There are currently 1,448 cryptocurrencies in the world. According to some counts. You can have a programmable currency like Ethereum for every Bitcoin, or you can use a coin to represent a specific service, such as Augur.
Some of these coins have a better reputation because of the technology, their utility, or even the people who made them. Investors, researchers, and users do not take them all seriously.
Different functions
There are several types of cryptocurrency. Cryptocurrencies such as Bitcoin, Litecoin, and Dogecoin provide only basic functions, like transferring value between parties.
Tokens are also available and are created with smart contracts. They can be used for many different purposes. They are used to raise money to build services. And they can be used as tickets to the services.
Differences in technology
Different technologies used in the various cryptocurrencies mean that some coins are more promising than others.
IOTA can be used to create “Internet of Things devices” (such as smart kettles). It uses a unique form of blockchain technology (which tracks transactions), which allows it to achieve faster transaction speeds and confirmations of trades.
It is a built-in feature in Nxt and Arvor. This allows users to do more than send coins.
Cryptocurrencies like Zcash or Monero are used to settle transactions with “zero-knowledge.”” The cryptocurrencies are designed to hide information about the actual payers and recipients, as well as the amount of money transacted.
Monero is largely replacing the use of Bitcoin on the dark Web.
Read more: KodakOne could be the start of a new kind of intellectual property.
And smart contracts built with cryptocurrencies like Ethereum have countless potential use cases, from property transactions to digital asset management and fundraising.
This technology allows for a cryptocurrency to use less energy than another.
Limitations
Bitcoin and Ethereum are slow due to their inability to handle the massive amounts of data sent by users. The data security technology is expensive and inefficient.
Bitcoin can only process seven transactions per minute. Ethereum can handle fifteen transactions in a second. This is compared to the VISA payment system, which can take as many as 56,000 transactions every second.
New entrants, such as Red Belly from the University of Sydney, could solve this problem by handling up to 660,000 transactions per second.
Smart contracts may also have bugs. In 2016, US$50,000,000 in Ether was stolen from a decentralised organization built on Ethereum.
Read more: The DAO: a radical experiment that Could be the Future of decentralized governance.
When something achieves the success of Bitcoin, we’re bound to see competitors entering the market, hoping to grab a share.
This is what explains the explosion of cryptocurrencies after the source code for Bitcoin was released under a license that allowed anyone to modify it. Anyone can change Bitcoin and then remove it.
We will soon see more crypto coins if we follow the current trend.
As we can see, “cryptocurrency”, as a term, encompasses many different technologies, uses, and communities. All of these factors determine whether investors, users, developers, and researchers will take a cryptocurrency seriously.