Not all Bitcoins are created equal: Know your currencies

Ever since it was introduced in 2009, cryptocurrencies have taken the world by storm, changing the way people do monetary transactions. Cryptocurrency is a digital currency that is not controlled by a particular bank or government. Every transaction and creation of a cryptocurrency is done digitally, with the help of the internet and a few dedicated miners and investors.

One of the most popular cryptocurrency is Bitcoin. It came into existence in January 2009 by Satoshi Nakamoto, a pseudonym of the person (or group of people) who created the coins and was said to have mined an estimated one million Bitcoins.

As of January 2021, there are now over 4,000 cryptocurrencies in existence falling under three categories: Bitcoins, altcoins, and tokens.

Bitcoins

As previously mentioned, Bitcoin was the first and most popular cryptocurrency in the market. It is often regarded as the digital alternative to traditional currencies because it can be spent and saved, can be kept in a wallet, and is scarce or finite.

Because no government or bank controls Bitcoins, there is no central authority. Users control the sending and receiving of this currency, allowing for anonymous transactions.

Bitcoin also allows users to make transparent peer-to-peer transactions—meaning, all users can view the transactions, but only the owner of the Bitcoin can decrypt it with a key. This key is given to each owner, and the transactions are secured through an algorithm within the blockchain. The disadvantage with Bitcoin is that the network is slow compared to traditional banks.

Altcoins

Altcoins, on the other hand, are alternative coins to Bitcoins. Some altcoins serve the same purpose as Bitcoins, while others have a wider range of uses. These can also operate on their own networks, utilizing distributed ledger technology (DTL) or blockchains. There are currently 856 altcoins in existence, including Ethereum, Ripple, Bitcoin Cash, Litecoin, and EOS.IO, the top five altcoins in the market today.

• Types of Altcoins

Litecoin was launched in 2011 as an alternative to Bitcoin. It is also an open-source, global payment network that is decentralized, similar to Bitcoin. The difference between the two digital currencies is that Litecoin is said to feature faster transaction times, operate on different algorithms, and have a higher limit than Bitcoin with 84 million.

Ethereum was created in 2015. It is an open-source platform based on blockchain technology. Basically, it has a programmable blockchain used to develop and deploy decentralized applications (dapps), tokens, and smart contracts. The one advantage of Ethereum is that transactions are carried out at jet-speed, compared to Bitcoin, which can take a few minutes.

Bitcoin Cash is a type of digital currency created to improve certain features of Bitcoin. It increased the size of blocks, allowing more transactions to be processed faster with an adjusted level of difficulty and ensuring the chain’s survival and transaction verification speed regardless of the number of miners supporting it.

However, Bitcoin Cash also has its share of issues, such as its security, which could be compromised.

Ripple is an altcoin that works similarly to Bitcoin. However, it is widely used by banks globally to make payments. So much so that it is also called a banker’s coin. Many banks and governments are working with Ripple, hailing it as the best alternative to physical currencies

Tokens

Last but not least, tokens—unlike Bitcoins and altcoins, tokens cannot operate independently and are dependent on the network of another cryptocurrency. They do not have their own blockchain because they are built on top of an existing cryptocurrency’s blockchain. However, they are easier to create because miners do not need to make a blockchain from scratch.

The top five tokens in the market today are Tether, UNUS SED LEO, Chainlink, Huobi Token, and Maker. All five are deployed on the Ethereum blockchain.

• Types of tokens

Tether is one of the first and most popular in the group of stablecoins, or cryptocurrencies that aim to copy their market value to a currency such as a dollar, euro, or yen. And because it is a stablecoin, it keeps the cryptocurrency valuations stable compared to the wide swings in the prices of Bitcoins and Ethereum.

This allows Tether to be used as a medium of exchange and mode of storage rather than as a medium of speculative investments.

Introducing Bitcoin SV

In November 2018, Bitcoin SV was created after the Bitcoin Cash networked experienced its own hard fork. A hard fork is when users and miners of cryptocurrencies cannot agree or have become dissatisfied with some features of a cryptocurrency, forcing the digital currency to split.

The old chain remains true to its original code, while the new chain is the more recent version of the previous coin with added features and functionality, which is what happened with Bitcoin Cash.

Bitcoin SV was created to restore the original protocol set by Satoshi Nakamoto. The “Satoshi Vision” means to keep the digital currency stable and enable it to scale massively. The Bitcoin Community says it is critical to ignite the future of “bcommerce” and create a profitable ecosystem for all Bitcoin industry participants.

Compared to other digital currencies, Bitcoin SV performance is technically superior because it is more stable and has a clearer vision, which allows for better scaling and usage by businesses in the crypto industry. The block size is 128MB, compared to Bitcoins’ 32MB, helping to scale the network and allowing more transactions.

It also has the lowest transactional fees because the developers wanted to minimize them, thus creating more affordable and faster transactions at a large scale and making the coin value 38 times higher.

Whether you are new to the crypto industry or have had your share of experiences, it is always best to know what cryptocurrencies are available in the market today before jumping into it. With over 4,000 digital currencies available, always exercise caution when investing in any of them.

As we’ve learned, not all cryptocurrencies are equal; some are better than others, so always do proper research to know which one best suits you or offers better value both in return on investment and its features and usability.