A cryptocurrency is a digital currency that uses encryption methods to regulate the generation of its units and verify fund transfer. Unlike conventional currencies that are regulated by central banks, cryptocurrencies operate independently. Here is an overview of selected major cryptocurrencies in use today.
1. Bitcoin
This is the first cryptocurrency ever made. It is a peer to peer worldwide payment system that leads the pack of cryptocurrencies out there. Peer to peer means that a transaction is carried out between the sender and recipient without the involvement of a third party. An example of a third party here would be a central bank. Therefore, Bitcoin transactions are decentralized. Currently, Bitcoin has the highest market value among cryptocurrencies. It is also used for Initial Coin Offerings (ICOs) in which new companies sell crypto tokens in exchange for Bitcoins.
Bitcoin Cash
Bitcoin Cash is a hard fork of Bitcoin.A hard fork is a rule change that causes software that enforces old rules to see blocks that adhere to newly defined rules as invalid. The main aim of hard forking Bitcoin was to increase the block size limit to 8 MB. Bitcoin Cash’s market capitalization is currently about roughly one-seventh of Bitcoin’s.
2. Litecoin
This is one of the alternative cryptocurrencies that were launched after Bitcoin’s success. Litecoins mostly mimic bitcoins as they involve a mining process and are peer to peer.Litecoins are one among many altcoins.Like Bitcoins, Altcoins offer a cheap way of transacting over the internet. Other examples of altcoins include Peercoin and Dogecoin.
3. Ethereum
This cryptocurrency has one of the highest market capitalizations.Ethereum’s goal is to utilize blockchains, the technology on which cryptocurrencies are based on, to replace internet third parties. Examples of internet third parties are those that store data or keep records of all financial transactions. With Ethereum, “nodes” run by volunteers around the world replace servers and clouds. Also, Ethereum is capable of maintaining transactions with zero chance of fraud, third party interference or censorship.
4. Ripple
Ripple is a cryptocurrency that majors in connecting payment providers, digital asset exchanges, and corporates to send money around the world. Ripple is built on secure, scalable, and network inter-operable block-chain technology. Ripple has been adopted by a number of banks because it is a promising piece of technology in the financial industry. The coin is, therefore, a promising long-term investment.
