The cryptomarket has seen a huge jump in terms of growth and advancement. Due to the popularization of the blockchain technology, more and more tech companies adopt the innovation for business applications. If you are new to the crypto space, here are the basic advantages and disadvantages of the top 8 cryptocurrencies based on value and utility.
Market capitalization: $153 billion
Advantage: Bitcoin, the original cryptocurrency, is the most popular and influential blockchain network, and has the most protected system against attackers.
Disadvantage: Transactions are expensive as growing demand has pressured Bitcoin’s network. The system can process only about seven transactions per second that guzzles electricity because of its proof of work consensus protocol, especially made to make mining labor-intensive.
Market capitalization: $64 billion
Advantage: Smart contracts run on the blockchain. It is a built-in programming language that enables the developers to write computer programs. Up to now, most initial coin offerings (ICOs) have been based on Ethereum smart contracts.
Disadvantage: Ethereum is slow and energy-hungry as it uses proof of work. Many early smart contracts are vulnerable to hacking, and the field of smart-contract security is still immature.
Market capitalization: $31 billion
Advantage: Ripple says its crypto token, called XRP, can be a “bridge currency” that financial institutions can use to settle cross-border payments faster and cheaper than they do now. It uses a novel consensus protocol that allows for much faster transactions than Bitcoin and Ethereum.
Disadvantage: Ripple has so much control over the system as it is a privately owned company. Crypto purists say XRP is not decentralized enough, which is the opposite of Bitcoin, which can be mined by anyone.
Bitcoin cash (BCH)
Market capitalization: $22 billion
Advantage: Bitcoin’s software to handle larger transaction volumes was adjusted by the creators of this currency. BCH is the output of a “hard fork” of Bitcoin.
Disadvantage: According to experts, Bitcoin Cash is too centralized as a handful of miners create most of the coins.
Market value: $8.5 billion
Advantage: According to the creators of Cardano, the system remains to be the only platform for trading and transferring its token, which gives a tough privacy and regulatory compliance. They also stated that it will eventually host smart contracts. In that way, it will be similar to Ethereum. However, it uses a proof-of-stake consensus protocol so that less energy will be consumed.
Disadvantage: There are big claims from the developers, but facts and information about Cardano are few.
Market capitalization: $8 billion
Advantage: Litecoin is an “altcoin.” It is almost the same as Bitcoin, but with just a few differences. Transactions can be processed four times faster, and its mining process is designed to stay open to hobbyists, which is the opposite of Bitcoin, where expensive hardware is used by professional miners.
Disadvantage: Litecoin is faster than Bitcoin. However, Litecoin is still too slow and energy-hungry to be an excellent choice for payment method. Also, it has the added handicap of being far less popular.
Stellar Lumens (XLM)
Market capitalization: $7.4 billion
Advantage: Stellar’s ledger is a hard fork of Ripple’s that aims to be a bridge currency for cross-border payments, too. The only difference with Ripple is that XLM is being run by a non-profit company. It also aims to compete with Ethereum as a platform for initial coin offerings.
Disadvantage: Stellar deals with many competitions, from both Ripple and the traditional banking system’s dominant platform, SWIFT, which puts distributed-ledger technology with blockchain-like elements into trial.
Market capitalization: $5.2 billion
Advantage: China’s biggest cryptocurrency, NEO is a smart-contract platform with goals similar to Ethereum’s. It uses a consensus protocol called delegated Byzantine fault tolerance, which NEO’s creators say allows for 10,000 transactions per second, compared with Ethereum’s 15.
Disadvantage: NEO is very centralized, and it is not clear if this will ever change. The founder stated that the goal is to make it more decentralized “someday.”
If you are entering the cryptomarket as an investor of the technology, you should take note of the different advantages and disadvantages of the various coins and tokens. Make sure to understand the fundamentals of the blockchain before making any decisions of getting into the crypto space.