What are the main cryptocurrencies and what do they do?
There are around 1000 coins/Altcoins. Some are legitimate and some may not be.
It is imperative that you do your own research before investing Which ones are the best ones?
This changes all the time – do your research. We will go more in depth into this in the Chapter “How do you make money in cryptocurrencies?”
Below are the largest coins at time of writing in terms of their market capitalisation (price in dollars x
number of shares in the market). They are in no particular order:
What problem does it solve?
The first blockchain , solving the problem of duplication and manipulation. It’s like Liquid Gold.
This is the first ever cryptocurrency invented and remains by far the most
sought after cryptocurrency to date. Bitcoin is known as the digital gold
standard in the cryptocurrency network. As explained, Bitcoin is the pioneer of
blockchain technology that made digital money possible.
It is the first ever decentralised peer-to-peer network powered by its users
without any central authority or middleman which means no unnecessary
costs are included in the digital money transaction.
One major advantage that it has over other cryptocurrencies is Bitcoins are
impossible to counterfeit or inflate. The reason being there are only 21 million
Bitcoins created for mining, no more no less. Therefore it is predicted by 2140,
all Bitcoins will already be mined.
Thanks to its blockchain technology, you have ultimate control over your
money and transactions without having to go through a third party such as the
bank or PayPal.
Interesting fact: Wiki Leaks would not be here if it weren’t for Bitcoin . When
credit card companies stopped their service to Wiki Leaks, people used Bitcoin
to keep the service alive.
Media companies and investment firms in South Korea, India, Australia, Canada and
Japan have started discussing on how Bitcoin may surpass the value of certain fiat currencies in the future as an alternative monetary system.
Japan even made it an official currency in April 2017, paving the way for other
countries to do the same.
Over the years of Bitcoin’s existence, its value has fluctuated tremendously
from zero to over $4200 per Bitcoin to date.
Have I invested in Bitcoin?
I buy Bitcoin to then exchange it for other Altcoins, so I hold very few Bitcoins.
The second most popular currency is Ethereum. It has scored itself the second
spot in the hierarchy of cryptocurrencies. This digital currency,
launched in 2015, is predicted to surpass Bitcoin and may be the cryptocurrency of the
Is Ethereum similar to Bitcoin?
It is in a way, but not really. Like Bitcoin, Ethereum is a part of a blockchain network. The main difference between the two currencies is that the Bitcoin blockchain focuses on tracking ownership of the digital
currency while the Ethereum blockchain focuses on running the programming code or network.
Instead of having to build an entirely original blockchain for each new application, Ethereum enables the development of thousands of different applications in a single platform. In the Ethereum blockchain, miners work to earn Ether. Ether is a crypto token that helps run the network.
Another use of the Ethereum blockchain is its ability to decentralise any services that are centralised. For instance, Ethereum is able to decentralise services like loans provided by banks, online transactions using PayPal as well as voting systems and much more.
Ethereum can also be used to build a Decentralised Autonomous Organisation (DAO). A DAO is a fully autonomous organisation without a leader. DAOs are run by programming codes on a collection of smart contracts written in the Ethereum blockchain . DAO is designed to replace the structure of a traditional
organisation and, like Bitcoin, eliminating the need for people and a centralised control.
What problem does it solve?
Ethereum solves the problems of legal contracts online, eliminating middle men taking fees
Firstly, a third party cannot make any changes to the data. The system is also
tamper and corruption proof. This is because Ethereum is built based on a
network formed around a consensus which, as a result, makes censorship impossible.
Secondly, just like Bitcoin, Ethereum is backed up by secure cryptography.
Therefore, the applications are well protected against any form of hacking.
Ethereum went from around $400 to a low of $149 to its current price of $317.
Do I hold Ethereum?
This is my second largest holding. I bought into Ethereum on 10 separate
occasions as the price was falling from its high. At time of writing that position is up by 31%.
c. Ethereum Classic
A few years back someone hacked into an Ethereum-based application and stole millions. There was an internal argument about whether this event should be allowed to happen or to go back in time and make good the money so no one loses out. The purists who argued that there is no going back in blockchain technology broke away to form the new Ethereum Classic.
What problem does it solve?
It is essentially the same as Ethereum, so it is unclear why we need two of the same. However, lately it is looking to distinguish itself from Ethereum.
Do I hold Ethereum Classic?
Yes, I have one position in Ethereum Classic which at time of writing is up 220%.
Ripple was launched in 2012
What problem does it solve?
Banks can use Ripple to make payments faster and cheaper nationally and internationally.
If you have sent money overseas, you will have used a SWIFT code which is an entity with a monopoly on border transfers – in 200 countries, with more than 11,000 financial institutions forming its branches.
However , Ripple while working together with financial services, banks and institutions wants to take down SWIFT and disrupt its functionality.
Ripple is actually a technology that has a dual function; as a digital currency as well as a digital payment network for financial transactions.
Unlike the other cryptocurrencies, Ripple operates on an open-source and a peer-to-peer decentralised platform which allows a transfer of money in any form, both fiat and cryptocurrency.
Ripple uses a middleman in the currency transactions. The medium (the middleman) known as “Getaway” acts as a link in the network between two parties wanting to make a transaction.
The way it works is that the Gateway functions as a credit intermediary that receives and sends currencies to public addresses over the Ripple network.
This is why Ripple is less popular when compared to the other digital currencies. Also, many people don’t like Ripple because they believe that cryptocurrencies is an answer to the domination of the current banking system and Ripple works with the banks.
Ripple acts as a bridge for other currencies which includes both fiat and cryptocurrencies. In Ripple’s network, any currency can be exchanged between one another.
If user X wants Bitcoins as the form of payment for his services from Y, then Y does not necessarily have to possess Bitcoins. Y can pay X to X’s Gateway using US Dollars or any other currencies. X will then receive Bitcoins converted from the US Dollars from his Gateway.
The nature of Ripple’s network and its systems exposes its users to certain risks. Even though you are able to exchange any currencies, the Ripple network does not run with a proof-of-work system like Bitcoin. Instead, transactions are heavily reliant on a consensus protocol in order to validate account balances and transactions on the system.
But Ripple does improve some features of traditional banks. Namely, transactions are completed within seconds on a Ripple network even though the system handles millions of transactions frequently.
With traditional banks, even a wire transfer may take up days or weeks to complete. The fee to conduct transactions on Ripple is also very minimal, as opposed to large fees charged by banks to complete
Do I own Ripple?
30 I have three positions in Ripple due to a Tim Ferris podcast with Nick Szabo, the creator of BitGold. Nick said that the currencies that could cross the bridge between the current banking system and the new digital system would be the winners. Ripple is the first to attempt this.
At time of writing, this position is up by 14%.
What problem does it solve?
The technology solves the problem of privacy. People who might be under dictatorship of governments can use Monero to keep their identity hidden. So it has a real function to help the underprivileged in the world regardless of your creed, colour, sex etc. who might not be able to existing systems, not be able to open a bank account etc.
Monero’s main goal was to create an algorithm to add the privacy features that is missing in Bitcoin. Monero invented a system to conceal the identity of its senders and recipients.
The system combines a user’s private account keys with public keys obtained from Monero’s blockchain
to create a ring of possible signers that would not allow outsiders to link a signature to a specific user.
While Monero users have the ability to keep their transactions private, they are also able to share their information selectively.
Monero has received the acceptance of multiple dark web marketplaces and has generated its own fan base due to its privacy settings. Therefore, it is less speculative as compared to other digital currencies and traders purchase Monero as a hedge for other cryptocurrencies.
Do I own Monero?
Yes,I have three positions in Monero which at time of writing are up by 138%.
Dash–Digital Cash is one of the most promising alternative coins to Bitcoin.
Dash is unlike other cryptocurrency projects like Ethereum or Stratis which are more of a development platform.
Dash advocates it self as peer-to-peer decentralised electronic cash. It intends to be as liquid as real cash which we use in our respective countries.
Dash is built upon Bitcoin’s core code with the addition of new features (such as privacy and quick transactions).
Like Bitcoin, Dash is open-source and has its own blockchain, wallet infrastructure, and community. But unlike
Bitcoin , its transaction fee is negligible.
Moreover, it appears from the attitude of the development community that Dash will only remain as digital money for the Internet, which is a good thing.
Dash is designed to have a total supply of 18 million coins.
At present, the circulating supply of Dash is over 8 million and it will reach 18 million in the year 2300.
Do I own Dash?
I only have one position which is up by 216%. This is one I wish I had more of. I am looking for any weakness in the dollar price to get in again.
When the currency was first launched, it aspired to be the ‘silver’ to Bitcoin’s ‘gold’.
The main reason of Litecoin’s creation is to make up what Bitcoin lacked. The main difference between Litecoin and Bitcoin is the 2.5 minute time to generate a block for Litecoin, as opposed to Bitcoin’s 10 minutes.
For miners and technical experts, the Litecoin possesses a very important difference to Bitcoin, and that is a more improved work algorithm which speeds up the hashing power and system altogether.
One of the biggest advantages that Litecoin possesses is it can handle a higher volume of transactions thanks to its algorithm. The faster block time also prevents double spending attacks.
While Litecoin failed to secure and maintain its second place after Bitcoin, it is still actively mined and traded and is bought by investors as a backup in case Bitcoin fails.
Do I own Litecoin?
This is an interesting one because it has a lot of promise but it just doesn’t seem to be going in the right direction. If it doesn’t do something soon it might be overtaken by some of the promising new coins like Dash.
I hold one position which at time of writing is up by 22%.