The Top Cryptocurrencies and Their Challenges
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What is cryptocurrency?
In case you haven’t figured it out yet, we live in the digital age. It was only a matter of time before something so important and fundamental as money becomes also digitalised. It all started back in 2009 with the creation of Bitcoin (though that’s certainly not the first attempt at digitalising money) and we got to a point when there are around 2,000 cryptocurrencies out there with a market cap of almost $300B.
Let’s talk more about the core ideas of cryptocurrencies before moving on to the challenges they are facing in today’s financial environment.
Cryptocurrency is decentralised digital money. There are no coins or notes, everything is stored digitally. Cryptocurrencies don’t have a central computer or a server. Instead, they are distributed across a network of thousands of computers, without a central server. That’s why we are referring to them as “decentralised” digital money.
Cryptocurrencies are passed from one person to another online.
There are no banks, PayPal or Facebook involved. Parties deal with each other directly.
You don’t have to give any personal information in order to use or own cryptocurrency and no one can tell you whether you are qualified or not to own or use them.
All cryptocurrencies use distributed ledger technology (DLT) to remove any third parties from their systems. The DLT that most cryptocurrencies use is called blockchain technology. The first blockchain technology was designed by Satoshi Nakamoto, who is credited for the creation of Bitcoin.
One more thing to mention is that in order to store, receive or send cryptocurrencies, you need to have a cryptocurrency wallet. Most coins have an official wallet, however, some wallets are built for more than one coin. A cryptocurrency wallet will store “public addresses” (cryptocurrency-specific numbers) that can be used to receive a certain type of cryptocurrency. For instance, if you are to receive Bitcoin, you do need a Bitcoin address and it can be shared publicly.
Why has crypto become so popular these days?
Why is it that in such a relatively short period of time, so many people got interested in being part of the crypto community? Let’s find out!
- Cryptocurrencies promise an easier way to transfer funds directly between two parties in a transaction. No banks or credit card companies are involved.
- Funds transfers are done with very minimal/almost no fees.
- Blockchain technology is designed to prevent any threats from hackers and makes the payment process more efficient.
- Anonymity: No central government, authority, or any corporation can access your funds or obtain your personal information.
- Access to everyone! As long as you have access to the Internet and a computing device you can become part of the cryptocurrency community.
Which are the top cryptocurrencies and what are their challenges?
Bitcoin is the most popular and highly valued cryptocurrency we have so far. It’s also the most accepted crypto. Developed back in 2009, Bitcoin has challenged the traditional perception we have of money and making payments. Bitcoin’s market share is more than 60%, making it the dominant force in the crypto market.
One of the reasons why BTC is top of the crypto market is because it’s the oldest, and it has the biggest community of developers and investors who support its further growth. It’s also quite easy to purchase Bitcoin, even for beginners. Little by little Bitcoin is being adopted in the mainstream economy with companies like Bloomberg, Microsoft and many more accepting payments in BTC.
There are, however, some challenges we have to talk about when it comes to Bitcoin so make sure you take notes.
If speed is something you are looking forward to, you may be a little bit disappointed to find out that Bitcoin is facing some challenges in scaling up. A Bitcoin transaction is going to take you about 10 minutes. The network can process around 7 transactions per second.
Another challenge Bitcoin is facing is energy. Though they are currently trying to improve this issue, mining, which is the most important activity for most cryptocurrencies, has become highly energy-intensive activity in the case of Bitcoin. You can now mine Bitcoin only with super-powerful hardware that uses a lot of electricity.
The transaction fees for sending Bitcoin are also quite high which makes it feasible.
The second most valuable cryptocurrency after Bitcoin is Ethereum. It was created in 2015 and it’s way more than just a digital currency. It is a blockchain-based platform for smart contracts. Smart contracts are the next big thing in the cryptocurrency universe and it allows users to use blockchain technology if they have an idea for a project/application, without the need to develop their own blockchain.
Ethereum is a great platform for ICOs (Initial Coin Offerings) for blockchain projects. In comparison to Bitcoin, Ethereum has a transaction speed of only a few seconds, while it takes Bitcoin 10 minutes or more.
Let’s talk about some of the challenges Ethereum are facing. Ethereum supports only one coding language, Solidity. Developers have to learn it so it is an entry barrier for them. In terms of competition, Ethereum is currently facing off NEO and Cardano which are offering similar platforms, however, utilise improved technology and algorithms so Ethereum needs to step up its game.
One more thing we have to mention is that just like Bitcoin, Ethereum uses a Proof-of-Work algorithm to verify the transactions which these days is considered highly obsolete. Ethereum also demands a lot of electricity but this is an issue they have been working on quite actively to resolve in the future. Hopefully, soon we will witness a new and improved Ethereum.
Let’s talk about another quite interesting cryptocurrency on the horizon, Ripple. It’s very unique because it focuses on solving problems related to International Payment Transfers. It was founded back in 2012 with one goal in mind - to make international transactions fast and as cheap as possible.
Ripple differs from the other top cryptocurrencies because unlike them, there’s a central entity that holds the majority of coins and that is Ripple Labs (the company behind Ripple). 100 billion coins exist and 50 billion of them are owned by the founding company.
What makes Ripple one of the top cryptocurrencies out there is that you can make an international money transfer within seconds, instead of waiting for about a week. Fees are also relatively low, compared to what banks or other cryptocurrencies charge.
With Ripple the case is clear and targeted - international payments for low costs and quicker time.
Ripple is also among the few cryptocurrencies that’s been tested out there in the real world. They also managed to create strong ties with major financial institutions, such as American Express and Santander.
The criticism Ripple is facing is mostly related to the fact that it’s centralised. Since the core idea of cryptocurrencies is to be decentralised, Ripple is not entirely following this idea.
One more challenge Ripple will probably have to face in the years to come is that banks and other financial institutions, which are Ripple’s biggest users, have started working on their own cryptocurrencies and improving international payments. At one point, Ripple may become obsolete. Only time will tell.
Let’s talk about this relatively new force on the market. EOS was launched in 2017 through an ICO and is a direct competitor to Ethereum and NEO. In its ICO, it raised around $700 million and it still has an on-going ICO, which opens up for short periods of time. For updates, you can check out here.
The biggest advantage of EOS is its platform for developers to build decentralised applications and smart contracts, however, it presents a much more improved environment and great advancements in technology. To put it simply, the EOS community is working hard on presenting one massively scalable dApp platform for the everyday user. Also, by default, the EOS platform won’t require any micropayments by end-users to send transactions or perform any other task on the blockchain.
Individual app developers will be the ones determining how users will pay transaction fees. The advanced mechanism EOS uses to verify transactions is capable of achieving around 100,000 transactions per second.
EOS also supports multiple coding languages, including C++.
Some of the challenges EOS faces are related to bugs. Even after the official overdue launch and the built-up excitement from the cryptocurrency community, hackers continued to report bugs. With a large budget as theirs, many people were wondering how come so many critical vulnerabilities started popping up leading up to the launch of the platform’s main net. It’s safe to say that they still have to work on several aspects to make it 100% secure.
One more thing we should mention about EOS is that other than Ripple and Bitcoin Cash, EOS is probably the most polarising project. The competition argues that EOS is centralised, because of its consensus mechanism, in which 21 block producers verify transactions.
Since the coin is still under development, we are yet to see what’s going to happen after the latest release comes to light.
Litecoin was created back in 2011 by an ex-Google employee, named Charlie Lee. Litecoin was also created from the blockchain of Bitcoin itself but with the purpose of improving it. Litecoin doesn’t provide a platform for smart contracts but somehow it still managed to stand the test of time as it has been around for over 7 years and is still considered as one of the top cryptocurrencies.
Some of the great characteristics of Litecoin include the speed. Litecoin transactions take around 3 minutes (as compared to a Bitcoin transaction which takes around 10). Litecoin transaction fees are also relatively low, compared to other cryptocurrencies, including Bitcoin.
A challenge Litecoin is facing is mining. Many cryptocurrencies are working hard on making it less expensive and more accessible, however, with Litecoin, mining is still quite expensive and restricted to people who have very powerful hardware.
One more thing; at one point, Litecoin was a highly preferable option for the crypto community. However, these days, with the advent of altcoins and so many coins coming out as we speak, Litecoin has to buckle up and fight the stiff competition from other coins that offer better conditions such as privacy, international payments, smart contracts and more.
What are some of the other top cryptocurrencies out there?
In addition to the above-mentioned top players in the crypto game, there are certainly a fair amount of other promising cryptos to watch out for. Some of them include:
- Bitcoin Cash
Yes, Bitcoin is still leading the cryptocurrency market, however, other coins are also gaining popularity due to improved technological characteristics and the option of being used for enterprise solutions.
Make sure you do your research and thoroughly examine the pros and cons of each cryptocurrency before you decide to invest, trade, purchase or mine it. Thankfully, there are plenty of options out there, depending on what types of services you are looking for and what you expect from your cryptocurrency.
It’s safe to say that going by the current trend, cryptocurrencies are here to stay. Coins keep emerging but we’re yet to see how the growing environment will deal with the competition.
We’ve briefly explored some of the best cryptocurrency picks out there, their positive points as well as some of the challenges they are facing in the current crypto industries. We hope that this information will give you some insight and help you pick the best cryptocurrency for yourself.
Overall, we have a long way to go before we witness how cryptocurrencies replace credit cards and traditional currencies as a tool for global commerce. They have a long way to go before becoming widely-accessible and easy to obtain for everyone.
Going through all the information we’ve presented on our list of cryptocurrencies, we can conclude that the future of cryptocurrencies lies in allowing the users to have ultimate control over their money with quick global transactions, top security levels, little to no transaction fees and easier mining.
We are positive about the future and think that one day, cryptocurrencies will fundamentally change our economic landscape.
Top cryptocurrencies by market capitalisation and cryptocurrencies latest price can be checked out HERE.
Which ones are your favourites? Let us know!