In this section, I’ve taken the largest cryptos in order of market cap at the time of writing and attempted to offer an overview of which problem they’re addressing and what differentiates them. I will be adding in-depth guides to each one with details on their technological advantages, the quality of their development teams and communities, their financing, marketing, roadmaps, recent events, competitors, advantages, shortcomings, growth potential and if you’re interested, my personal take.
Note that I haven’t bothered to include the use of each crypto as a speculative investment as this is a given in the current market. Note also I have only classified those cryptocurrencies with long enough histories (5+ years) as stores of value.
I will be doing a deep dive and heavily researching all aspects of the listed cryptos and writing in-depth analyses in the near future. In order to prioritize which guides I write first, I’m going to use the number of donations to each address as a measure of interest(cheeky I know but I’m investing 100s of hours of my time into this)
The Father of cryptos, Bitcoin is considered the most secure of the cryptos, partly because it has been around the longest and therefore has the most commercial proof of security, and partly because of the amount of computing power and a number of nodes providing the protection is the largest. It has recently implemented a software update allowing something called SegWit2x which will increase the size of the blocks (the pages in the banking analogy) from 1 to 2MB and allows the creation of “sidechains” which free up room on the main blockchain and can add extra functionality such as instant transactions, easy swapping between cryptocurrencies and even smart contracts.
Consensus Method PoW
Intended Use Currency
Current Uses Currency and Storage of Value
Future Uses Smart contracts (with the implementation of RootStock)
Risks
- Disagreements between miners may cause instability
- Political spotlight
- Currencies with superior technology may overtake it in the future as it has been very slow to adapt.
- The government may enforce regulations to prevent the conversion of FIAT to bitcoin (although this may apply to all cryptocurrencies which don’t have compliance as a central aim)
- The transaction backlog has been growing and it is yet to be seen whether Segwit will solve the issue.
- possibility of a chain reaction occurring as miners switch between Bitcoin and other more profitable mined cryptos leading to longer block times, larger backlogs and uncertainty creeping in.
Advantages
- First mover advantage
- Largest network effects
- Largest due diligence around changes due to the number of stakeholders and value in the currency
Ethereum’s meteoric rise came about due to the hype over Smart Contracts. It recently had a very large amount of ICOs on its platform and a lot of interest from the developer community. It is a Turing Complete language meaning that pretty much any kind of program can be written on it. It aims to be a platform on top of which Dapps and Smart Contracts can be written. It uses its own programming language, Solidity.
Consensus Method Currently PoW. Planned PoS
Intended/ Current Uses Smart contracts, Dapps, ICO platform
Risks
- A repeat of the DAO hack on other software developed on the platform due to the room for error and unfamiliar programming language
- Slower uptake due to unfamiliar programming language
- Superior tech may overtake it
- Uncertainty surrounding PoS shift
Advantages
- Turing Complete allows a very broad range of Dapps to be programmed on the platform
- Largest following amongst blockchain developers
- Arguably the best developer tools
- Large corporate support through the Ethereum Enterprise Alliance (EEA)
- Concise programming language suitable for blockchain
The first crypto backed by the banks. It has a very specific use case: providing liquidity in Forex markets between banks. Note this does not mean they intend to replace the Forex markets but supplement them.
Consensus Method Ripple Consensus Protocol Algorithm (RCPA) consists of a few trusted nodes run by banks. Although it doesn’t provide the same level of trustlessness of other consensus methods it is suitable for its intended use case which solely deals with transactions between banks.
Intended/ Current Use Provide forex market liquidity between banks
Risks
- Entirely reliant on the banks
- Very centralized
Advantages
- Clear use case
- Currently being used
- Legally compliant
- Strong links with banks
Bitcoin Cash is a hard fork of Bitcoin created during the controversial scaling debate. It decided to tackle the scaling problem in a different and more immediate way to Bitcoin by increasing the size of its blocks (the pages in the banking analogy) from 1MB to 8MB which doesn’t do anything to speed up transactions but reduces backlogs while retaining security. In order to adapt itself to the large change in computing power experienced over the first few weeks it implemented an emergency difficulty adjustment which allows it to change the block difficulty much more quickly than Bitcoin.
Consensus Method PoW
Intended/ Current Use Storage of Value, Currency
Risks
- Lower popularity compared to Bitcoin
- Very China centric (centralized)
- Doesn’t allow any extra functionality and shows no willingness to change this
- The emergency difficulty adjustment may be open to abuse (we may see fluctuations of miners appearing briefly to take advantage of a lower difficulty and switching out when the difficulty changes only to switch back in when it readjusts leading to instability in block times and profitability)
Advantages
- All the benefits of bitcoin before the hard fork with an immediately improved transaction capacity
- Seen as a backup to Bitcoin
Litecoin has been like Bitcoin’s younger brother, similar in most respects but due to lower expectations is able to change quicker than it’s larger counterpart, as in the case of Segwit implementation. Very popular in China.
Consensus Method PoW
Intended/ Current Uses Currency, Storage of Value
Risks
- May become obsolete as it doesn’t differ substantially from Bitcoin
Advantages
- Confirmation time are 4 times faster than Bitcoin
- May be able to synergise with Bitcoin, often referred to as the silver to Bitcoin’s gold.
- Has a face to the company, Charlie Lee, which may allow it to decide its direction more decisively than Bitcoin. As was the case with Segwit implementation
- Large support in China
- For the past couple of months it has been the most stable cryptocurrency
NEM also has its own unique consensus algorithm, Proof of Importance (PoI) which inherently promotes network usage as a currency rather than a storage of value. A clever, if complex, method of retaining security and efficiency while promoting usage has been established and there are a lot of upcoming updates to the protocol in the works for added functionality. NEM allows multi-signature wallets which can serve as extra security or for things such as joint accounts or financial services.
Consensus Method PoI
Intended Use Currency with a focus on network usage
Risks
- Less straightforward to understand the underlying technology than other cryptocurrencies which may inhibit uptake
Advantages
- Inherently encourages network usage
- Multi-signature wallets
- Consistent updates to the technology
- Has been active in establishing partnerships
Dash stands for Digital Cash and really aims at bringing cryptocurrencies to the consumer market by allowing very fast transactions required for industries such as retail. It has also implemented a “treasury system” where 10% of the transaction fees are pooled towards funding further development of the protocol in a self-governing system.
Consensus Method PoW with a second PoS tier of “Master nodes” which provide extra services such as instant payments and added privacy. These master nodes must stake some Dash (currently 1,000Dash).
Intended/ Current Uses Currency with a clear focus on fast payments.
Risks
- As with the other currencies (as opposed to platforms, assets and tokens), it is a highly competitive space
- NOT anonymous despite its claims
Advantages
- Very fast transactions
- Low fees
- A focus on user friendliness and consumer uptake
IOTA is unique among the cryptos as it doesn’t use blockchain technology but a “Tangle Network” which allows instant, free transactions with the intention of creating a “Machine Economy”. With the rise of the Internet of Things different machines will be able to communicate and pay each other for products or services that can supplement each other. In line with this IOTA is developing its own hardware and a terniary CPU especially for this. However, there are still many questions about the security of the network.
Consensus Tangle Network
Intended Uses Machine economy
Risks
- The creators have implemented a “training stage” until the network is large enough that security is not such a concern.
- Requires specialised hardware which may delay its intended use
- The market it’s aiming for doesn’t exist yet
- the nodes have nothing at stake for attempting to attack the network which is a red flag for security.
Advantages
- Instant, free transactions
- Truly unique technology
- If the market takes off it will have positioned itself perfectly
- Very large potential market
- Several strong partnerships
Often touted as “The Ethereum of China”. While NEO uses Smart Contracts and provides a platform for the creation of Dapps it has an added clear focus on connecting the real world with the digital and supports many common programming languages such as C#, Java and Python. It aims to achieve this by combining legally binding digital certificates of assets with digital identities and smart contracts to create what they call “The Smart Economy”. NEO has a unique structure in that NEO are undivisible and intended to act as shares which give voting rights and pay dividends in the form of GAS which is used for transactions and extra services.
Consensus dBFT
Current Use ICO platform
Intended Uses Asset digitization and trading (digital stock exchange and real estate market for example), business blockchain solutions
Risk
- It is yet to be seen how their unique consensus method will work in practice
- Low initial GAS supply and speculation may lead to very volatile GAS prices (bad for businesses who want to know how much a transaction will cost them)
- Poor communication from the development team (although this has been improving greatly since mid July)
Advantages
- Great transaction throughput (1000 Tx/s)
- Low/no fees
- Multiple language support (C#, VB.Net, F#, Java, Kotlin) and planned support (C, C ++, GO, Python, JavaScript)
- Addresses a need from a legally compliant approach
- Almost impossible to hard fork (Focus on consistency over liveness)
- Great community support with community developers (group known as City of Zion)
- Network effects
- easy access to the Chinese market
Monero’s main focus is on privacy and true decentralisation. The development team have prioritised the improvement of their privacy technology over marketing and user friendliness which allows it to focus on its niche. It can bundle transactions together in such a way that provides anonymity to the users. While the obvious implications are that Monero will be used for less than legal transactions many people do and will value privacy, especially in light of current developments around net neutrality etc. Monero has created a protocol where ordinary consumer computers can still remain competitive whilst mining, as opposed to Bitcoin which required specialised ASIC computers. It should also be noted that Monero transactions are 25 times larger than Bitcoin’s which may prove difficult to scale going forward. There will be no immediate issues with this as the block size scales dynamically but the main issue becomes bandwidth.
Consensus PoW
Intended/ Current Uses Currency for untraceable transactions
Risks
- Questionable market size (smaller room for growth)
- Not scalable currently
Advantages
- Network effects
- Anonymous transactions
- Good decentralization
- If private transactions become increasingly important its market size will increase
- Strong developer community and technology
OmiseGo is a DApp built on the Ethereum blockchain. It is part of the parent company Omise which is payment gateway provider aiming at the South East Asian market. If you know anything about payment systems in China you will have heard of WeChat pay and AliPay. The premise is that everyone has access to a smart phone and allowing you to pay everything from bills to street vendors with a swipe of your phone is not only convenient but has become the predominant form of payment in China. Omise aims at establishing this same system in South East Asia and OmiseGo is it’s attempt to incorporate cryptocurrencies into this system. The positioning is unique for a couple of reasons. Firstly it allows people access to secure funds without the need for a bank account. In South East Asia only 27% of the region’s 600 million inhabitants have a bank account. Secondly it is working towards facilitating payment in FIAT as well as cryptos and making the whole process easy to understand and set up which is crucial for vendor and customer adoption. Could this be the key to mainstream cryptocurrency usage?
Consensus Based on the Ethereum blockchain
Intended Uses Banking services and payment gateway
Risks
- Very early stages. No proven track record yet.
- The marketing has been very slick and as a consequence there has been a lot of hype. Most likely overvalued (Could be said about most cryptocurrencies to be fair)
Advantages
- Many high profile advisors including Ethereum founder Vitalik, Lightning network co-author Joseph Poon and the founder of Golem, Julian Zawistowski.
- In talks with the Thai Government.
- uniquely positioned in East Asia with directed efforts towards accessing SEA, Korean and Japanese markets.
- Professional presentation and organisation
Stratis aims to provide a platform for businesses to build their own blockchain solutions to problems as varied as supply chain management to the transparency of research publications. The integrity and transparency provided by the blockchain will allow greater control over complex systems such as supply chains and Big Data.
Consensus PoS
Intended Uses Platform for building business blockchain solutions.
Risks
- Less popular currently than other cryptos with similar objectives
Advantages
- Built on top of the Bitcoin blockchain ensuring security
QTUM is a Singapore based Ethereum competitor aimed at businesses. Built from the Bitcoin core code with a secondary layer which allows it to use Virtual Machines including the Ethereum Virtual Machine (These allow the use of Smart Contracts and Dapps). It aims to bridge the security of Bitcoin with the limitless use cases of Ethereum.
Consensus Method PoS
Intended Uses Business smart contract solutions
Risks
- CEO received negative press from his time at Bitbay a few years ago
- Yet to be seen how their approach of layering Virtual Machines on top of the Bitcoin blockchain technology will work.
Advantages
- Based in Singapore which has so far been very encouraging about blockchain technology
- Positioned to target both western and eastern markets
- Not in direct competition with Ethereum or NEO. Can coexist.
EOS aims to be the “operating system” on which other blockchains can more easily be built. You can think about it like a current computer program is written to talk to Windows OS or iOS instead of the actual hardware. The CEO Dan Larimer previously founded Steem and BitShares, two cryptos with market caps in the 100s of millions of dollars. Dan compares EOS to his previous two projects by saying that EOS allows these kind of Dapps to be made easily and interoperate, much like programs on an operating system. Unfortunately, many of the technical details surrounding his products have been misleading and The ICO, which is ongoing, has aroused a lot of suspicion due to its structure and legal disclaimers. However, due to the consensus method being PoS Dan claims it is necessary to avoid any one person owning too much of the total supply. Given that it doesn’t have a functional product yet it is fair to say the price is speculative.
Consensus Method dPoS
Intended Use An “operating system” for blockchains.
Risk
- Suspicious ICO format
- No working product yet
- Very convoluted and difficult to understand
Advantages
- high bandwidth
- 1.5s confirmation time
- Many other technical advantages (claims with nothing to back it up yet)
Bitconnect claims to offer a guaranteed return on investment if you ‘stake’ your BCC for at least 15 days. There is no whitepaper and the way it functions is completely opaque. The obvious answer to how they’re able to continually offer guaranteed returns is that the whole thing is a pyramid scheme. As with any pyramid scheme, if you’re in early enough you can make money. Miss the boat and you will undoubtedly lose it all when it collapses. I can’t say how long this will take. It could be tomorrow, it could be years. If someone can point me in the direction of how BitConnect works then I’ll happily change my mind, until then I advise people to stay away.
Consensus Leased PoS (functions similarly to PoS except users can ‘lease’ their currency to nodes for profit)
Intended/ Current Uses Magic money machine.
Risks
- Pyramid scheme. Need I say more?
Advantages
- If the pyramid scheme doesn’t immediately scare you away then there is the possibility of making profits from this coin. As long as you get out before it collapses.
Another crypto founded by Dan Larimer. Bitshares is a decentralized exchange that has the benefits of increased security and equality between market orders (No high-frequency trading, front running, hidden orders, or location bias). Digital tokens of common physical assets such as gold also exist on this platform, however, these are not actually backed by the real physical assets as other platforms intend to do. It has pegged fiat cryptocurrencies and zero fees so is an ideal platform for trading.
Consensus dPoS
Current Use Decentralized exchange
Risks
- From what I can see there is no legal backing behind their digitized assets.
Advantages
- Very fast transactions
- Very high transactions per second (100,000s Tx/s)
- low fees
- a decentralised exchange (no third party risk)
A platform that makes it easy to create your own crypto token in a very user-friendly way and provides a decentralized exchange for these tokens.
Consensus Leased PoS
Current Use Crowdfunding
Risks
- Eliminating all barriers to entry for creating a token and allowing crowdfunding may oversaturate the market and make it even more difficult to find promising ICOs.
Advantages
- Very user friendly, no technical knowledge needed
ZCash uses a protocol called zk-SNARKS to provide anonymity. However, it is currently still possible for analysts to correlate enough information to deduce user identities.
Consensus Method PoW
Current Uses Anonymous transactions
Risk
- Potentially limited market size
- Must implement further upgrades to stay regarded as an anonymous currency
Advantages
- Likely to coexist with other anonymity-centric currencies such as Monero
- Clear utility
Tether creates cryptocurrencies whose prices are tethered to that of FIAT currencies. Currently supports USD and EUR and will soon add JPY. It, therefore, acts as a safe haven for traders on crypto exchanges. Based on the Omni protocol which is built on top of the Bitcoin Blockchain. Every USD/EUR/JPY is backed with real currency in a reserve.
Consensus Method PoW
Current Uses Trading, storing FIAT on the blockchain.
Risk
- Questions about how this is backed. If all users were to withdraw simultaneously the network would collapse (would love someone to correct me on this)
Advantages
- Useful as a safe haven when trading when entering a bear market
