cryptocurrencies represent a paradigm shift in how we think about money. Cryptocurrencies have been around for over 8 years, and they currently have a market value of around $170 billion.
Recent media spotlight paved the way for more and more people to take note and delve a bit deeper into the world of cryptocurrency and its purpose. So, with this starter’s guide we want to give you a good understanding of what cryptocurrency is all about
What is Cryptocurrencies. ?
First, let’s look at the word itself. Digital currencies are secured using cryptography and combining that with their role as a currency gives us the compound word cryptocurrency.
To understand what a cryptocurrency is, rather than just the what the word means, you first must think a bit about the nature of a currency itself. Money, like cash money, is simply a token we use to exchange for goods and services. There is no inherent value in the pieces of paper we carry in our wallets, purses or pockets. It only has value because we believe it does.
In the modern age, however, there is no need for that token to be a physical one. For a long time now, many transactions have not involved the transfer of actual cash. Even before computers, writing a check meant allowing a bank to reduce your balance and increase somebody else’s by updating a ledger, and debit cards are a more modern version of that. No cash changes hands in these transactions.
Cryptocurrencies are in many ways just a version of that, updated to allow for the widespread use of the internet, but with a couple of crucial differences.
How are cryptocurrency Different
First, they are not issued by the government. They are created and controlled by computer programs, or algorithms. Those algorithms lay out how transactions are made and recorded, and how new coins or tokens are found and released. People and organizations known as miners keep records of every transaction and attempt to solve complex computer problems that, when solved, reward them with new coins as payment.
In effect, it is the users themselves and their vast combined computing power that record transactions directly between peers, rather than through banks or other intermediaries. That system is known as a blockchain and the transactions, and even the currencies, are sometimes referred to as “peer-to-peer.”
Commonly Used Cryptocurrencies.
Bitcoin (BTC)
Bitcoin is the big daddy of cryptos and the one that most people are aware of. It was created in 2009by the still mysterious and pseudonymous Satoshi Nakamoto. There are actually now two types of Bitcoin, the original and Bitcoin Cash which came about as a way of solving the high transaction times on the Bitcoin network.
Litecoin (LTC)
Litecoin, launched in the year 2011, was among the initial cryptocurrencies following bitcoin and was often referred to as ‘silver to Bitcoin’s gold.’ It was created by Charlie Lee, an MIT graduate and former Google engineer. Litecoin is based on an open source global payment network that is not controlled by any central authority and uses "scrypt" as a proof of work, which can be decoded with the help of CPUs of consumer grade. Although Litecoin is like Bitcoin in many ways, it has a faster block generation rate and hence offers a faster transaction confirmation. Other than developers, there are a growing number of merchants who accept Litecoin. As of June 2018, Litecoin has a market cap of $4.89 billion and on June 21, 2018, it closed at $96.7.
Ethereum (ETH)
Launched in 2015, Ethereum is a decentralized software platform that enables Smart Contracts and Distributed Applications (ĐApps) to be built and run without any downtime, fraud, control or interference from a third party. During 2014, Ethereum had launched a pre-sale for ether which had received an overwhelming response. The applications on Ethereum are run on its platform-specific cryptographic token, ether. Ether is like a vehicle for moving around on the Ethereum platform, and is sought by mostly developers looking to develop and run applications inside Ethereum. According to Ethereum, it can be used to “codify, decentralize, secure and trade just about anything.” Following the attack on the DAO in 2016, Ethereum was split into Ethereum (ETH) and Ethereum Classic (ETC). Ethereum (ETH) has a market capitalization of $41.4 billion, second after Bitcoin among all cryptocurrencies. As of June 2018, Ethereum has a market cap of $47.47 billion and on June 21, 2018, it closed at $525.77.
Zcash (ZEC)
Zcash, a decentralized and open-source cryptocurrency launched in the latter part of 2016, looks promising. “If Bitcoin is like http for money, Zcash is https," is how Zcash defines itself. Zcash offers privacy and selective transparency of transactions. Thus, like https, Zcash claims to provide extra security or privacy where all transactions are recorded and published on a blockchain, but details such as the sender, recipient, and amount remain private. Zcash offers its users the choice of ‘shielded’ transactions, which allow for content to be encrypted using advanced cryptographic technique or zero-knowledge proof construction called a zk-SNARK developed by its team. As of June 2018, Zcash has a market cap of $713.254 million and on June 21, 2018, it closed at $190.22.
Dash (DASH)
Dash (originally known as Darkcoin) is a more secretive version of Bitcoin. Dash offers more anonymity as it works on a decentralized mastercode network that makes transactions almost untraceably. Launched in January 2014, Dash experienced an increasing fan following in a short span of time. This cryptocurrency was created and developed by Evan Duffield and can be mined using a CPU or GPU. In March 2015, ‘Darkcoin’ was rebranded to Dash, which stands for Digital Cash and operates under the ticker – DASH. The rebranding didn't change any of its technological features such as Darksend, InstantX. As of June 2018, Dash has a market cap of $1.999 billion and on June 21, 2018, it closed at $261.03.
Related: Top Alternative Investments for Retirement
Ripple (XRP)
Ripple is a real-time global settlement network that offers instant, certain and low-cost international payments. Ripple “enables banks to settle cross-border payments in real time, with end-to-end transparency, and at lower costs.” Released in 2012, Ripple currency has a market capitalization of $1.26 billion. Ripple’s consensus ledger -- its method of conformation -- doesn’t need mining, a feature that deviates from bitcoin and altcoins. Since Ripple’s structure doesn't require mining, it reduces the usage of computing power, and minimizes network latency. Ripple believes that ‘distributing value is a powerful way to incentivize certain behaviors’ and thus currently plans to distribute 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.” As of June 2018, Ripple has a market cap of $18.9 billion and on June 21, 2018, it closed at $0.534.
Monero (XMR)
Monero is a secure, private and untraceable currency. This open source cryptocurrency was launched in April 2014 and soon spiked great interest among the cryptography community and enthusiasts. The development of this cryptocurrency is completely donation-based and community-driven. Monero has been launched with a strong focus on decentralization and scalability, and enables complete privacy by using a special technique called ‘ring signatures.’ With this technique, there appears a group of cryptographic signatures including at least one real participant – but since they all appear valid, the real one cannot be isolated. As of June 2018, Monero has a market cap of $1.812 billion and on June 21, 2018, it closed at $123.32
