Three of the most famous cryptocurrencies that most people have heard of are Bitcoin, Ethereum, and Litecoin. Not only have they survived longer than many others, but they have all maintained their strong positions in the rankings of most valuable cryptocurrencies. Each one has its own unique attributes that they hope will help them compete in an extremely volatile market.
Bitcoin is the most famous cryptocurrency out there and also the original. Created by Satoshi Nakamoto in 2008, Bitcoin is an uncensorable form of money that can be sent peer to peer anywhere in the world, without the need for a third party.
These unique attributes have garnered interest from libertarians, crypto-anarchists, and people unsatisfied with the current status quo of the economic system. It has also received derision from classical economists who point to the volatile price fluctuations as a clear example of a bubble in progress.
Despite being labelled “dead” on numerous occasions, Bitcoin has continued to survive and ultimately thrive. Not only is the price higher than most ever imagined, but there are now whole industries and conferences built around this one invention that was released on a mailing list all those years ago.
As a piece of software, Bitcoin continues to develop and evolve. New ideas such as the Lightning Network and Schnorr Signatures hope to help continue pushing Bitcoin further mainstream, with the ultimate goal being to overthrow the current fiat system. Such lofty goals have caught the attention of US congressmen who have called for cryptocurrencies to be made illegal due to fear of the US losing its hegemony through the use of the US dollar as the world’s reserve currency.
Criticism of Bitcoin is usually aimed at the Proof-of-Work hashing algorithm and the size of the network. Proof-of-Work is energy intensive, and many people have accused Bitcoin of being a waste of precious resources in a time when global warming is on the forefront of many people’s minds.
Ethereum is the creation of Vitalik Buterin and doesn’t directly compete with Bitcoin in terms of its money properties. Instead, the smart contract-based platform has been labelled as a potential “world computer”. Despite this, for many people, cryptocurrencies are merely investment vehicles, meaning the underlying technology often gets overlooked for the price.
Ethereum has seen significant growth in price the same way as Bitcoin has. It has also created plenty of hype and excitement. Due to the nature of Ethereum, it is possible to build tokens on top of the platform. Many cryptocurrencies on the market today are ERC-20 tokens that use Ethereum as a base layer.
Whilst Ethereum has struggled to become the “world computer” many believe it can be, another use case was found for it in 2017. Ethereum became the vehicle for many projects to launch their ICOs. Unfortunately, many of these ICOs were shady and unscrupulous, meaning that although they raised millions of dollars, investors are yet to see any return.
Whilst Ethereum currently uses Proof-of-Work like Bitcoin, its ultimate goal is to move to Proof-of-Stake. Proof-of-Stake is less energy intensive and seemingly more palatable to mainstream consumers because of this.
Both Bitcoin and Ethereum struggle with issues relating to scaling their respective blockchains. Whilst the Lightning Network on Bitcoin is meant to help solve this, upgrades such as Casper on Ethereum should in theory help its scalability problems.
Litecoin was created by Charlie Lee and is a fork of the Bitcoin code with a few different parameters. Often referred to as the “silver to Bitcoin’s gold”, the plucky altcoin has managed to survive to this day and is currently trading above $80.
Litecoin is quicker to transfer than Bitcoin, making it more suitable for payments. However, whether Litecoin will still be able to maintain a market share once the Lightning Network is fully integrated into Bitcoin remains to be seen. Through the Lightning Network, payments on Bitcoin will become quicker and cheaper than Litecoin, possibly rendering its use case null and void.
Litecoin has proved beneficial for Bitcoin. When the scaling debate was at its peak in 2017, Litecoin went ahead and implemented SegWit onto its platform. This showed that there were no issues with SegWit as Litecoin continued to run smoothly, calming some of the fears surrounding the new upgrade.
Founder Charlie Lee has previously been accused of undermining the project when he chose to sell all his holdings for more than $300 a coin in the last bull market. His argument was that he has too much influence over the price, and by selling he could focus solely on improving Litecoin. However, when he chose to sell, the price of Litecoin soon collapsed, leading many to accuse him of “dumping his bags”.
Bitcoin to this day remains the original and strongest cryptocurrency on the market. Whilst the interest around Ethereum is very high, there are still many questions that surround the project’s viability. This is true for Bitcoin in the long term as well, however.
Litecoin is a plucky altcoin that has proved a valuable asset as almost like a test net for Bitcoin. Each of these cryptocurrencies have shown that they have staying power so far, but this does not necessarily guarantee success for them in the future.