Investing in cryptocurrencies is gaining momentum with time. Today, the digital world is dominated by more than 3000 cryptocurrencies alone. Cryptocurrency offers a great refuge from interference and control by the government by leveraging Blockchain technology to gain transparency, immutability and decentralization. It has become a global phenomenon known to people. Despite the advantages they offer, cryptocurrencies have had their fair share of controversies over the last decade.
In 2018, the Reserve bank of India banned the banks and any regulated financial institutions from dealing with or settling virtual currencies such as Bitcoins. However, no clarity has been given by it with regard to its usage which still falls into a grey area. The furor surrounded by Bitcoins and other cryptocurrencies doesn’t seem to bother people who are actively involved in trading cryptocurrencies. Beyond the noise and overwhelming publicity, people possess limited knowledge of cryptocurrency. The article highlights the key aspects of cryptocurrencies and gives you insights into some of the best cryptocurrencies to invest in.
What Is Cryptocurrency?
Before we take a look at the alternatives to Bitcoins, let’s understand what cryptocurrency actually means. Cryptocurrency is a digital/virtual currency that uses cryptography to secure online transactions. This decentralized technology lets users make secure payments and store their money without mentioning their name or going through a bank.
With cryptocurrency like Bitcoins, one can send/accept the virtual money to each other’s digital wallets. Since every transaction is recorded in a ledger called Blockchain, you can easily trace your money. With the growing popularity of Bitcoins, many other new players (altcoins- an alternative to Bitcoins) have joined the market to provide tough competition to the popular cryptocurrency Bitcoins.
How Does Cryptocurrency Works?
So how does cryptocurrency works? Cryptocurrency like Bitcoin have a network of peers that keep the record of all transactions. When the transaction takes place, a unique hash code is added with it to prevent fraud and intrusion. Now the transaction is broadcasted in the network, sent from one peer to another will a confirmation is reached. The confirmation of the transaction can be done only by miners who stamp the transaction as legit and add the block to the chain. For this job, miners are rewarded with a token of cryptocurrency.
Through Blockchain technology, cryptocurrencies are safely transferred from one’s wallet to others. The entire transaction history is recorded in Blockchain through which a person can keep track of his investments.
Best Cryptocurrencies to Invest In
Here are top 5 cryptocurrencies other than Bitcoins with great promises to look forward to:
- Ethereum (ETH)
Launched in July 2005, the brainchild of crypto-genius Vitalik Buterin, Ethereum is the first alternative to Bitcoin that enables smart contracts and decentralization applications to be built and run without fraud, control or interference from a third-party. In 2016, Ethereum was split into two Blockchains namely Ethereum and Ethereum Classic. This Blockchain does not only process transactions but complex contracts and programs. With its strong mining algorithm and equally strong transaction verification process, Ethereum is without a doubt the next best virtual currency after Bitcoin.
- Ripple (XRP)
To solve the challenges of Blockchain scalability and facilitate secure and instant global transactions, Ripple was launched in 2012 by the Ripple company. The currency XRP doesn’t merely serve as a medium to store and exchange value, but as a token to guard the network against spam and fraud. Unlike Bitcoin and Ethereum, Ripple doesn’t involve mining as ripple coins are already pre-mined. Ripple to date remains one of the most enticing and revolutionary virtual currencies in the world that is looking for ways to facilitate cross-border payments securely. It is also the third-largest cryptocurrency by overall market cap. Ripple offers speedy transactions without paying high foreign transaction fees.
- Tether (USDT)
Tether was launched in 2014 as a Blockchain platform to anchor the value of coin to the price of national currencies. It allows individuals to carry out transactions in traditional currencies using Blockchain network and related technologies thus minimizing the volatility associated with virtual currencies. This cryptocurrency facilitates trading between other cryptocurrencies with a rate fixed to the USD thereby allowing traders to take advantage of trading opportunities.
- Litecoin (LTC)
Litecoin was released in 2011 and was one of the first cryptocurrencies after Bitcoin. It is often regarded as the silver to the digital gold Bitcoin. Being faster than Bitcoin, this little brother of Bitcoin emerged as a top contender in the race of best cryptocurrencies to invest. The main differences between Bitcoin and Litecoin lie in generation time of the smaller block, increased maximum number of coins and a different script-based algorithm.
Interestingly, Litecoin is based on an open-source global payment network with no control of any central authority and uses “scrypt” mining algorithm as a proof of work. Litecoin is perfectly altcoins to facilitate smooth, fast and secure virtual currency transactions. Litecoin has algorithms that are easy to mine when compared with Bitcoins.
- Libra (LIBRA)
Facebook’s own cryptocurrency Libra is one of the most-promising cryptocurrency which will let you buy or send money with nearly zero fees. Libra will most probably start as permission Blockchain just like Ripple. However, its goal is to become a permissionless chain eventually like Bitcoin and Ethereum. In a permissionless chain, anybody can buy some ASICs and become a miner but one needs to be a part of network to mine cryptocurrencies in permissioned network such as Ripple. With all the publicity, frenzy and distinct traits, Libra is a promising virtual currency that will most likely give a tough competition to Bitcoins in the future.
