The market price isn’t the only thing that separates Bitcoin from the top altcoins. Here are the most important differences between the titans of crypto.
“What’s in a name…” the famous line, quipped by Romeo and aimed at seducing the young Capulet probably didn’t consider it’s application to digital currency- but the premise still stands. While there are definitely names that identify top cryptocurrencies, their name is of little consequence when it comes to what actually sets them apart. Out of all the cryptocurrencies, most exist in stark contrast to the others.
Understanding the fundamental differences between cryptocurrencies is an important part of expanding your trading finesse and technique. Choosing a good exchange platform, one that helps you to navigate many of the nuisances in the market itself is another. Platforms like Bitvavo are designed to focus on helping each of their users to better understand the market at large, which is massively important for any budding day trader. In this guide, we only talk about the top four cryptos and the top four things that set them apart for one another. Bear in mind that there are literally thousands of cryptos, and probably hundreds of ways in which they differ.
Cryptocurrency is still largely considered a nascent industry. Even though bitcoin, which has been on the market the longest, has been around for 11 years. Regardless, age of any given asset or security can often provide an idea of its staying power.
Established in 2009.
Established in 2015.
Established in 2012.
Established in 2011.
It’s not enough to just “buy low, sell high”. Honestly, if that was the only formula needed to trade stocks, assets, and securities successfully- everyone would be doing it. With cryptocurrencies, it’s also important to pay attention to each individual coin market cap. Market cap speaks to the total circulating supply of any given crypto, weighted against the price per coin. Making market cap the best indicator of a company's worth. Bear in mind that these market caps were current at the date of writing.
$207.9 Billion USD
$41.99 Billion USD
$29.73 Billion USD
$3.782 Billion USD
Most crypto tokens also represent a specific type of technology or tech wise solution to any number of problems the world may be facing. Just as bitcoin hoped to usher in a new way of considering currency, other altcoins have their own aspirations and functionality. This is a very superficial list of the technologies that these cryptos hope to offer, and definitely not exhaustive.
While bitcoin may have started out as a new and better way to think about currency, it’s evolved into something a little bit different. Bitcoin is now the only cryptocurrency that’s really being looked at as a functional store of value. Behaving more similarly to safe-haven assets like gold, bitcoin is rarely traded or used similar to fiat.
Ethereum, and its token Ether, look to bring out decentralized technology to the masses. From smart contracts to decentralized applications, the Ethereum network is dedicated to the continued evolution of the technology behind decentralized finance.
Ripple is one of the few “centralized” cryptocurrencies. The token works closely with many big names in the traditional financial sector, aiming to provide a solution for money conversation amongst banks. Using crypto technologies, Ripple makes it quick and affordable for banks and financial institutions to send and receive money from unusual places- or places that are outside of their standard networks.
Litecoin is one of the earliest derivatives of bitcoin. Functioning almost identically to its parent coin, Litecoin keeps the original premise of bitcoin and runs off of that. Hoping to achieve the “novel currency” approach that was bitcoin’s original goal, without relegating itself to becoming a store of value. Instead hoping to continue an open and earnest currency trade for services and goods.
PoS vs. PoW vs. Centralized Release
While you’re likely to hear quite a bit about “mining”, there are actually a number of other ways that transactions can get verified across a network. These verification process often also dictate how a given network reaches census about a number of different modifications, upgrades, or other types of network changes- essentially the democratic process behind how alterations are achieved.
Bitcoin runs off of a “Proof of Work” (PoW) validation scheme. This means that coins are mined by the network and each individual validating node attempts to solve the cryptographic algorithms all at once. The node that is the first to solve any given algorithm is then rewarded.
While the network originally operated under a PoW scheme, the network recently released Ethereum 2.0, and is migrating toward a “Proof of Stake” (PoS) system. In a proof of stake system, validators must bid for their opportunity to crack cryptography. Staking an amount of the network's token as a sort of collateral. Then, if they successfully solve the algorithm, they are rewarded and their stake is returned. PoS is thought to be a superior system to PoW by many, largely because of its efficiency and inherent scalability that PoW doesn’t have.
Ripple is unusual in that the network doesn’t run a PoS or PoW format. Instead, it uses a consensus protocol, where a number of individual distributed nodes must agree that the given transaction is valid.
Litecoin uses PoW, similar to Bitcoin.