Top Cryptocurrencies and Their Challenges

Last Updated September 14th 2020
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Crypto Trading Opportunities, Challenges & Perspectives

What are the top cryptocurrencies ruling the crypto world? What are their challenges and perspectives?

The world of cryptocurrency and blockchain technology comes with various opportunities… but also numerous challenges. Even the top cryptocurrencies out there have their hurdles. Learn how to overcome the challenges hindering crypto trading today!

We at Trading Education can help you understand the world of cryptocurrency and blockchain technology. Simply sign up for one of our online trading courses, which will help you gain tonnes of information about the top cryptocurrencies and their challenges and adopt efficient trading skills and habits.

What Should I Know About The Top Cryptocurrencies & Their Challenges?

Wondering why you need to know about the top cryptos and their challenges and perspectives? Well, in case you haven’t figured it out yet, we live in the digital age. It is only a matter of time before something so important and fundamental as money becomes fully digitalised.

The rise of cryptocurrencies started back in 2009 with the creation of Bitcoin, though that’s certainly not the first attempt at digitalising money. Because of the high potential cryptocurrencies and blockchain technology have, we’ve got to a point when there are more than 5,000 cryptocurrencies out there, with a market cap of over $300B, as per CoinMarketCap.

Cryptocurrency trading, in particular, attracts more and more people from all over the globe. To become a successful crypto trader, though, one should know more about the core ideas behind cryptocurrencies and the challenges they are facing in today’s financial environment.

So, let’s cover the basics. 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. 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; no one can tell you whether you are qualified or not to own or use them. 

All you need to store, receive or send cryptocurrencies is 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 which can be shared publicly. 

We should also mention that all cryptocurrencies use distributed ledger technology (DLT) to remove the need for the middlemen. 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. Here we should note that blockchain technology can revolutionise the world far beyond the financial sector.

Which Are The Top Cryptocurrencies And What Are Their Challenges?

top cryptocurrencies

Bitcoin

When we talk about the top cryptocurrencies out there, we should admit that 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 challenged the traditional perception we have of money and financial payments. Bitcoin’s market share is more than 60%, making it the dominant force in the crypto trading market. 

One of the reasons why BTC is at the top of the crypto market is because it’s the oldest coin, with 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 now 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. If speed is something you value, you may be a little bit disappointed to find out that Bitcoin - one of the top cryptos - is facing some real challenges. Believe it or not, a Bitcoin transaction can take up to 10 minutes. The network can process only around seven transactions per second. 

Another challenge Bitcoin is facing is energy efficiency, something experts are currently trying to improve. Mining, which is one of the most important activities for most cryptocurrencies, has become highly energy-intensive. You can now mine Bitcoin only with super-powerful hardware that uses a lot of electricity. 

Last but not least, Bitcoin transaction fees are also quite high, which can be a burden to cryptocurrency traders. 

Will Bitcoin overcome its challenges and stay crypto no.1?

Should you invest in Bitcoin?

   

Ethereum

The second most valuable cryptocurrency after Bitcoin is Ethereum. This top crypto was created in 2015. 

In fact, Ethereum is way more than just a digital currency. Ethereum is a blockchain-based platform for smart contracts. Smart contracts are the next big thing in the cryptocurrency universe. 

Ethereum also allows users to employ blockchain technology easily and develop decentralised applications (dApps). For instance, if you have an idea for a project or an application, you can get started without the need to develop your own blockchain.

In fact, 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 Ethereum is a real game-changer in the world of cryptocurrency, we should also talk about some of the challenges it is currently facing. Ethereum supports only one coding language, Solidity. Developers have to learn it, which can be a huge entry barrier.

In terms of competition, Ethereum is currently competing with NEO and Cardano which are offering similar but improved technology and algorithms. No doubt Ethereum needs to step up its game to stay one of the top cryptos today. 

One more thing we have to mention is that, just like Bitcoin, Ethereum uses a Proof-of-Work algorithm to verify payments and transactions, which these days is considered highly obsolete. Ethereum also demands a lot of electricity - an issue experts keep working on quite actively. 

Hopefully, soon we will witness a new and improved Ethereum.

Should you invest in Ethereum?

Ripple

Let’s talk about another quite interesting cryptocurrency: Ripple. Ripple is one of the top cryptocurrencies in the world of crypto assets. It’s very unique because it focuses on solving problems related to International Payment Transfers. 

We should note that Ripple was founded back in 2012 with one goal in mind - to make international transactions fast and as cheap as possible. What makes Ripple one of the top cryptocurrencies out there is the fact that one can make an international money transfer within seconds, instead of waiting for about a week! 

Ripple is among the few cryptocurrencies that have been tested in the real world. Ripple has also managed to create strong ties with major financial institutions, such as American Express and Santander. 

Fees are also relatively low, compared to what banks or other cryptocurrencies charge. With Ripple, the case is clear and targeted; international payments, low costs, and quick processing times!

Nevertheless, there are numerous crypto challenges. We should note that Ripple differs from other top cryptocurrencies. Unlike most cryptos, there’s a central entity that holds the majority of Ripple coins: Ripple Labs, the company behind Ripple. 

Thus, the main criticism Ripple is facing now is about its centralised side. Since the core idea of cryptocurrencies is to be decentralised, Ripple is not entirely following this idea. 

Another challenge Ripple will be dealing with in the years to come is possible crypto services launched by central banks. Note that banks and other financial institutions, which are Ripple’s biggest users, have started working on their own cryptocurrencies to improve international payments. At one point, Ripple may become obsolete. 

Will it resolve its problems? Only time will tell.

Should you invest in Ripple?

EOS

When it comes to cryptocurrencies, EOS is for sure one of the top cryptos out there. So, let’s talk about this relatively new force on the market! 

EOS was launched in 2017 through an ICO and is now a direct competitor of Ethereum and NEO. Note that during its ICO, EOS raised around $700 million. Interestingly, it still has an on-going ICO, which opens up for short periods.

The biggest advantage of EOS is its platform for developers that can be used to build decentralised applications and smart contracts. EOS presents an 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. EOS also supports multiple coding languages, including C++.

Additionally, by default, the EOS platform won’t require any micropayments, so end-users won’t have to pay 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 good news is that the advanced mechanism EOS uses to verify transactions is capable of achieving around 100,000 transactions per second. 

Despite its advantages, there are some real issues. Some of the challenges EOS is facing are related to bugs and vulnerabilities. Even after the official overdue launch and the built-up excitement across the cryptocurrency community, hackers continued reporting bugs

Given EOS’ large budget, many people started wondering why so many critical vulnerabilities continued popping up, leading up to the launch of the platform’s main net. EOS still has plenty of work to do to make EOS 100% secure and overcome its challenges. 

One more thing we should mention about EOS is that, other than Ripple and Bitcoin Cash, EOS is probably the most polarising project. Competitors argue that EOS is centralised because of its consensus mechanism, in which 21 block producers verify EOS transactions. 

We are yet to see what’s going to happen after new improvements come to light. 

Should you invest in EOS?

Litecoin

Litecoin was created back in 2011 by an ex-Google employee, named Charlie Lee, in hopes of improving Bitcoin. Though Litecoin doesn’t provide a platform for smart contracts, it has managed to stand the test of time. 

That’s right - Litecoin has been around for over nine years and is still considered one of the top cryptocurrencies out there.

One of the most valuable characteristics of Litecoin is its high speed. Litecoin transactions take around three minutes (compared to Bitcoin transactions that might take up to 10 minutes). 

Litecoin transaction fees are also relatively low, especially compared to other cryptocurrencies.

Yet, there are many challenges Litecoin has to overcome. A major issue Litecoin is facing today is related to mining. Many cryptocurrency experts are working hard on making mining less expensive and more accessible. Yet, with Litecoin, mining is still quite expensive and restricted to people who have very powerful hardware.

Oh, and one more thing! At one point, Litecoin was a highly valued cryptocurrency option among crypto enthusiasts. Nevertheless, these days, with the advent of different altcoins, Litecoin has to buckle up and fight fiercely in terms of privacy, international payments, smart contracts, and other crypto challenges. 

Should you invest in Litecoin?

What are some of the other top cryptocurrencies out there? 

The world of cryptocurrency and blockchain technology is evolving at a rapid pace, and as mentioned above, there are more than 5,000 cryptos to buy, watch and avoid out there. Though Bitcoin is still leading the cryptocurrency market, other coins are quickly gaining popularity due to their improved technical characteristics and perspectives.

In addition to the above-mentioned top players in the crypto game, there are certainly a fair amount of other promising cryptos you should be watching. Some of them include: 

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. 

Fortunately, there are plenty of trading options and reputable brokers out there to suit your goals and expectations.

That said, while crypto trading might offer some impressive financial opportunities, the crypto world as a whole still has to overcome numerous challenges regarding speed, energy efficiency, scalability, privacy, and digital ownership

On top of that, though blockchain technology has a wide range of applications in different sectors (including the gaming industry), the crypto world is still facing numerous social misconceptions. As cryptos have been used for illicit activities and crypto scams, ordinary people find it hard to believe that even the best cryptocurrencies can overcome their own challenges and replace fiat money.

See also: Cryptocurrency Exchange Or CFD Broker?

Why Has The Crypto Industry Become So Popular These Days Despite Its Challenges?

why has cryptocurrencies become popular

Yet, despite all the challenges and myths circulating in the cryptocurrency world, there’s no doubt that cryptos and blockchain technology can revolutionise the whole world.

But why exactly? Why did in such a relatively short period so many people become interested in being part of the crypto community? Let’s find out!

  • No middlemen: Cryptocurrencies promise an easier way to transfer funds directly between two parties. No banks or credit card companies are involved in transactions.
  • Low costs: Funds transfers are done with minimal or almost no fees.
  • Safety: Blockchain technology is designed to prevent hacker attacks and make payment processes more efficient.
  • Anonymity: No central government, authority, or any corporation can access your funds or obtain your personal information.
  • Access: As long as you have access to the Internet and a computing device, you can become part of the cryptocurrency community. You can even start trading cryptos with as little as $100.

Final Thoughts On Cryptocurrency Trading Perspectives And Challenges

It’s safe to say that cryptocurrencies are here to stay. Coins keep emerging, so we’re yet to see if today’s growing environment can deal with the current competition.

We at Trading Education have briefly explored some of the best cryptocurrencies out there, their positives, as well as some of the main challenges they are facing today. We believe that this information will give you some valuable insights and help you pick the best cryptocurrency to trade.

Based on the information above, we can also conclude that the future of cryptocurrencies lies in allowing users to have ultimate control over their money. Quick global transactions, top security levels, little to no transaction fees, and easier mining!

Though cryptos have a long way to go before they can actually replace credit cards and fiat money, the future of cryptocurrency is bright and is about to fundamentally change our economic landscape.

If you want to become a part of this new financial world, sign up for one of our trading courses. We at Trading Education can guide you through the mazes of crypto trading and help you overcome any crypto challenge.

Key Points:

  • Despite their relatively short history, cryptocurrencies have the potential to revolutionise the whole financial world.
  • Though there are more than 5,000 cryptos out there, some of the top cryptocurrencies include Bitcoin, Ethereum, Ripple, EOS, and Litecoin.
  • Other popular coins include Dash, IOTA, Bitcoin Cash, Stellar, and Monero.
  • Some of the main challenges cryptocurrencies are currently facing today target privacy, energy efficiency, safety, scalability, digital ownership, and social attitudes.
  • Yet, cryptos are about to change our economic landscape; by trading cryptos, you can become a part of this change.

Now you know the top cryptocurrencies and their challenges. If you're feeling inspired to start trading cryptocurrency, you may be pleased to know that etoro provides the ability to buy Crypto assets on up to 90+ cryptocurrencies. Crypto Traders can build a diversified portfolio with the most popular coins.

→ Click here to explore some of the top Cryptocurrencies

Would you invest in cryptocurrencies? Which of the top cryptocurrencies would you choose? What challenges do you find the most dreadful? Let us know in the comments below.

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Disclaimer: Cryptocurrencies are highly volatile. Your capital is at risk and Past performance is not an indication of future results.

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