Cryptocurrencies have been a hot commodity recently with the rise of Bitcoin and other cryptocurrencies. There are currently more than 1,600 types of cryptocurrency available for trade on the world’s various markets.
Some investors have been attracted to cryptocurrencies because they offer a fresh take on investing that is not very correlated to traditional stocks and bonds, and there is always the possibility that you can make money by investing in something that has yet to be discovered.
Bitcoin is the most popular and the oldest cryptocurrency. It was created in 2009 by pseudonymous developer Satoshi Nakamoto. The main difference between bitcoin and other cryptocurrencies is that it does not use a blockchain to maintain consensus on its network, which has emerged as an issue of debate within the cryptocurrency community for years.
Instead, it uses a data structure called the “blockchain,” which is basically a public distributed ledger that records and validates all transactions. The bitcoin’s protocol determines how many bitcoins are released and when and who releases them, and makes sure that nobody can tamper with this data.
Ethereum is an open-source, public, blockchain-based distributed computing platform featuring smart contract functionality, which provides developers with the ability to construct and run applications that run exactly as programmed without any possibility of downtime, censorship, fraud, or third-party interference.
It was launched in July 2015 by Vitalik Buterin and has become the second-biggest cryptocurrency in just over a year. The market cap of Ethereum passed $1 billion in March 2017 and is now behind Bitcoin with a total value of about $8 billion.
Litecoin is one of the most prominent altcoins (alternative coins) and exists as a fork of bitcoin. While some forks are made to mine new coins, Litecoin was created with the aim of using a different hashing algorithm than bitcoin which would lower the hardware requirements needed to mine it.
As of February 2018, there are 34 million litecoin in circulation out of a maximum limit of 84 million coins.
Ripple is a financial technology company creating a new payment protocol, RippleNet. There are two currencies in the Ripple network called XRP and IOU. While there is no actual coin, each IOU (which stands for “I owe you”) has a corresponding currency code with a one-to-one exchange rate with XRP.
A user can issue an IOU in any currency, and another user can redeem that IOU for the currency. By using XRP, banks can source liquidity on-demand in real-time without having to pre-fund Nostro accounts.
Dash is a well-known cryptocurrency that was originally known as a dark coin but since March 2015 has been referred to simply as a dash (a portmanteau of digital cash).
Dash aims to be the most user-friendly and scalable payments system in the world.
Monero is a privacy-focused cryptocurrency, it is based on the CryptoNote protocol and possesses significant algorithmic differences relating to blockchain obfuscation.
The developers behind monero say that it is private, anonymous, and untraceable. Monero uses a public ledger to record transactions while new units are created through a process called mining.
NEM is a peer-to-peer cryptocurrency and blockchain platform launched on March 31, 2015. Written in Java, with a C++ version in the works, NEM has a stated goal of a wide distribution model and has introduced new features to blockchain technology such as its proof-of-importance (POI) algorithm, multi-signature accounts, encrypted messaging, and an Eigentrust++ reputation system.
The NEM blockchain software is used in a commercial blockchain called Mijin, which is being tested by financial institutions and private companies in Japan and internationally.
Binance Coin is the digital token of the Binance platform, a cryptocurrency exchange. The platform was launched in Mid-2017 and has an average daily trading volume of $2 billion as of February 2018.
Binance users get a 50% discount on all trading fees if they pay their transaction fees with the platform’s own coin.
Tether is a cryptocurrency with a value meant to mirror the value of the U.S. dollar. Tether is backed 100% by actual assets in the platform’s reserve account, one-to-one for every tether issued.
The idea is that exchanges can use tethers as stable currency substitutes without having to cash out to fiat currency like the dollar.
In conclusion, it is apparent that cryptocurrencies are an important and evolving topic in the global economic space. The recent price fluctuations have led many to become increasingly interested in this market, which is why it has been so difficult to come to a consensus on how to regulate it.
The article ends by pointing out that it has been hard for regulators to agree on how best to regulate cryptocurrencies.