Compare Bitcoin against the top altcoin cryptocurrencies, which include Ethereum, Litecoin, Stellar & Ripple to name just a few!
|BTC||2009||Satoshi Nakamoto||21 Million||Decentralised peer to peer online transactions, store of value. Mined crypto.||Visit|
|ETH||2014||Vitalik Buterin||97.2 Million||Decentralised smart contract platform. Mined crypto||Visit|
|XRP||2012||Arthur Britto, David Schwartz, Ryan Fugger||100 Billion||Centralised real time gross settlement system for banks. Non-mined crypto.||Visit|
|ADA||2017||Charles Hoskinson||45 Billion||Decentralised layered currency and contracts. Mined crypto.||Visit|
|XLM||2014||Jed McCaleb||103 Billion||Decentralised payment and exchange network for people, banks and businesses. Non-mined crypto.||Visit|
|LTC||2011||Charlie Lee||84 Million||Decentralised peer to peer online transactions. Bitcoin Silver, fast transactions. Mined crypto.||Visit|
Bitcoin is the original cryptocurrency, originating back to 2009 when it was launched onto the Internet as the world’s first virtual reality currency. Bitcoin was founded by an individual (or group of people) called Satoshi Nakamoto, whose true identity to this day remains a mystery. Bitcoin has had a meteoric rise in value since its launch, resulting in many competing cryptocurrencies entering the cryptocurrency marketplace.
What is the big difference between Bitcoin and standard fiat currency?
Bitcoin is not controlled by any government or financial institution. It is intangible, almost like digital gold. What gives it its uniqueness is the sophisticated online technology behind it. As the amount of Bitcoin currency in the marketplace is limited to reaching twenty-one million Bitcoins, its value cannot be diluted by the ‘printing’ of additional coins, unlike regular currencies (Euro, US Dollar, Sterling) whose governments can print as many notes as they deem fit.
How to trade in Bitcoin?
Trading in Bitcoin is open to anyone over the age of 18 years old and is facilitated through the emergence of many cryptocurrency trading exchanges, like Coinbase, Kraken, Binance, KuCoin and Bitstamp. These exchanges deal in the buying and selling of many cryptocurrencies, Bitcoin being only one. The main thing to keep in mind, unlike investing in company stocks and shares Bitcoin’s value fluctuates dramatically. Typically, transaction fees are less than those associated with more regular investment opportunities, like company share dealings.
The mechanics of a Bitcoin transaction:
The technicalities involved in a Bitcoin transaction can be explained as follows: A Bitcoin transaction request is made through a network of online peers. Peers are individuals who have details of all Bitcoin dealings. The network will then validate/verify each transaction using complicated algorithms. This transaction is then added to other individual transactions to form a transitional block, blockchain or distributed ledger. Once added to the blockchain the transaction is completed, locked in and irreversible.
What can you do with Bitcoin?
Wherever Bitcoin is accepted, it can be used to purchase goods and services like any other currency, although payment is always carried out online. Unlike other regular currencies, once you purchase a Bitcoin, it remains under your total control, safely stored in your online digital ‘wallet’. Due to the anonymity offered by Bitcoin trading, it is believed to have attracted investment from criminal sorts, attempting to avoid paying tax or to launder cash.
It would seem that the majority of individuals using Bitcoin are not doing it solely to use later to purchase goods and services. Many are using this new digital currency as an opportunity to invest in something that could literally grow their investment dramatically, akin to buying shares in companies, only typically much more volatile. Bitcoin has made many speculators very wealthy but in the main this new currency remains outside the scope of normal regulated currencies and its future cannot guaranteed.
How secure is Bitcoin?
Bitcoin is developed through the use of security cryptology, offering each coin a uniqueness, as every single Bitcoin transaction is recorded digitally. This makes it incredibly difficult to counterfeit. As the Bitcoin currency is completely decentralised…having no overall regulator, it is not dependent on the strengths or weaknesses of the world’s governments or financial institutions. It is suggested that the technology behind Bitcoin is indeed safer than conventional money transactions. Despite this level of security, Bitcoin is unsecured or backed by any government, and if any security issues became apparent, the chance of getting a ‘refund’ would be impossible.
How valuable is Bitcoin?
When launched in 2009 a Bitcoin was worth less than a cent/penny. Today a Bitcoin is worth approx €5,400 (2nd Feb 2018) and some predict that when all twenty-one million Bitcoins are released into the online marketplace, their value will be a vast multiple of this. However, like any investment, forecasting for tangible or intangible stocks, shares or currencies, it can be a very risky business.
The cryptocurrency market is incredibly fluid, with hundreds upon hundreds of various digital currencies all vying for your investment. Bitcoin remains the leader of the pack but there are many trying to bite at its heals, including Ethereum, Litecoin, Ripple, Stellar, Dash and Cardano, to name but a few.
After Bitcoin, the next most used cryptocurrency currently is Ethereum. Ethereum was developed by Vitalik Buterin in 2013 and has since split or forked into Ethereum ETH and Ethereum Classic ETC. Ethereum is transacted in the form of tokens called Ether, and like Bitcoin, is based on blockchain technology. Ethereum is not just another cryptocurrency, as it was primarily developed as a platform to assist in the processing of ‘smart’ contracts…from financial contracting to the registration of domain names, etc.
A more sophisticated cryptocurrency?
Although hugely popular as a cryptocurrency, Ethereum is a work-in-progress cryptocurrency, which continues to develop towards its ultimate stage, called Serenity. The first stage of Ethereum’s launch in 2013 was called Frontier, when developers were encouraged to crowd fund the currency. This was followed by the present stage, Homestead, when Ethereum wallets became available, giving the currency a secure platform among competing cryptocurrencies. Stages Metropolis and Serenity are still under development. Each new development stage adds another level of sophistication to the currency. The next stage, Metropolis, aims to introduce even stronger ways to deal anonymously and safely than is currently the case with most other cryptocurrencies.
Ethereum’s early crowd funding history:
The impetus that propelled Ethereum to where it is today in terms of being currently ranked second in popularity to Bitcoin was it’s highly successful crowd funding drive in 2014, when it raised over fourteen millions dollars. These early Ethereum investors/developers were paid sixty million Ether, which gave this young cryptocurrency a critical mass of funding and developer support to help build the platform into the popular cryptocurrency that it is today.
How to purchase Ethereum:
The main ways to fund an Ether or Ethereum transaction are not dissimilar to those of most cryptocurrencies:
1. Purchase through the use of fiat currencies, like US Dollars and Euro.
2. Ethereum can be purchased with Bitcoin or other Atlcoins depending on the crypto exchange.
3. Ethereum can be obtained through the process of mining, just like with Bitcoin, Litecoin and most other cryptocurrencies. Mining can be carried out on an individual basis or as part of a ‘mining group’.
Methods one and 2 above are nearly always carried out through cryptocurrency exchanges like Coinbase and Binance.
The main differences between Ethereum and Bitcoin:
Although both currencies are based upon the typical developmental rules of blockchains/ledgers, cryptology and decentralisation, there are a few technical issues that set them apart:
• They use different algorithms, giving each its own unique strengths. Ethereum is believed to be one of the most secure cryptocurrencies available in the marketplace.
• Ethereum has a block time of only twelve seconds versus Bitcoin’s ten minutes.
• Up to seventy percent of Bitcoins have now been mined whereas only about fifty percent of the younger Ethereum cryptocurrency has been mined.
• The cost of transacting in Ethereum and Bitcoin depend on different elements, for example Ethereum’s costs are influenced heavily by the storage requirement of the transaction, whereas Bitcoin’s costs are more influenced by the size of the blockchain being transacted.
• Despite being a cryptocurrency, using Ether as its currency, Ethereum is also a platform for individuals to carry our various ‘smart contracts’ in a decentralised manner. Blockchains can be developed on the platform to facilitate these non-cryptocurrency smart contracts.
Obtaining an Ethereum wallet:
Typically, cryptocurrencies need secure digitally encrypted wallets to hold an individuals currency…and Ethereum is no different. As Ethereum increases in popularity so does the number of wallets on offer. See page on crypto wallets.
Ethereum currency limits:
Whereas Bitcoin currency is limited to reaching twenty-one million Bitcoins, and Litecoin currency eighty-four million, Ethereum’s limits are more fluid. Typically, Ethereum allows eighteen million Ether into the cryptocurrency market annually. In terms of mining, five Ether are offered per block mined.
The Ethereum Foundation:
As part of its crowd funding exercise, twelve million Ether were also released to an Ethereum development foundation, in addition to the sixty million released to investors. This foundation fund has given this cryptocurrency the ability to invest in its long term platform building strategy. The Ethereum foundation is based in Switzerland and is run on a not for profit bases.
Are Ethereum profits taxable?
This depends on the country you are operating in. For instance, if you were to exchange your Ether for Bitcoin or turn it back to Euro or US Dollars, capital gains tax would be due on any profit gained since the original transaction.
Following on the success of Bitcoin, Litecoin was introduced to the online market in 2011. Litecoin was developed by an ex Google employee, Charlie Lee, whose plan was to develop a cryptocurrency that differed in many ways from Bitcoin. Lee’s Litecoin is now traded in a manner that is faster than Bitcoin.
Litecoin V’s Bitcoin:
Essentially, Litecoin is a typical cryptocurrency like Bitcoin and the many other hundreds of cryptocurrencies available. Both Litecoin and Bitcoin are decentralised meaning there is no one person or group controlling the currency. However, Litecoin essentially sees itself as having unique selling points that sets it apart from Bitcoin and other competing cryptocurrencies. Possibly because of these differences, Litecoin has now become on of the biggest cryptocurrencies in terms of market capitalisation.
The main differences between Litecoin and Bitcoin:
• First and foremost, the limit set for the number of Litecoin is eighty-four million versus Bitcoin’s 21 million. This higher quantity of Litecoin in circulation may help its liquidity status in the long run.
• The time to generate a new Litecoin block is only two and a half minutes versus Bitcoin’s ten minutes. One of the main advantages of this is that there is less risk of double spending, which occurs when the same digital currency token/coin is sold twice.
• In the development process, Litecoin depends mainly on script for ‘proof of work scheme’ versus Bitcoin’s SHA 256 algorithm.
• For miners, the reward per Litecoin block is set at 50 Bitcoin versus the 25 Bitcoin offered by the market leader for a Bitcoin block.
• Litecoin mining rewards will be only halved every 840 thousand blocks versus Bitcoin’s 210 thousand.
• The individual value of a Litecoin is currently much lower than that of a Bitcoin. Some might think that this gives Litecoin the scope for greater growth. However, as Bitcoin and other Altcoins (non Bitcoin cryptocurrencies) can be transacted by part coin, this negates that belief somewhat.
How to purchase Litecoin:
The easiest way to purchase Litecoin is, believe it or not, is by using a Visa Debit card. Litecoin has less transaction costs and the process is relatively fast. Once again there are many cryptocurrency exchanges offering to assist in the purchase of Litecoin, the more popular agencies being Coinbase, Kraken and Binance. The other way to purchase Litecoin is by means of SEPA and wire transfer. Currently there are not as many exchanges dealing in Litecoin for cash, as there are Bitcoin exchanges. Some of the exchanges dealing in cash for Litecoin are Coinbase and Kraken. Typically, these exchanges charge transaction fees/commissions.
An alternative way to obtain Litecoin:
An alternative way of obtaining Litecoin is to use your PC and mine the currency, as Litecoin is a lot easier to mine than other cryptocurrencies like Bitcoin. This is because it does not require the expensive hardware/rigs required that other cryptocurrencies require. However, as the number of Litecoins increase in circulation it may become more difficult to mine. Once you download the necessary software (principally mining and update software), a good old home PC can get you up and running to mine your very own Litecoin! You can then proceed to the download link to establish your Litecoin wallet (or securely encrypted address) to store all your mined Litecoin. Typically, many Litecoin miners work on developing blockchains in groups, rather than on an individual bases…and so share in the collective rewards when the blockchain is completed.
Software versus hardware wallets:
Digitally encrypted wallet keys are required to transfer your Litecoin in and out of your secured wallet address. Many investors store their Litecoin in online software wallets, where their wallet encryption key is also stored. However, there are investors who are storing their individual encrypted wallet keys offline in a hardware wallet. These wallets are more secure as they are not connected to the internet. Litecoin wallets are available to suit Windows, Mac and Linux and are also available for Android.
In addition to the more limited number of exchanges dealing in Litecoin, another possible disadvantage is the fewer Litecoin ‘wallets’ available to purchasers compared to those available to Bitcoin investors. In simple English, a wallet is an online location to hold your cryptocurrency securely, by offering a wallet access key just for you, and is generally anonymous in nature. Once you have uploaded your Litecoin into your wallet, the encryption that comes with Litecoin enables you to secure your investment with a small number of clicks on your keyboard. The more popular exchanges to download Litecoin cryptocurrency wallets are Coinbase, Kraken & Binance.
Bitcoin Cash was developed from the Bitcoin fork in August 2017 to increase the speed of Bitcoin transactions. The original Bitcoin was developed in a way that groups individual transactions into ‘blocks’ of transactions, called a transaction ledger. This is an integral part of the complex digital coding required to keep Bitcoin transactions secure. However, the limit of 1MB per Bitcoin block was seen as restricting the currency in keeping up with its incredible growth rate. Bitcoin Cash is trying to ease this restriction by using transaction blocks of 8MB, thus speeding up the transaction process substantially.
Bitcoin and Bitcoin Cash:
The introduction of Bitcoin Cash has caused what is termed a fork or hard fork to develop within the standard Bitcoin market. This fork has provided the currency with a second path towards Bitcoin Cash. Owners of Bitcoin were given the new Bitcoin Cash coin to the same value at the time the fork was introduced.
Are my Bitcoin’s now Bitcoin Cash?
If you held your Bitcoin before blockchain number 478558 your were automatically entitled to an equivalent number of Bitcoin Cash coins. Transactions occurring after that have been cryptocurrency specific, i.e. you either purchased Bitcoin or Bitcoin Cash, with both currencies having their own unique platforms and set of rules. One should always be very careful not to mix up the two currencies. If you accidently send your Bitcoin Cash (BCH) to your Bitcoin (BTC) wallet address (or vice versa) it may be very difficult to retrieve.
The main differences between Bitcoin and Bitcoin Cash:
• Bitcoin Cash has a more decentralised administration structure in place than the tighter Bitcoin development team. This supposedly gives it a better chance of long term viability and security as its administrators are dispersed throughout the world and work independently or in independent groups.
• Bitcoin Cash’s blockchain size at 8MB is 8 times the size of Bitcoin’s 1MB, resulting in transaction turnaround times in Bitcoin Cash being faster than its parent currency. To put this into layman’s speak, 1MB typically allows for up to a quarter of a million transactions per day, whereas 8 MB allows for up to two million. A Bitcoin Cash transaction can take just seconds and be confirmed in a few minutes.
• Transaction fees tend to be lower for Bitcoin Cash due to the faster turnaround times and quicker confirmations.
• Bitcoin Cash uses a different algorithm than Bitcoin that reduces the chances of any ‘replay attacks’ or duplicate transactions.
• The network facilitating Bitcoin Cash transactions is more reliable than that for Bitcoin as it is less congested due to its more decentralised nature.
• As it is still a very young cryptocurrency, Bitcoin Cash does not yet have the same acceptance within the cryptocurrency community as Bitcoin.
Where can you find Bitcoin Cash exchanges?
Bitcoin Cash or referred to as Bcash (typically by those who are not fans of this new fork), can be traded in many cryptocurrency exchanges, including Coinbase, Kraken and Binance many of which charge lower fees than for Bitcoin transactions. However, as yet there are not as many exchanges accepting transactions in Bitcoin Cash as there are Bitcoin. This may change as Bitcoin Cash gains a stronger foothold within the cryptocurrency marketplace.
Bitcoin Cash wallets:
Like any other cryptocurrency, maximum security is obtained by storing your Bitcoin Cash in online or offline digital wallet…protected by your digital key. These include Trezor, Ledger, Keepkey and Jaxx.
Ripple is a global payments system which allows money to be transferred around the world in seconds. Ripple has transformed the system of sending money through traditional banks or Western Union. To date Ripple has focussed on facilitating banks in sending real time payments more efficiently.
Traditionally, the process to transfer less conventional currencies involved trading that currency for Euro or US Dollars, completing the transfer and then converting the Euro/ US Dollars back to the currency required. The fees to convert the currency to Euro or US Dollars and back again made the transfer expensive.
Using Ripple, an individual can convert their currency to Ripple’s currency XRP relatively inexpensively, make the transfer to another Ripple wallet in real time and then easily convert their XRP back to the desired currency.
In theory, Ripple should allow any currency to be easily converted or exchanged for another and makes real time global payments possible.
How do I invest in Ripple?
Most traditional investors will invest in Ripple’s currency XRP rather than the company itself. XRP allows users to trade any currency on the Ripple platform seamlessly on a real time basis. As more users begin to trade XRP the value of the currency increases and it is easy to foresee a future where individuals may hold XRP as the main currency for worldwide payments.
How to buy Ripple:
1. Get a Ripple Wallet:
o A wallet is somewhere to store your digital currency. When using a wallet you will receive a secret key which gives you access to the wallet and your cryptocurrency. For maximum security you can choose a ‘hardware’ wallet. These are physical devices on which you can store your private key safely reducing the risk of hacking.
2. Use an Exchange:
o Use a trading exchange to buy and sell XRP with conventional currencies like Euro or US dollars.
o Buy XRP with Bitcoin. Often seen as the most cost effective option, you can buy Bitcoin from a provider like Coinbase and then trade your Bitcoin for XRP on an asset exchange like Binance or Kucoin.