The Different Cryptocurrencies and Their Uses
Photo by Dmitry Demidko at Unsplash
There are different types of cryptocurrencies available in this current decade. Out of the total number of close to four thousand cryptocurrencies, few are going to make it out of the bunch. Many have already referenced the similarities to the “dot.com” bursting bubble that may occur within the cryptosphere, but there are differences that will make the current run interesting.
Depending on the use case scenario, there are multiple ways that cryptocurrencies can be used. Some cryptocurrencies have the potential of solving previous difficulties. From connecting people through social media, to getting paid for watching ads, to the ability to earn more cryptocurrency through mining, the many uses can be interesting to learn about. Here are some cryptocurrency projects that may have a future use.
Bitcoin and Ethereum started the revolution in the 2000s and for that are regarded as the originators. Bitcoin continues to give reasons into why it is unlike any other resource. While Bitcoin has been compared to the digital form of gold, it has acted in ways that gold has not in the past. While the bull run of 2018 definitely created a formidable movement, the technicalities and origins are also interesting.
Ethereum has been the number two cryptocurrency that allows users to use the network in ways that are completely different from Bitcoin while maintaining value. Ethereum allows developers to create “smart contracts” that allow individuals to set a specific timeline when a certain agreement may take effect. Whether you are buying and selling or expecting a specific condition to be met, these agreements allow for a new way to conduct business. Ethereum also serves as a network that can serve as a groundwork for newer projects. Currently Ethereum is attempting to evolve into a new version that would solve some problems encountered in the past like scalability issues of a congested network.
The Second Wave
There are new projects coming out and those with new ideas include EOS and Tezos for networking. These innovated projects are attempting to use the block-chain groundwork started by Bitcoin and Ethereum and solve problems that previous cryptocurrencies have yet to solve. While both Bitcoin and Ethereum are great coins for the innovation, there are recurrent minor issues that can be improved upon such as the speed of the transaction. Bitcoin initially had a transaction speed of 10 minutes which could be slow compared to newer coins that may send and receive a transaction in a minute or less.
Ethereum is able to create “smart contracts” which are lines of code that communicate between users to enable a certain agreement that can be initiated, completed, and ended in a specific time-frame. While Ethereum is impressive, the network has developed congestion in the network. Some newer networks attempt to facilitate an improved transaction speed or prevent congestion from occurring on the network. Even the newer projects seem to have difficulty with congestion as EOS has experienced such issues this year.
The Banking/Exchange Cryptocurrencies
There are two currencies that can be used for banking purposes or for trading currency pairs. Ripple’s cryptocurrency and Stellar’s cryptocurrencies are two currencies that have been making constant changes to improve their future use. Ripple’s cryptocurrency seeks to allow the exchange of the cryptocurrency with fiat currencies. There are banks that are associating or at least trying to see what Ripple has to offer.
Stellar, on the other hand, seeks to bank the un-banked in developing countries through the use of its Stellar Network Protocol. Ripple also allows for an exchange between cryptocurrencies and fiat currencies. Whether both companies and cryptocurrencies can coexist in the crypto domain is interesting to watch. Both currencies serve different sectors or niches; however, it can be seen that as cryptocurrency adoption continues, one will attempt to serve as the potential heir of conventional fiat exchanges.
There are some coins that have been formed from the forking of a specific coin. These coins include coins like Bitcoin Cash, Ethereum Classic, Bitcoin Gold, Bitcoin SV, and Dogecoin. These coins retain the initial protocol or assumed a different protocol when a mining pool decided to fork the coin. Like a fork in the road, the original coin is split in two. Bitcoin split into Bitcoin and Bitcoin Cash. Litecoin split into Litecoin and Dogecoin, Ethereum split into Ethereum and Ethereum Classic. These splits occurred because there was a mining majority that decided to fork the coin either to keep the original vision or aspiration of the coin or to create a new vision for the coin.
The Privacy Coins
These coins are those that allow individuals to mask their balance and addresses and keep their privacy. These coins are considered privacy coins for their ability to keep your information private. Cryptocurrencies like Dash, Monero, and Zcash can be used to protect your identity and balance. While there is fear by some on how these coins can be used, they can actually be used to simply protect assets or even protect a person’s identity online.
There are coins that seek to connect the cryptocurrency universe. With so many different projects, it can be dizzying to keep up with the cryptocurrency news. There are new currencies that seek to connect the use of other cryptocurrencies and allow for the idea behind cryptocurrencies to take effect. A unification of digital assets for use in the real world as well as the digital world while producing efficiency and accountability. Currencies like Cosmos and Komodo are attempting to resolve issues of inter-connection between cryptocurrencies.
The $#!T Coins
There are many coins that are probably scams, unrealistic, deceptive, non-existent, or any combination of the above. We talked about the good and now we skip the bad and go directly to the fugly. Coins that should cause your spider senses to tingle a bit. Every investment decision that you make should require a certain level of preparation. Anyone should be able to understand the projects, concepts, code, cases of use, community, as well as be willing to ask questions.
There are a multitude of different coins that can fit into these descriptions as well as being other descriptors for other coins. I tried using the examples that have been around for the most time or have been seen in reputable exchanges.
I neither endorse nor offer advice concerning particular investing. I wish only to help educate on this wild journey into cryptocurrencies as I continue to learn as well.