A look at the top ten Cryptocurrencies and what they do

16-Mar-2018

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I have been watching with interest the development of the blockchain and cryptocurrency space the last year or so. There are som many projects out there so as a personal learning I will list here the top (on 26th Nov 2017) 10 cryptocurrencies by market cap and my notes about each on to understand their differences and what they could mean for entrepreneurs. Hopefully this might be a useful intro for others as well.

1. Bitcoin (BTC)

Market Cap USD 138 bi

The most well-known cryptocurrency. Was supposed to be used as a digital currency but is currently mainly used as a store of value (like gold for example) due to the difficulties it is encountering in scaling. Back in 2012 it was still possible to use as a payment for services, but now the transaction times and cost for transactions is simply too high for small payments. Bitcoin has the most amount of eyeballs and money, but is running in to issues with it’s community as it has, compared to other projects, difficulty agreeing on the next steps. Recently the project has been split into different currencies like Bitcoin Cash (BCH) and Bitcoin Gold (BCG) but the forked projects have yet to achieve the same popularity of the original bitcoin.

Interesting to note:

  • Maintaining and mining Bitcoin is using too much of the world’s electricity — as much as the bottom 160 countries in consumption combined!
  • Bitcoin could easily incorporate and surpass other cryptocoins in functionality and scalability if only it had some way for the community to agree. Does not seem like major changes will happen soon though…

For Entrepreneurs:

Right now, not very useful because of slow transaction confirmation times and cost of transacting (a high percentage of the value nterprise Ethereutransferred). But if the community can come together and work out the scaling issues, many people already hold Bitcoin and many companies accept payment in it too. It’s almost there… but not quite.

2. Ethereum (ETH)

Market Cap USD 38 bi

A new breed of cryptocurrency. It allows code to be executed on the blockchain depending on external conditions. They call this smart contracts. Smart contracts essentially let code be executed if certain conditions (contract conditions) are met. This can enable things like selling a house and after the deeds are transferred the money is also transferred. There are countless opportunities with this type of setup. Currently very popular are Initial Coin Offerings, which are being used by startups to raise money on the Ethereum blockchain by emitting tokens to their platforms in exchange for Ethereum. If you are an entrepreneur you need to read up on this! ICOs are big right now, and with them some problems too (scammers, companies with no products raising too much money, etc).

Ethereum is a more recent development, has become the main rival to Bitcoin (excluding the Bitcoin forks). There are many big tech companies and banks jumping onboard Ethereum. ETH Is enabling a lot of P2P business model ideas to become viable. Worth noting is that mistakes in the code are perpetual! So any unforeseen circumstances might generate lost money or incorrect contracts being executed… bugs in code? Never!

ETH is backed by the Ethereum Alliance — The Enterprise Ethereum Alliance connects Fortune 500 enterprises, startups, academics, and technology vendors with Ethereum subject matter experts.

Smart contracts are coded in a programming language called Solidity: not a lot of people know it but it is inspired by Javascript and C++.

Interesting to note:

  • It appears to be quite centralised as opposed to Bitcoin
  • Corporates are very interested in this tech as can be seen in the Ethereum Alliance initiative
  • The creator of Ethereum has become very well known and when he was falsely rumoured dead Ethereum almost stopped in it’s tracks.
  • Because many companies are raising money via Ethereum in exchange of tokens, the price remains stable as the companies flood the market with their Ethereum in exchange for fiat currencies to finance their projects.

For Entrepreneurs:

  • Probably the most interesting from a technology point of view.
  • Smart contracts are coded in a language similar to Javascript
  • Is enabling P2P companies
  • Enables the creation of Tokens to raise money for creating projects (sometimes a LOT of money)

3. Bitcoin Cash (BCH)

Market Cap USD 22 bi

A fork of Bitcoin — as an attempt to fix the issues bitcoin is currently facing with scaling and long transaction confirmation times. A sign that Bitcoin is so big that factions are breaking away. From the outside, it looks to me like a group of people trying to make a purely financial gain on top of Bitcoin by moving users away from Bitcoin. Adds marginal improvements to the main Bitcoin project.

Interesting to note:

  • No all that different from BTC

For Entrepreneurs:

  • Better for transactions, but who has BCH? Might be an option as a list of accepted currencies, but not by itself.

4. Ripple (XRP)

Market Cap USD 9 bi

Ripple is a company that has built tools for banks to transfer money cheaply around the world. XRP is a cryptocurrency that is part of their vision — but most banks don’t use XRP (the cryptocoin) because it has a volatile valuation. Built for commercial use in mind (banks, moving money around at scale and low cost). Allows real-time payments at the low cost. Focus on cheap, fast, bulk transactions.

Interesting to note:

  • Built for banks to move money around
  • Banks don’t use the cryptocurrency, just the network because they don’t want exposure to the volatility of the Cryptocurrency (this seems like a problem).

For Entrepreneurs:

  • Could be useful when creating something related to the banking sector, but might run into issue if the currency is used and not just the network.

5. Dash (DASH)

Market Cap USD 5 bi

A decentralized and self-funded organisation. Focused on privacy and anonymous payments. Fast confirmations (seconds) of payments. Masternodes (users with a lot of DASH) have voting rights to decide the direction of the project (a clear and defined voting system that, for example, Bitcoin lacks).The network features instantly confirmed, double-spend-proof, optionally anonymous transactions, a self-governing & self-funding model through incentivized full nodes. Masternodes pay around 8% interest per year. Has a DAPI (decentralised API) for apps to interact with the blockchain enabling simpler adoption.

Interesting to note:

  • Has a built-in governance model. Owners of DASH Masternodes can vote on the direction of the project
  • Owners of Masternodes (1000 DASH) earny 8% interest — they also need to run a server 24/7
  • Privacy oriented — can be anonymous but that is optional

For Entrepreneurs:

  • Instant payment confirmations could be very useful and together with anonymity and a positive community, this project could have some legs 😉
  • There is a simple dAPI for creating apps that run on their blockchain, making it much easier than other blockchains to get up and running!

6. Litecoin (LTC)

Market Cap USD 4 bi

One of the older Cryptocurrencies — initially used for faster and smaller transactions (around 2,5 min confirmation time). Many places online accept Litecoin as payment. Litecoin uses scrypt in its proof-of-work algorithm, a sequential memory-hard function requiring asymptotically more memory than an algorithm which is not memory-hard. It is like Bitcoin’s little brother, mocked by other communities, including the Litecoin community itself. But nonetheless it has stuck around and is still one of the most popular cryptocurrencies.

Interesting to note:

  • Unsuspecting but keeps growing
  • A bit of a laughing stock cryptocurrency and has a self-deprecating community

For Entrepreneurs:

  • Has a pretty good adoption across online outlets that accept Bitcoin as it seems to have been added at the same time
  • Faster transaction speeds and lower cost of confirming transactions

7. Bitcoin Gold (BTG)

Market Cap USD 4 bi

A hard fork of Bitcoin. The forked protocol aims to change bitcoin’s consensus algorithm allowing users to mine the currency with graphic processing units (GPU) among other changes. The goal appears to be a move to diminish the importance of bitcoin miners in the network and allow it to scale via normal users of the currency, making it more decentralised, robust and more scalable.

Currently Bitcoin mining is dominated by ASICs (Application Specific Integrated Circuits). They’re different from CPUs in that they do only one thing, but they do it really, really well.

Bitcoin mining is currently completely dominated by ASICs, mostly produced by Bitmain, Bitfury and Canaan. This is largely due to the proof-of-work function (SHA256) being reasonably simple and not requiring much RAM. Bitcoin Gold changes this to a more standard PC configuration relying on more standard Hardware.

Interesting to note:

  • Tries to fix the distortions in mining created by the Bitcoin mining algorithm creating a more decentralised Bitcoin network (and more stable /scalable )

For Entrepreneurs:

  • Very, very new, I would hold off for a few months until it finds it’s place

8. Monero (XMR)

Market Cap USD 2,6 bi

Untraceable — the one that has a javascript embedded code mining script being used on many websites to monetise them. Monero is different because every transaction is always private (in Dash, privacy is optional). There is no way for pools and exchanges to opt out of sending private transactions.

Has an accessible Proof of Work (mining) algorithm. Monero is developed mostly for free, but top voted ideas can be paid to become a reality via the community forum.

Interesting to note:

  • Some websites are attempting to replace ads with a Monero mining script so that site visitors will give them revenue by sharing their CPU usage. Many users hate this!
  • Always private transactions
  • There is a pool of money to be used to improve Monero if the community votes, the money can be spent improving functionality

For Entrepreneurs:

  • Similar to Dash in privacy, speed and community…

9. IOTA (IOT)

Market Cap USD 2,5 bi

A fixed money supply with zero inflationary cost. IOTA offers zero-fee transactions and no fixed limit on how many transactions can be confirmed per second. IOTA is focused on being useful for the emerging machine-to-machine (m2m) economy of the Internet-of-Things (IoT), data integrity, micro-/nano- payments, and other applications where a scalable decentralized system is warranted. Unlike blockchain architecture, IOTA has no separation between users and validators (miners / stakers); rather, validation is an intrinsic property of using the ledger, thus avoiding centralization.

Interesting to note:

  • Focused on being used on the internet of things (IOT)
  • Everyone is all parts of the network at the same time (buyer, seller, ledger, miner) creating the most decentralised blockchain on this list

For Entrepreneurs:

  • Interesting to look at for IOT-related projects

10. NEO (NEO)

Market Cap USD 2,3 bi

NEO is a non-profit community-based blockchain project that utilizes blockchain technology and digital identity to digitize assets, to automate the management of digital assets using smart contracts, and to realize a “smart economy” with a distributed network. designed to host smart contracts, ICOs, utility Token Sales and dApps in a decentralized manner. Created out of China. Uses proof-of-Stake.

  • NEO’s smart contracts and dApps can be written and compiled in C# and Java. In the future, developers will also be able to write smart contracts in Python and Go.This drastically reduces the barrier for developers around the world to support NEO.
  • NEO can handle 10,000 transactions per second.
  • NEO is, as they describe, the only cryptocurrency quantum-computer-proof. Quantum computers are believed to have the ability to break into and hack the cryptographic math on which blockchains are based, including Bitcoin. NEO claims that they have already developed an anti-quantum cryptography mechanism called NeoQS.

Interesting to note:

  • Based out of China
  • Uses more common programming languages for smart contracts
  • Supposedly quantum computer proof (but the quantum computers don’t yet exist). Quantum computers, when created, might be able to solve sophisticated encryption algorithms.

For Entrepreneurs:

  • Not sure why someone would choose NEO over ETH…

Some takeaways from looking at these top 10 Cryptocurrencies

  • Community is key for a project to thrive. Rifts in the community can mean stagnation and impasses.
  • Sticking around for a long time and going through ups and downs is by itself a sign of strength.
  • Cryptocurrencies and their technology can adapt and change. Just because it started out one way, it could become quite different after a few years.
  • Even at the top 10 in the market cap table, places are not guaranteed — lot’s of moving around (and indeed the bottom 7 currencies changed place multiple times during the time it took to write this post).
  • Traders are all over the space using lot’s of cash to manipulate the market using techniques often illegal in the stock market (like pump-and-dump).
  • Most projects have a slightly different take on blockchain / cryptocurrency and have interesting concepts from a technical as well as philosophical /moral point of view.
  • A coin getting onto a popular exchange makes a big difference to the community and valuation of the coin.
  • Ethereum seems to stand out from the other 9 cryptocurrencies with it’s smart contract technologies — enabling tokens and programatic currency as well as a big pool of good will and enthusiastic developers.
  • Bitcoin’s success and scaling and the community issues has spawned a myriad of other projects that try to fix the problems encountered.
  • Cryptocurrency markets are on fire right now! Just in the time period it took to write this blog post many billions of USD were injected into the space and Cryptocurrencies changed places many times in the market cap table.
  • There is a lot of new ideas and with them come terminologies — if you don’t undertand the terminology it’s hard to understand the potential of the the tech. Some examples
  • Proof-of-word vs Proof-of-stake
  • Gas
  • Ledger
  • Blockchain

https://medium.com/@rod_3348/a-look-at-the-top-ten-cryptocurrencies-and-what-they-do-4ac862a18cb5

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