It’s a new year, and with that comes new goals and aspirations in the landscape of businesses, big and small. However, one event happening right now could change the way businesses are conducted: cryptocurrency.
What is cryptocurrency?
The forms of cryptocurrency differ, but all are ultimately composed of virtual coins that are traded as stock values or mined on computers. They are also starting to gain traction by being used to buy goods and make donations. This is due to the ease of trading coins through the use of electronic “wallets” that store coins. One of the biggest factors concerned with using these currencies is that no central authority or server verifies any of these transactions, and instead the legitimacy of a payment is determined by the network itself. Whichever method you use to obtain them, they are becoming more common place – both online and in real-life businesses – so here are seven popular currencies explained in detail:
Bitcoin is the original cryptocurrency, and also the most popular one. As the most frequently traded coin, Bitcoin has earned a certain reliability, and is becoming more widely accepted. Released in 2009, Bitcoin uses peer to peer transactions to utilize what’s called a “blockchain” to produce coins. When it comes to mining, it uses CPU power to solve complicated algorithms that produce coins when solved. Bitcoin also forms the basis of other cryptocurrencies, since its value affects all other currencies when used in the market.
As the most well-known competitor against Bitcoin, Ethereum is the second most popular trading currencies for business and market trades. It is an advanced version of Bitcoin because it uses GPU power primarily when it comes to mining instead of the CPU. Another big difference is that it uses any application to use its underlying blockchain infrastructure. This means that it has easier accessibility for acquisition, but also loses some security in its structure.
One of the unique differences between Litecoin and other cryptocurrencies is the algorithm that Litecoin uses with their mining techniques. Bitcoin uses a highly structured and complicated algorithm called SHA-256, which has become harder to mine. However, Litecoin utilizes the algorithm Scrypt, which is considerably more streamlined compared to its predecessor. Another feature of Litecoin is that transaction times are considerably less than Bitcoin. Due to the predefined block size that Bitcoin can mine, this has maxed out the capacity of the block sizes. This often leads to exaggerated transaction times, meaning that while Bitcoin is traded for a much higher premium, Litecoin has a greater market presence in both trading potential and merchant appeal.
#4. Bitcoin Cash
Bitcoin Cash was created out of the need for a competitor against the rising popularity of Bitcoin. What makes Bitcoin Cash unique is the potential to increase the block size which adds more value to the market. This creates more opportunity to mine for this currency over Bitcoin. Established in August 2014, this cryptocurrency allows maximum capacity for block size by eliminating parts of the transaction code that may utilize extra block size.
This currency was conceived with two purposes in mind: increasing the speed of transactions, and anonymous trading. This type of cryptocurrency, formally known as “Darkcoin”, uses a two-tier system that allows near instant transactions to occur. Dash has built a reputation for being the hardest to track and is often used on the black market. This cryptocurrency also has the advantage of low transaction fees associated with trading and using the currency across the web.
Probably the most unusual cryptocurrency on the market due to its origin from a meme of a Shiba dog, this currency was made in response to the Bitcoin in that it is used to reach a wider audience. Dogecoin is seen as more of a fun activity than a trading currency. One interesting point about Dogecoin is that there is an unlimited pool of coins to pull from, affecting how mining is conducted so people can’t abuse the inflation rate.
A key difference with Monero is that transactions always have the potential for gain with mining and using this currency for transactions. This is due to Monero using ring signatures to disguise the valuable information that the site can obtain from its users. Another unique feature of Monero is that the transactions cannot be blocked by merchants or vendors depending upon the history of transactions made previously with Monero.