Don’t just say bitcoin to a cryptocurrency. There are over a hundred digital coins that use the blockchain. Some are shameless bitcoin copies, others are their own creature. We dive into the digital economy and investigate the difference.
Blockchain and bitcoin are still synonymous for many people. Anyone who follows up on blockchain technology knows by now that the potential outside the financial sector is immense. The future for secure digital logistics, smart contracts and digital shares is bright. However, the blockchain was born as the foundation of the digital bitcoin coin. It should come as no surprise then that there are many digital coins today. You know bitcoin, probably Ethereum as well. Litecoin and Ripple are already a lot less known. We will look at the most important ones.
With the exception of bitcoin, no other crypto coin has really broken through in daily life. With bitcoin you can really pay, with more obscure coins you cannot. So they mainly serve as an investment: a scarce commodity in which people invest their money in the hope that the game of supply and demand will increase the value of their investment. That’s exactly why many experts think that the cryptocurrency market is currently in a bubble. Many people have already heard of it and risk their chances with an investment, but few know exactly what kind of product they are investing in. Because you can pay with bitcoin in different webshops and even physical shops, you can easily put your digital coin next to classic money.
For the second most popular coin, Ethereum, the cards are already shuffled differently. Ethereum does not have the ambition to compete with bitcoin at all. The Ether coin serves exclusively as a payment unit to drive the use of the Ethereum block chain network. Ethereum is a public blockchain on which developers can develop their own applications. For the majority of people, however, Ethereum has no value, except as a capital good. They are counting on the blockchain technology to break through with the help of Ethereum. You can best compare an investment in Ether with an investment in oil. With the oil itself you don’t buy anything, but it serves as a raw material for many industries.
In third place, with a total market value of about nine billion dollars, is Ripple. That ‘currency’ is again not meant to be a real means of payment. Ripple is a token that drives the Ripple Transaction Protocol. This protocol should facilitate large transactions between banks, for example. Several large companies such as Santander and UniCredit make use of the blockchain technology. An investment in Ripple is another investment in a very specific raw material with the expectation that the Ripple technology will do very well in the coming years.
Bitcoin Cash & Litecoin
Like the classic bitcoin, Bitcoin Cash has the ambition to be a means of payment that works alongside classic money. The currency was created when some of the miners split off from the ‘normal’ bitcoin. Anyone who already had bitcoin at that time, automatically owns Bitcoin Cash as well. For example, the $6 billion worth of the currency at the time of the demerger was de facto created out of nothing.
Litecoin, as the third currency, has the ambition to become a real currency. The developers of the coin boast that it is technologically stronger than bitcoin, but the lack of name recognition plays tricks on the coin. Yet all Litecoins together are still worth about 2.7 billion dollars.