Cryptocurrency is a medium whose existence is based on the internet. It uses cryptographical functions to make financial transactions. In order to achieve decentralization, transparency, and immutability, blockchain technology is used.
Cryptocurrency is not controlled by any authority, which makes it very special and important. The lack of authoritative control also means it is decentralized, this makes cryptocurrencies kind of immune to the traditional grasp of government control.
As cryptocurrency has developed, Crypto-Tokens have also been produced, created through Initial Coin Offerings (ICOs).
Cryptocurrencies and ICOs are not exactly the same thing. ICO is an acronym for Initial Coin Offering and is a way of raising funds for companies that are in need of it. So here is how it works, in short - a company launches an ICO so they can create a new coin, service, or app. Those that are interested in investing can buy the offering and get a new cryptocurrency token issued to them by the company itself. The token can represent a stake in the company or it can have some utility for using the product or service the company is working on and offering.
A lot has happened in the crypto world in all these years (see crypto history), in spite of that, cryptocurrencies have become a global sensation known to the masses.
Cryptocurrencies are not all the same and different cryptocurrencies have appeared throughout the years, each of them having been made for different purposes.
BTC & BCH
When you mention cryptocurrencies to people, the first response is usually something about Bitcoin, and that is probably since it’s the first and most known cryptocurrency globally.
You could say bitcoin is seen as the digital gold standard in this industry. It is used as a digital payment, however, it is also a currency of cybercrimes, used in darknet markets or ransomware. There is a high probability that Bitcoin is here to stay.
Bitcoin Cash was launched in August of 2017. The launch was initiated by a group of miners and developers via a hard fork with the main goal of improving scalability. A hard fork means there is some kind of alternative to the original coin (of BTC). But what happened, in this case, is that Bitcoin Cash was rejected by some users, so there was a split. And that is how Bitcoin Cash, BCH, came to its existence.
BCH key accomplishments:
- Cheaper transaction fees
- Faster when it comes to processing transfers
- Able to process numerous transactions per second
Ethereum was launched in 2015 and it is said to be the world’s programmable blockchain.
Ethereum’s native cryptocurrency is Ether (ETH). ETH is digital money and has many features also found in Bitcoin. It can be sent all around the globe and it is decentralized, which means it is not controlled by any one government or company.
What is special about Ethereum is that it is programmable. That means that developers can use it for building new applications, like creating new kinds of money and digital assets, building decentralized organizations or virtual worlds that are supervised collectively.
Those applications move forward the interests of cryptocurrency and blockchain technology. Once they are on the Ethereum network, they run as programmed forever. Since they can be decentralized, no entity or person has control over them.
There is always something happening on Ethereum, like Cryptocurrency wallets, financial applications, decentralized markets, games, and a lot more.
ETC and ETH are not that different from each other. They both belong to smart contract platforms that allow the creation of new decentralized applications.
Ethereum Classic is basically a hard fork of Ethereum and it was kind of made due to differing opinions on how to resolve the hack of the DAO (Decentralized Autonomous Organization), a venture capital fund built on Ethereum to fund the development of blockchain. In the end, some of the Ethereum nodes chose to proceed with processing the original code without the updates.
Ethereum Classic has a few keys to success:
- It benefits from sharing its name and a high share of its codebase with one of the most thriving blockchains of all time
- It gained a headstart in the market place and wallet support because its roots go all the way back to Ethereum
These two keys make Ethereum Classic a powerful blockchain project and it will eternally have the support of those who back its philosophical stance. However, it still lives in the shadows of Ethereum.
Our new digital world is fascinating. It wasn’t all that long ago that the concept of cryptocurrencies and decentralized payment methods were just an idea, probably sketched on a napkin. In our next edition of How Do Cryptocurrencies Differ From One Another, we will explore DASH, XRP and REP. Let us know your thoughts so far in the comments!
Check our part 2 of How Do Cryptocurrencies Differ From One Another blog.