As the oldest and most well-established cryptocurrency, Bitcoin gets most of the attention. But in the world of cryptos, it’s just the tip of the iceberg.
There are actually more than a thousand so-called “altcoins” out there, with more than 20 having a market capitalization of at least $1 billion as of early February. While they share key similarities—like being digital and decentralized and using cryptography for security—they can be pretty different from one another.
If you’re interested in cryptocurrencies—as a potential investment or just as a topic of conversation—it’s worth getting familiar with a few big names besides Bitcoin, too. Here’s a round-up of five of the most popular.
What Makes It Different: The first decentralized, blockchain-based cryptocurrency. By design, the total number of bitcoins is limited to 21 million.
The Godfather of cryptocurrency, Bitcoin was created in 2009 based on a technology called “blockchain,” which—very simply put—is a public ledger used to record transactions. Everyone who participates in the blockchain by mining Bitcoin maintains the decentralized ledger, helping to track every transaction ever made. This is what allows for transactions without a middleman or a regulatory agency, like banks and the Federal Reserve.
At launch, one coin was worth six cents. As of early February 2018, it was worth about $7,000, though it jumped as high as $19,000 in December 2017.
What Makes It Different: In addition to being a currency (“Ether”), Ethereum is a platform that allows for decentralized applications to be built.
Conceptualized in 2013 and launched in 2015, Ethereum is both a currency (“Ether”) and a blockchain-enabled software platform. It acts as a worldwide “supercomputer,” where developers can build applications called smart contracts. Essentially, the application’s requirements are written into the code, allowing for automatic execution when specific conditions are met. Running each application requires transaction fees, paid in Ether.
A number of Fortune 500 companies have teamed up to build upon Ethereum’s blockchain and smart-contract technology, which is partly why many believe Ethereum will ultimately supersede Bitcoin as the crypto market leader.
Since early 2017, Ether’s price has gone from about $8 to a high of nearly $1,400. As of early February, it was trading at around $700.
What Makes It Different: Ripple has captured the interest of more than 100 financial institutions as a way of transferring funds internationally.
Launched in 2012 as an adaptation of peer-to-peer payment network Ripplepay, Ripple is both a currency and payment network that’s being used to simplify global banking processes.
One thing that sets it apart is that it was never intended to operate like a traditional currency, but rather an intermediary that allows for the transfer of other currencies—catching the attention of dozens of financial institutions like Santander, UBS and American Express. Using Ripple and its network, banks can transfer large sums cheaper and faster than through traditional channels.
Ripple started 2017 worth $0.006—that’s six thousanths of a dollar—and sat at about 70 cents in February.
Bitcoin Cash (BCH)
What Makes It Different: Bitcoin Cash’s blockchain has larger blocks than Bitcoin, allowing for faster transactions.
Because the blocks making up Bitcoin’s blockchain cannot exceed one megabyte in size, as it grew in popularity, it started taking a lot longer to process transactions. Large block sizes would solve that problem. But since Bitcoin isn’t centralized, making code changes requires community consensus. Otherwise, the currency is forced to undergo a “hard fork,” or split—essentially creating a new cryptocurrency.
That’s how Bitcoin Cash was born. By increasing block size to eight megabytes, Bitcoin Cash aims to be faster than classic Bitcoin. When it launched on August 1, 2017, it was valued at 291.55. It climbed above $4,000 at one point late in the year. But by early February 2018, it had fallen to around $880.
What Makes It Different: Litecoin generates blocks faster than Bitcoin, allowing for faster transactions. It’s also a lot cheaper. (It’s often viewed as the silver to Bitcoin’s gold.)
Litecoin was launched in October 2011 by former Google engineer Charlie Lee. Like Ethereum, it was designed to address some Bitcoin shortfalls—namely, transaction speed.
Litecoin and Bitcoin are based on the same basic principles and operate similarly. The key difference is that Bitcoin takes much longer to generate blocks (10 minutes vs. 2.5 minutes). Faster block generation allows for faster transactions using Litecoin.
Litecoin started 2017 at $4.54 and shot up past $370 in December; as of early February, it sat around $130.
Editor’s note: Cryptocurrency prices can fluctuate dramatically in a short-term period. The numbers below were as of early February.
February 6, 2018