popular cryptocurrencies explained

Popular Cryptocurrencies Explained

What are the unique features of different cryptocurrencies and what actual services do they provide? Get a clear overview in this moneyland.ch guide.

Here, moneyland.ch explains the basic functions of popular cryptocurrencies to help you understand how they work and what value they bring.

1. Bitcoin (BTC)

Bitcoin was the first true cryptocurrency and has the highest market capitalization. One bitcoin is made up of 100 million Satoshis. New bitcoin is created every time that one of the computers or “miners” which power the network processes a transaction. The maximum number of bitcoins which can ever be created is 21 million. Bitcoin is open-source and non-proprietary, meaning it is not owned by or dependent on specific companies or foundations. It uses the proof of work model to process transactions.

  • What value does bitcoin offer?

Bitcoin is one of the only cryptocurrencies which is fairly widely accepted as payment for goods and services. Transactions and the contents of blockchain wallets cannot be controlled by third parties. Thanks to its high market capitalization, it is one of the most liquid blockchain assets, and can easily be converted into Swiss francs. This liquidity makes bitcoin a functional tool for transferring wealth.

2. Ethereum (ETH)

ETH is a cryptocurrency which serves as the basis for transactions within Ethereum. Ethereum is an open-source, blockchain-based operating system on which decentralized applications (dapps) and smart contracts can be created and hosted. It is primarily developed and promoted by the Ethereum Foundation, which also holds ETH coins. ETH has an initial supply of 72 million, but new ETH are created every time a transaction is processed, with no fixed limit. Ethereum currently uses the proof of work model, but is in the process of moving to a proof of stake model.

  • What value does ETH offer?

The main advantage of ETH is that it is required to pay for paid services on the ethereum operating system. Because the ethereum system offers many possibilities (dapps, smart contracts, ICO tokens, and non-fungible tokens, for example), there are many potential use cases for ETH. Like bitcoin, Ethereum is a very liquid asset which can easily be converted to Swiss francs. It is also more widely accepted by merchants than other altcoins.

3. Solana (SOL)

The SOL cryptocurrency is used for payment transactions on the open-source Solana platform. The Solana system is similar to Ethereum in that it can host dapps and smart contracts, among other things. Development is primarily managed by Solana Labs, a private company. Solana uses a proof of history model for processing transactions.

  • What value does Solana offer?

Solana’s focus is on decentralized applications. It is designed to enable high transaction speeds and keep transfer fees low – factors which are crucial for the functional use of dapps by large numbers of users. The Solana operating system offers numerous possible use cases, and the SOL cryptocurrency is needed to pay for services hosted on Solana. SOL can be staked to earn new coins.

4. Cardano (ADA)

Cardano, like Ethereum and Solana, is a blockchain-based operating system on which decentralized applications and smart contracts can be created and hosted. The Cardano software is owned, in part, by private companies IOHK and Emurgo, which manage development and marketing respectively. The ADA cryptocurrency is used for value transactions within the platform, and the supply is limited to a maximum of 45 billion coins. Cardano uses a proof of stake model to process transactions.

  • What value does Cardano offer?

The ADA cryptocurrency is needed to make payments within the Cardano system. Because Cardano can be used for many different applications, there are many possible use cases for ADA. You can also stake ADA to earn new coins.

5. Ripple (XRP)

Ripple is fully-proprietary software. The Ripple blockchain and its XRP cryptocurrency are developed and centrally-controlled by the Ripple company, which holds a large share of XRP coins. The supply is limited to 100 billion coins, all of which were generated when Ripple was created. No new Ripple coins are generated when transactions are processed. Unlike most other cryptocurrencies, Ripple does not reward entities which help power the network. So-called “validators” are primarily Ripple and its stakeholders, all of which have a direct interest in keeping the network running. Ripple uses its own proprietary model for processing transactions.

  • What value does Ripple offer?

Ripple is a company which provides services for international payment settlements, much like the SWIFT system currently used by most banks. The company aims to provide a fast, low-cost alternative to conventional settlement services. It markets its product to banks and other financial service providers. Validators do not compete for transactions, which keeps the required computing power and resulting energy consumption low compared to that of many other cryptocurrencies.

6. Monero (XMR)

Monero is focused on privacy and fungibility. It is fully open-source. Development is carried out by a worldwide community of private individuals and coordinated by the Monero Foundation, which is financed by donations. The initial supply is limited to 18.4 million coins, but new coins will always be created when transactions are processed. Monero uses proof of work mining.

  • What value does Monero offer?

Fungibility is a primary focus of Monero. In order to accomplish this, it incorporates features aimed at making the transaction history of individual coins impossible to trace. It currently has some of the strongest privacy features of any cryptocurrency.

More on this topic:
Compare Swiss online trading platforms now
How to buy and spend bitcoin in Switzerland
Guide to investing in bitcoin and other cryptocurrencies 
Bitcoin savings accounts explained

Editor Daniel Dreier
Daniel Dreier is editor and personal finance expert at moneyland.ch.
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