Comparing Crypto: Top 4 Cryptocurrencies Explained
While bitcoin gets a big amount of the spotlight, every savvy investor knows to look toward competitors for industry insight.
As an investor, choosing to hedge a portfolio with crypto is a spectacular financial strategy in today’s market. But how do you choose from the literally thousands of options out there? Even the top 10 performing coins have a tendency to shuffle about fairly regularly in terms of price and market capitalization. So unless your familiarity with the intimate inner workings of crypto- or you use an exchange like Bitvavo, that can help you stay on top of the latest trends- crypto can seem like an overwhelming choice.
Perhaps the most enticing aspect of cryptocurrencies for many investors is that the market, at least on the surface, is far less nuanced than that of traditional investment options. Cryptocurrencies and altcoins also function as a simple way for retail investors to get their feet wet in the larger fundamentals of trading- without the need of fund managers. Here’s what you need to know about the top cryptos that have held their value, and their investors, for over ten years.
Bitcoin has long been the major front runner in the cryptocurrencies market. In fact, even at its lowest trading volumes, bitcoin has outperformed all other crypto’s up until this point. Established in 2009, by the still entirely anonymous Satoshi Nakamoto, bitcoin presented a vision for the financial future that had never before been viable. A totally decentralized mechanism for global currency. No boundaries, no manipulation, no headache. A truly democratized financial system that is borderless and available to nearly every person on this earth.
What started out as a good possible alternative for future fiat systems, has become something a bit different- often referred to as a “digital gold”. Largely because bitcoin has become a store of value, an asset, more so than it has evolved into a type of everyday currency that is useful for the tiny transactions that we all interact with on a daily basis. Now, bitcoin is seen more as a hedge for personal assets- meaning that it is similar to gold in that it is worth money, but rarely used to purchase a gallon of milk. Often looked at as the long-term investment of choice amongst other cryptocurrencies, it has functioned as a platform for offshoots of better technology and development for other cryptocurrencies.
Ethereum, like bitcoin, has long held the number two spot. While it has never come close to the worth that bitcoin holds, it still has risen, and stayed, well above the value of other altcoins. Unlike bitcoin however, ethereum doesn’t really function as a store of value. Instead it’s often seen as the digital currency of development. Where this token seems to fuel the creation of the infrastructure that will help digital currencies succeed and compete with future traditional financial markets. Ethereum seems to be constantly evolving, moving farther away from the fundamental network processes that drive bitcoin.
The ethereum network has given rise to the newly competitive market of decentralized finance (DeFi), decentralized applications (DApps), and smart contracts. Where bitcoin seems to try and find a way to provide a digital alternative system for traditional investments and gold, ethereum provides the more functional aspects. Looking to decentralize and democratize many of the everyday administrative tools of our time. Taking out the middlemen and fees of legally binding contracts, banking systems, and lending practices. So, while Ethereum may not be seen as a traditional investment for many, it is still worth buying into, as these tokens create the scaffolding and use case scenarios of most digital currencies.
Ripple exists as the bridge between digital currency and fiat. Helping to bring in existing legacy banking systems to the digital currency network. In traditional banking, banks can only transfer funds to other banks within their own network. This means that if you’re trying to send money from Kentucky to a friend in Botswana, you’ll have to move that money through a series of banks that can finally convert your US Dollars into Botswana Pula. This process can not only be incredibly time consuming, but also disastrously expensive.
Ripple is faster and less energy intensive than most other networks, including bitcoin, ethereum, and even Visa. The market doesn’t only settle fiat conversions either, but can be used in a number of different scenarios, like commodities and frequent flier miles. Helping to create a faster and more efficient settlement network that is far less costly than most conventional options.
While the token was launched back in 2016, IOTA has been making some serious tracks in 2020. Bouncing up from a long-term bear run, IOTA is once again coming for a top spot in the altcoin running. This is largely because of what the coin functions as and represents. During its introduction year, the Internet of Things (IoT) network was still largely a tech fairytale, something that many of us were interested in, but had little real-world application. Fast forward 4 years and the IoT is bringing to integrate itself seamlessly into nearly every aspect of our lives. Functioning as a device network, the IoT is a way for devices- like our cell phones, computers, home gadgets, cars, and a number of other items we use everyday – to communicate with one another. Exchanging information without the need of human intervention. Which not only creates a faster network, but also a safer one. The IOTA altcoin aims to function as the monetary unit of the IoT.
As mentioned before, network speeds and transaction fees associated with bitcoins network often make it less than useful when it comes to the microtransactions that we use everyday. Things like transport tickets, or snagging a soda from a vending machine. Using bitcoin for these transactions is nearly unthinkable. Not only because it takes roughly 10 minutes for BTC to validate, but also because you would wind up spending more on fees than your bus pass. IOTA comes in with a novel approach to transaction validation- one that doesn’t require miners, so fees are non-existent and transactions are virtually simultaneous. Making IOTA the front runner for digital cash.
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