Chapter 5: How do they differ?

The list of new cryptocurrency seems to be getting longer day after day. There are now more than 1500 of them and no one knows when their progress will end.

Not all cryptocurrency are equal. In truth, many are little more than the work of brilliant students who seek to participate in this adventure for fun alone.

A correct cryptocurrency must combine several important factors:

  • A strong team of developers whose objective is to make their currency the best on the market.
  • A real reason to exist. All cryptocurrency must be based on a fully documented and exploitable objective.

For example, Bitcoin was created to be a digital currency that eliminates the need for a trusted third party capable of performing peer-to-peer transactions online. It is based on cryptography, blockchain and a decentralized trading platform. That was his objective. Therefore, any other cryptocurrency introduced for the same purpose must somehow exceed the performance, safety, speed, reliability, etc. of Bitcoin. This is exactly what some of them are doing: Litecoin is a good example. However, the list does not end there.

Ripple XRP: This cryptocurrency has a totally different purpose. Ripple’s platform for money transfer has been specially designed to be used by banks and financial institutions to increase speed, improve efficiency and reduce costs. It has now been adopted by many banks around the world and is also used by American Express, the credit card giant. However, it is the currency most criticized by the cryptocurrency community because it is the antithesis of what a decentralized currency should be.  Unlike Bitcoin, all Ripple parts were pre-moulded by the company before being launched on the market. Ripple keeps 55 billion XRP parts (95% of the parts).

Ethereum (ETH): Nicknamed “Ether”, it has enjoyed a rapid increase in its value. It is currently one of the strongest cryptocurrencies on the market. The value of Ethereum continues to increase, while other cryptocurrency experience much higher levels of insecurity. Like Bitcoin, Ethereum is based on blockchain technology.

It was launched in 2015 by a programmer and cryptocurrency researcher born in Russia: Vatalik Buterin. It uses a decentralized software platform that facilitates the creation and management of smart contracts that can be established, updated and executed without requiring downtime or third-party control. It is not only a platform, but a complete programming language known as “Turing Complete”. It is run on a blockchain that allows developers to build, publish and distribute applications. As developers create different applications that can evolve on the Ethereum platform, they use Ethereum as a bargaining chip. This cryptocurrency therefore generally has two distinct objectives: first, it is a digital currency exchanged and second, it is used to run applications within the Ethereum platform, whose objective is to serve as a support for encoding, decentralizing, securing and exchanging almost any element.

You are probably wondering what Ethereum and its intelligent contracts can achieve. In concrete terms, intelligent contracts can solve, simplify or accelerate everyday problems:

Imagine a farmer who takes out an insurance contract that stipulates that if he does not rush for 30 days on his fields, compensation is provided. The intelligent contract makes it possible to fully automate this process and unblock the payment of compensation in a few minutes. I let you imagine this process with your traditional insurer.

Another example is the purchase of a car between individuals: you have to have a certain trust between the two parties: will the payment be valid, will the car have no hidden defects? An intelligent contract makes it possible to secure the amount of the buyer’s transaction, and then unlock it in one or more installments to avoid scams after receipt.

The uses are unlimited: the management and maintenance of real estate transactions (notaries have a lot to worry about), insurance, sales, food traceability, auctions… The future holds great innovations for us in these areas!

Here are some examples of crytomoney or companies developing a blockchain-based product:

Litecoin (LTC): Litecoin was created to be a smaller, more easily exchangeable part. He uses blockchain technology like his older brother, the Bitcoin, but his negotiation times are faster (2.5 minutes versus 10 minutes). It was released on October 13, 2011 by Charlie Lee, a former Google employee. It will have a total of 4 times more parts, 84 million parts compared to 21 million for Bitcoin.

Monero (XMR): Monero is one of the only cryptocurrencies to be truly anonymous. Contrary to the ideas received and journalists who are not very rigorous in writing their articles, Bitcoin is not anonymous. Indeed, if you have read the previous chapters diligently, you will remember that all transactions in the blockchain are public and can therefore be read by anyone.

Of course, the blockchain does not use your identity but one of the “available addresses of your wallet”. However, it may be possible to know who holds this address based on the transactions issued or received (by cross-checking information that may be available through exchanges or traders).

To return to the subject, Monero does not have a public blockchain, it is impossible to track transactions between users. That’s why Monero is increasingly used on the dark web. The dark web is a hidden Internet where everything that is wrong or forbidden is available: money laundering, drugs, weapons, paedophilia…

IOTA (MIOTA): IOTA aims to be the blockchain of connected objects (cars, household products). It is not based at all on the same blockchain principle as the Bitcoin or Litecoin. There is no real block, by the way. This mode of operation is called “Tangle” and can be summarized as follows: a single transaction refers to two past transactions.

Instead of a small subset of the network being responsible for the general consensus (mining / proof of issue), the entire network of active participants (i.e. devices performing transactions) is directly involved in the approval of transactions.

The automotive world is particularly interested in this mode of operation for their connected objects. Volkswagen is currently working closely with IOTA to develop a concrete application in 2019.

GOLEM (GNT): Golem is a protocol that allows you to use the computing power of the entire network to perform 3D rendering. What can take several hours of calculation by your machine to make the 3D model of an object can be done in a few minutes.

DOMRAIDER (DRT): Domraider is a French company that carried out the first ICO in France in September 2017 by raising 30 million euros in a few weeks. Domraider’s ambition is to create the first decentralized auction network using the blockchain. The use of the blockchain for auctions makes a lot of sense: transparency, security, reliability. Historical auction houses like Christie’s or Sotheby’s are showing signs of growing interest in blockchain technology.

TELCOIN (TEL): Telcoin’s ambition is to provide banking services to unbanked people by relying on the GSM network. As the mobile penetration rate is very high, even in developing countries, the idea is to join forces with telephone operators to make money transfers via SMS or MMS. The telephone operator would serve as a bank account for those who cannot have one.

As of May 2018, there are more than 1,600 currencies and it would take a long time to describe them all. Many projects are legitimate and will have a significant impact on our daily lives in the coming years, others are scams or projects with no real basis, it is necessary to be well informed before investing.

In order to discover which cryptocurrency have the most value, you need to do some real detective work.

  1. Find out what the purpose of the cryptocurrency is by going to the currency’s website and reading all the information about it. In the meantime, make sure that his site is professional, easy to navigate, logical and provides a good amount of detailed information.
  2. If possible, read the white paper. There may be a lot of technical information that you don’t understand, but you will get valuable information from it, which can give you a good overview of the currency and its long-term value potential.
  3. Consult the development and management team’s career paths. Do they have the necessary skills to succeed in their objectives? Can their previous professional experiences and connections give them a competitive advantage in business development and partnership signing?
  4. Check the discussions on the Internet and see what is being said about the currency, good and bad.
  5. Find out on which exchanges the currency is available, its price and its capitalisation

It’s just common sense! In the same way that you would not invest in a company whose teams and products we do not know, you must be interested in the project before you start.

It is important not to confuse the price of a coin with capitalization: a $0.001 coin may seem very affordable, but if 500 billion coins are in circulation, it already represents a capitalization of $500 million. A $10 coin with 500,000 coins in circulation will normally have a much greater upside potential.

Don’t be afraid if a currency has a very large number of coins, it may be related to its concept or functioning. To see clearly, I repeat, do your research to identify if all its factors are in correlation with the project behind it.