What types of cryptocurrencies are there?

Currently, more than 1 300 cryptocurrencies circulate throughout the web space. In the present article, we are going to focus on those digital currencies that have the largest market share as of now.

Bitcoin

It is largely considered as the first cryptocurrency to come into existence. Based on mathematical proof, Bitcoin’s system was created and introduced in 2009 by Satoshi Nakamoto. It still remains a matter of debate whether this refers to an individual or a group of people. Bitcoin is a completely decentralized digital currency, since no central bank or other regulatory authority has control over its network.

Bitcoin’s market capitalization has seen a tremendous growth during the past decade and, as of now, it is estimated at approximately $282.1 billion. It, along with Bitcoin Cash and Bitcoin Gold, account for 55% of total cryptocurrency market cap.

Ether

Ether is the underlying digital currency of Ethereum, a decentralized platform with the capability to execute peer-to-peer ”smart contracts”. Being considered as the first alternative to Bitcoin, Ether currently ranks second in terms of market capitalization ($83.6 billion, or 13% of total market cap).

A smart contract is a computer code, which facilitates the exchange of funds, content, property, shares and, in general, anything that has value. Once a part of the blockchain, smart contracts start acting like self-operating computer programs, which will initiate automatically as soon as specific conditions are met. Smart contracts run precisely as they have been programmed, which means there is no possibility of censorship, downtime, fraud or interference by a third party.

Prior to Ethereum’s introduction, blockchain applications had the capability to do quite a restrained set of operations. Because of this circumstance, developers faced a dilemma – either to expand the set of functions offered by Bitcoin and other digital currencies, or to establish a new blockchain application and a new platform, so that the issue is resolved. This explains why Ethereum came into existence.

IOTA

Established in 2015 by David Sønstebø, Sergey Ivancheglo, Dominik Schiener and Dr. Serguei Popov and introduced in June 2016, IOTA (or Internet of Things Application) is an open source cryptocurrency, which utilizes directed acyclic graph technology (also known as the ”tangle”), instead of the ordinary blockchain.

A specific feature of IOTA is that no fees are associated with transactions, regardless of their size. What is more, the number of transactions that can be handled simultaneously by the system is unrestrained, while verification times are fast.

Another key feature is that IOTA is decentralized, thus, there are no ”miners”. What this means is that every participant in the IOTA network, willing to make a transaction, is required to actively take part in the network’s consensus by validating two past transactions.

Currently, IOTA’s market cap is estimated at $14.4 billion, which ranks it sixth.

Ripple

Established in 2012, the Ripple real-time gross settlement system has already been integrated into several financial institutions and payment networks. The underlying digital currency is known as ripples, while, as of now, its market capitalization is estimated at $40.5 billion.

Litecoin

Introduced in October 2011 by Charles Lee (formerly employed by Google), Litecoin is currently ranked fifth in terms of market cap ($17.9 billion). It differs from Bitcoin in several ways:

First, a single block is processed every 2.5 minutes by the Litecoin network. That compares to 10 minutes, as is the case with Bitcoin. What this means is Litecoin facilitates a more rapid confirmation of transactions;

Second, Litecoin uses scrypt in its proof-of-work algorithm;

Third, the maximum number of Litecoins, which can ever be generated, is increased four times compared to the maximum number of Bitcoins – to 84 million.

Dash

Formerly known as XCoin or Darkcoin, Dash is an open source peer-to-peer digital currency, which bears certain similarities to Bitcoin. However, it also offers advanced capabilities such as instant transactions (InstantSend), private transactions (PrivateSend) and decentralized governance (DGBB).

Originally introduced as XCoin in January 2014, Dash is a portmanteau word of ”Digital Cash”.

A specific feature of Dash is that a two-tier architecture powers the cryptocurrency’s network. The first tier is comprised of miners who maintain and secure the network itself and also write transactions to the blockchain. The second tier is comprised of the so called ”masternodes”, which facilitate the advanced features of this cryptocurrency.

As of now, Dash is ranked eighth with a market capitalization of $11.8 billion.

Monero

Initially introduced as BitMonero in April 2014, Monero is a digital currency, which emphasizes on privacy, decentralization and scalability. One specific feature of Monero is that the cryptocurrency is based on the CryptoNight proof-of-work algorithm, designed for use with ordinary CPUs.

Another distinctive feature is that no hardcoded maximum block size is associated with this digital currency. In comparison, a 1 MB block size limit is associated with Bitcoin, or a circumstance that prevents scaling.

About 18.4 million coins are expected to be generated by the end of May 2022.

Currently, Monero is ranked eleventh with a market cap of $7.2 billion.

Cardano

It is a new fully open source cryptocurrency project, developed by the IOHK team. The project features a smart contract platform, which is oriented at delivering more advanced features than any other protocol developed up to this moment. Cardano is also regarded as the first blockchain platform to evolve out of a scientific philosophy and a research-driven methodology.

The platform’s design is aimed to protect privacy rights of users and it also takes into consideration the needs of regulators. As a result, Cardano appears to be the first protocol to balance such requirements in an effective manner.

At present, Cardano is ranked seventh with a market capitalization of $12.8 billion.

EOS

EOS is a smart contract platform developed by San Francisco-based firm Block.one. The initial coin offering for EOS began on June 26th 2017 and is expected to end on June 1st 2018. The ICO includes two periods – Period 1, which distributed 20% of the tokens, and Period 2, which is to distribute another 70%. 10% of the tokens are reserved for the blockchain company.

As many as 1 billion coins are expected to be supplied, with a potential of up to 5% inflation per year.

What is specific about EOS is that its blockchain architecture is capable of scaling to millions of transactions per second. Such a technology also allows for fast and easy deployment of decentralized applications and eliminates user fees.

Currently, EOS is ranked twelfth with a market cap of $6.2 billion.

NEO

NEO is the first decentralized, open-source cryptocurrency platform originating from China. Previously known as ”Antshares”, it was rebranded to NEO in June 2017 and is often referred to as the ”Chinese Ethereum” by many users. NEO’s main goal is ”to be the vanguard in the effort of building a smart economy”. What NEO’s community means by the term ”smart economy” can be described as a combination of digital assets, digital identity and smart contracts.

The platform has two crypto-tokens – NEO and GAS (formerly known as ” Antcoins”), both of which have maximum expected supply of 100 million units. Unlike other digital currencies, NEO is not divisible, meaning that the smallest unit will forever be 1. On the other hand, GAS can be divided into smaller units by a factor of 1/10^8.

As of the time of writing, the NEO token is ranked thirteenth with a market cap of $4.8 billion.