The World of Cryptocurrencies
Cryptocurrency is a digital currency that isn’t backed by any government or monetar authority. There’s no one who controls the currency. As opposite of centralized system, in case of cryptocurrencies they use a decentralized control mechanism. The supply of cryptocurrencies is always fixed unlike fiat currencies.
The first cryptocurrency that was ever created is Bitcoin. It was launched in 2009 by Satoshi Nakamoto. The digital currencies use cryptography to secure themselves. Cryptocurrencies don’t involve a third party to clear a transaction between a buyer and a seller. The entire transaction happens on a peer-to-peer basis.
Most people look at cryptocurrencies as assets. But with assets come cash flows. For example, equity, real estate, or for that matter fixed income, have cash flows attached to them. Cryptocurrencies are more like commodities than assets as they do not have any cash flows. They are more like digital gold or commodities.
Here are some additional virtual currencies you can look for investing.
Early in 2013, a programmer named Vitalik Butarin, who had worked on cryptocurrencies launched first ethereum platform with his foundation.
Since its launch the platform has gone through several planned protocols. Today it has become the largest open-ended decentralized software platform which enables smart contracts, and is also easy to use. Ethereum is currently traded at over $800. The current market capitalisation of Ethereum is at $66 billion.
This cryptocurrency is a result of a split between bitcoin developers on how to limit the size of a bitcoin block. At the beginning 1MB of bitcoin block could perform 4.4 transactions per second. But as the blocks started to fill up with the popularity of bitcoin, there was a group who wanted to increase the transaction cost of moving bitcoin from one person to another. But for single transaction it was still needed 13 minutes to complete. After that the block size was suggested to increase to 2MB.
Finally they decided to launch Bitcoin Cash with a 8 MB blocksize. Anyone who possessed a Bitcoin got the equal numbers of Bitcoin Cash. The users got their private keys and their bitcoins were not with any exchanges. Currenctly, the price of Bitcoin Cash is $3,200. It’s the third largest cryptocurrency around with a market cap of $54 billion.
Ripple is created to be a payment system. The idea is to create global financial transactions, without any fees for any kind of assets. Ripple as an idea is older than Bitcoin and was conceived in 2004. The authorization of Ripple transactions take 4 seconds, as compared to 13 minutes for bitcoins.
It’s a digital currency with low transaction fees. Dash privacy settings allow senders and receivers to remain anonymous, which are better than bitcoin. The first self-funding and self-governing Blockchain protocol was also created by Dash. There are high speed transactions confirmed within few seconds. This is the same as cash transactions.
Litecoin is one of the first forks of bitcoin. Litecoin is faster. It can handle higher volume of transactions. Litecoin can adopt to new technology and upgrades without any disagreements amongst its developers. Litecoin uses an algorithm that is different from bitcoin. The supply of litecoins is fixed at 84 million litecoins and is traded at around $330.
Litecoin is considered to be the first forks of bitcoin. It is faster and can support higher volume of transactions. Litecoin can adopt to new technology and upgrades without any disagreements amongst its developers. There is different algorithm, which uses Litecoin. The amount of Litecoin supply is 84 million. It’s price about $330.