The Most Important Cryptocurrencies To Know

Cryptocurrencies are more and more coveted. Bitcoin, the first of them historically, founded in 2009, but also in terms of market capitalization, is attracting the interest of a growing number of investors and financial services. Its price has seen a strong rise following the decision of the online payment giant Paypal, in October 2020, to launch a service to buy and sell cryptocurrencies.

There are thousands of crypto currencies out there, some worth just a few pennies. Bitcoin’s main rival is Ethereum, which experienced spectacular growth in early January. Polkadot, Cardano, Litecoin, Uniswap or even Chainlink are other major players in the cryptocurrency world.

Cryptocurrencies have seen a surge in interest in recent weeks. The value of Bitcoin has reached new highs, as has Ethereum, and many others. While no one can predict how things will turn out in the coming weeks, cryptocurrencies seem, in the long run, to have a bright future.

A brief history of cryptocurrencies

10 years after the publication of Satoshi Nakamoto’s famous white paper, the Blockchain and its most famous avatar, Bitcoin, continue to be talked about. If it was not until our time that it became technically feasible, this technology responds to an old ambition. Here is his story.

For a decentralized currency

The idea of currencies beyond the control of the state has its roots deep in the past. Their most famous promoter is Austrian economist Friedrich August von Hayek. It offers the creation of privately issued currencies. These currencies are subject to the law of the market and the principle of free competition. According to him, these would quickly become more stable and reliable than state currencies. Considered one of the leaders of neoliberalism, Hayek inspired the policies of Ronald Reagan and Margaret Thatcher.

At the beginning of the 20th century, the German socialist Silvio Gesell speaks in favor of a decentralized currency that depreciates over time, in order to stimulate consumption and prevent the accumulation of capital. At the end of the 19th century, industrialist Ernest Solvay went so far as to propose the outright abolition of money and its replacement by legal holding of transactions.

But until the advent of the web, all these ideas are not technically feasible remain a dead letter. We had to wait for the beginnings of the internet to see the emergence of the first forms of private and decentralized currencies. In 1995, the American cryptographer David Chaum launched Digi cash, a decentralized, untraceable and secure electronic payment system. The device is based on software that ensures the security of transactions using cryptographic keys. However, Digi cash went bankrupt in 1998.

The advent of Bitcoin

10 years later, in November 2008, everything changed. Indeed, a mysterious Internet user, with the pseudonym of Satoshi Nakamoto, publishes, on a discussion thread devoted to cryptography, a white paper called “Bitcoin – a peer to peer electronic monetary system (” Bitcoin – A Peer to Peer Electronic Cash System” in original version). Within the community, enthusiasm is immediate. The following year, Bitcoin is deployed in the form of free software.

The device relies on the Blockchain to allow Internet users to carry out secure peer-to-peer transactions. This without the intervention of a third party being necessary to guarantee their integrity. It was in 2010 that the very first Bitcoin purchase was made: an Internet user exchanges 10,000 Bitcoins for two pizzas. At the current rate, such a sum would be equivalent to approximately 70 million euros: that is expensive the pizza.

From then on, things started to accelerate. Bitcoin and the idea that it is now possible to design digital currencies on the web is gaining popularity. We are thus seeing the emergence of new cryptocurrencies promising increased transaction speed, enhanced anonymity or other advantages. Today there are more than 1,600 different cryptocurrencies.

Beyond cryptocurrencies

The Blockchain has remained closely linked to the financial sphere until now. Everything changes when Vitalik Buterin notices that the Blockchain is only used as a platform for deploying virtual currencies. He then begins to work on an alternative public Blockchain (Bitcoin and others all operated on the same Blockchain). Called Ethereum, it was created in 2015. Unlike its colleague, it allows the deployment of smart contracts, computer protocols coded on the Blockchain, which are only triggered when certain specific conditions have been met.

These smart contracts make it possible to imagine a large number of potential applications. Among these, they can be used as part of a system of autonomous taxis, capable of automatically billing their passengers. Or to increase the transparency of the value chain. But also facilitate online voting, fight against “blood diamonds,” even, for some, change the face of the company by replacing some of the managers. For the Blockchain to truly transform the world, certain issues need to be addressed, including its energy consumption. One thing remains certain, however: technology can no longer be regarded as a mere hobby for geeks or a speculative tool.

The difficulty of mining Bitcoin

When Bitcoin first came into being, there were very few people interested in cryptocurrency and Blockchain technology. A few people (probably a few hundred and then a few thousand) started mining Bitcoin, they had one or more computers and used them to verify transactions (as explained in the course “What is the Blockchain “) in return for a small commission.

The creation of other cryptocurrencies

From that moment on, miners began to optimize their computer hardware (processors) in order to provide better computing performance and consume less electricity, to mine more Bitcoin and more profitably, this becoming an idea for business. However, despite optimal confirmations, more and more miners have optimized their way of mining as well, which has increased the difficulty of managing Bitcoin. This is how the need to create other currencies started to be felt and some people got down to it. Other currencies which require less resources for example (certain components of a computer, a graphics card or particular component of a processor) and which are easier to mine.

Cryptocurrencies with the highest market capitalization

It was then backed by numerous announcements, including the $ 1.5 billion US car maker Tesla’s bitcoin investment. Today it is the only digital currency with a market capitalization exceeding $ 1,000 billion. Other cryptocurrencies, however, have jumped even more dramatically since the start of 2021. Ether, which runs on the Ethereum blockchain, for example has soared by around 370% since January 1, to Thursday May 6.

Bitcoin

Bitcoin is the star of cryptocurrency, the first to gain the attention of the general public. Created in 2008, it celebrated its tenth anniversary in 2018. Its inventor, Satoshi Nakamoto, remains a mystery. It is not known whether it is a person or a group of people. This unknown corresponds to the philosophy behind Bitcoin, namely to provide a fully decentralized currency, without control of states, a company or a person. 

Bitcoin, like other cryptocurrencies, is based on blockchain technology. It is a technology for storing and transmitting information, operating without a central control body. When two users exchange crypto currency, only two of them have access to the transaction, which is a definite advantage in terms of security.

A blockchain can be compared to an account book, public and permanently accessible, since all the transactions carried out since the very first one are listed there. 

Ethereum

Ethereum and its currency, Ether, is one of the most popular cryptocurrencies, behind Bitcoin. The Ethereum company was founded in 2013 by then-19-year-old Russian-Canadian computer scientist Vitalik Buterin. Launched on July 30, 2015, Ethereum, the platform that supports Ether, has seen a sharp increase in value since.

The strength of Ethereum, otherwise comparable to Bitcoin, lies in its blockchain, the technology on which it is based. This can be used as a basis for a multiplicity of applications, unlike that of Bitcoin intended only for transactions.

Ethereum thus makes it possible to carry out “smart contracts”, or intelligent contracts, that is to say contracts that are executed automatically when the conditions are met. Some believe it could be even more revolutionary than artificial intelligence, radically changing and improving the way all transactions take place.

Litecoin

Based on Bitcoin technology, Litecoin is one of the most famous cryptocurrencies. Created in 2011 by Charles Lee, a former Google employee, who used the source code of Bitcoin (open source), to develop his own code, Litecoin is a cryptocurrency distributed under an open source license.

The blockchain on which Litecoin is based has thus been improved compared to that of Bitcoin. This has made it possible in particular to speed up the verification process and therefore increase the speed of transactions, which is currently higher than that of its competitors. And the transaction fees are much lower than those of Bitcoin. Litecoin is thus particularly intended for daily transactions.

Polka Dots

Launched in 2017, Polkadot is one of the cryptocurrencies that has experienced the strongest growth in recent months. Created in particular by a former co-founder of Ethereum, Gavin Wood, it offers to connect different blockchains between them, in a secure environment. 

For example, a private blockchain containing data from a school could transmit proof of credential verification to a public blockchain, without disclosing the information it holds.

The smallest unit of account in the Polkadot network is the Planck (Planck’s length, in physics, is the smallest possible distance in the physical Universe). 

Chainlink

Along with Polkadot, Chainlink is the cryptocurrency that has experienced the strongest craze in recent months. Like Ethereum, it offers companies to develop smart contracts, but it has added the ability to include data in those contracts that are not on a blockchain. 

Bitcoin Cash

Nicknamed “the real Bitcoin” by its followers, Bitcoin Cash was born on August 1, 2017 from a schism (“hard fork”) with Bitcoin. While it is based on the same blockchain, it has long claimed less expensive transactions than Bitcoin. But if it has for a time seemed to compete with Bitcoin, it seems that it has now lost the battle, to the chagrin of its zealots. 

Uniswap

Running on the Ethereum blockchain, Uniswap is the token from the decentralized exchange platform of the same name. It is particularly popular because it is centered on decentralized finance (DeFi) technology and is easy to use. Created at the end of 2018, Uniswap is still young, but benefits from the enthusiasm of many investors, which has propelled its token to the gates of the top 10. 

Dogecoin

Designed by computer engineers Billy Marks and Jackson Palmer in 2013, Dogecoin has enjoyed a strong outpouring of sympathy, building around it a loyal community – the forum dedicated to it on Reddit brings together 781,000 subscribers.  

Initially, despite the fact that it was quite functional, it had been imagined as a funny cryptocurrency, with its logo representing a Shiba dog, but also allowing instant transactions and without bank charges. 

Dogecoin has been talked about a lot at the beginning of the year 2021, since it was the subject of a massive investment following the call of the Wall Street Bets group, which had made itself known a few days before by exploding the GameStop share price in order to counter the investment funds that had bet down on the price of this American video game chain. 

Ripple

Ripple has the specificity of having the support of banks: UBS, UniCredit or Santander already use its blockchain, which allows funds to be transferred free of charge. 

Rejected by “geeks” and “cypherpunks”, who defend individual freedoms and crypto currencies as a solution to get out of the rut of financial institutions and states, the Ripple is currently in turmoil, because in the sights of the gendarmes American Finance for legal matters.

Cardano

Founded by former Ethereum CEO Charles Hoskinson, Cardano and its ADA cryptocurrency is a blockchain comparable to Ethereum. Its blockchain, based on a mathematical algorithm called Ourobros, is supposed to make transactions highly secure, fast and reliable. It also allows the development of smart contracts. 

How to mine a cryptocurrency?

To undermine a cryptocurrency, it is usually enough to install on your computer software using the processor or the graphics card, or even both, in order to be able to solve the cryptographic problem requiring a relatively large computing power, which will allow you to touch new units of the cryptocurrency in question. If this is solved mining can become an easy way to make money online.

Be careful, however, the main crypto-currencies have become too difficult for individuals to mine. The mining of many of them has become largely professional and takes place partly in farms, buildings of several thousand m2 where tens of thousands of servers are running day and night to mine cryptocurrencies (Bitcoin, Litecoin, etc.). China once occupied a prominent place in crypto mining, but this industry no longer exists in the Middle Kingdom since the Chinese state’s ban on mining or using crypto assets. Thus, in September 2019, 76% of the energy used for Bitcoin mining in the world came from virtual currency miners based in China, a share which has now collapsed to 0. But the US share has jumped.

Faced with this competition from farms, cloud mining solutions have been developed. No investment in specific hardware is required. All you have to do is get in touch with a company that has invested in the necessary equipment and “hire” your computing power. But beware, there are many scams!

Who makes the cryptocurrency?

The role of the cryptocurrency miner is therefore to validate the transactions carried out. He is thus paid in tokens of the cryptocurrency for which he has confirmed a new block.

The role of the developer is very different. A cryptocurrency developer will develop the computer protocol at the base of the cryptocurrency which defines in particular the number of tokens in circulation, their speed of circulation, their storage power, etc. He is a bit like the architect of the network.

Blockchain technology

A blockchain is the public ledger or list of all cryptocurrency transactions. The completed blocks, made up of the last transactions, are recorded and added to the blockchain. They are stored in chronological order as an open, permanent and verifiable register. A peer-to-peer network made up of participants in this market manages the blockchains and they follow a whole series of protocols to validate the new blocks. Each ‘node’ or computer connected to the network automatically downloads a copy of the blockchain. This allows everyone to track transactions without the need to maintain a centralized ledger.

Blockchain technology creates a ledger that cannot be changed without the agreement of the rest of the network. The concept of blockchain is attributed to the founder of bitcoin, Satoshi Nakamoto. This concept has been the inspiration for other applications based on digital currencies and money.

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