We’ll discuss what we think is the best cryptocurrency, including recommendations on cryptocurrency projects you should be watching and explanations of some terminology in the cryptocurrency industry.
Before we get started naming the best cryptocurrency, let’s better understand some cryptocurrency industry terminology, such as “cryptocurrency”, “block chain” and “Bitcoin.”
What is Cryptocurrency?
Cryptocurrency is a digital asset that can be traded or used as payment from person to person on the internet. The best cryptocurrency uses cryptography to secure transactions on a network. Block chain technology is part of what makes the network secure. Miners use powerful computers to solve advanced equations in order to earn Bitcoin or other cryptocurrencies. Finally, mining makes the distributed ledger network secure. In addition, it ensures that transactions are completed and no one can cheat the system.
History of Cryptocurrency: Cryptography and the Cypherpunks
In the 1970s, a loose affiliation of programmers and mathematicians in the United States began communicating about issues related to cryptography. Prior to the 1970s, cryptography was the domain of governments, military and spy organizations. Cryptography is the study of writing and solving codes.
The Cypherpunks formed in the 1970s and 1980s. Computer development began later. The Cypherpunks debated privacy and security issues. Soon, these issues became directly related to communications between computers. In the 1980s, individuals associated with the Cypherpunk movement began experimenting with digital cash, one of the predecessors to Bitcoin and modern cryptocurrency. Ultimately, the groundwork laid by these pioneers led to development of modern cryptocurrency using newer technology.
What is Block Chain?
At its simplest form, the block chain is data stored on a public database. The blocks of information include transaction data, participant data and distinguishing data. Each block of data stores thousands of transactions under cryptographic lock and key. The block chain is operated as a network of computers. They make the network run and keep it secure by solving algorithmic hashes. The network computers earn cryptocurrency for their work.
What is the Best Cryptocurrency?
The best cryptocurrency is a project that is the most secure, has the strongest user base, has been operating the longest and is the highest capitalized market. Using these metrics, Bitcoin is considered the best cryptocurrency.
What is Bitcoin (BTC)?
Bitcoin is a Peer-to-Peer Cryptocurrency Payment System That was Founded in January 2009 by Satoshi Nakamoto
Bitcoin is an open-source, block chain-based technology that was designed as a peer-to-peer payment system. It is designed to be a decentralized electronic payment method that can be conducted semi-anonymously among individuals. Bitcoin is digital cash. The other intent of Bitcoin is to solve the double spend, trust problem that had been encountered in the past with electronic currencies.
Bitcoin uses block chain technology to maintain its function. In order for users to send and receive bitcoin, the block chain depends on miners. Computers are used by miners to complete complex calculations which build blocks on the block chain. As a reward, the miners receive Bitcoin as payment when each block is completed.
Bitcoin was introduced to the world in January 2009. It is unknown who invented bitcoin; however, a developer named Satoshi Nakamoto (probably a pseudonym) released a 9-page white paper entitled, “Bitcoin: A Peer-to-Peer Electronic Cash System.” The Bitcoin white paper describes Bitcoin’s purpose and how it works.
Bitcoin was the first cryptocurrency to experience widespread use and adoption. However, its use case has evolved over the years from a peer-to-peer payment method to a store of value model. Many Bitcoin users hold bitcoin much like you would hold silver or gold in an investment portfolio.
Why Bitcoin is the Best Cryptocurrency
Bitcoin is secure, has strong community support, has successfully operated more than 11 years and has the highest market capitalization.
The Security of Bitcoin is Based Upon a Strong Network of Users Over Its 11-Year History
The security of the Bitcoin network has proven itself time and again. Over the 11-year history of Bitcoin there have been many challenges to the network that could have spelled failure. However, Bitcoin lives on. For example, one of the largest hacks of Bitcoin occurred in 2014 when $800 Million was stolen from the Mt. Gox crypto exchange. However, it’s important to note that many of the most infamous Bitcoin hacks have been of the exchanges that handle Bitcoin. As a result, experts have faulted the exchanges lack of security for the hacks and not the Bitcoin network itself.
Block chain networks like Bitcoin handle transactions of cryptocurrency on a distributed ledger. This means that the mining computers that run the network share information on the ledger and ultimately, must reach a consensus. As a result, the more computer users that operate on the network means the ledger becomes more distributed among users. This inherently creates security and decreases the chances of one hacker group to gain control of the network.
One other security factor is the price of Bitcoin. In the early days when Bitcoin’s exchange rate was $1, the network and price could more easily be manipulated. However, today Bitcoin is priced around $10,000. A serious investment of billions of Dollars would be required to influence the Bitcoin network and price.
Bitcoin has a long history of community support. It has a growing community and network of individuals who believe in the project and who contribute to Bitcoin’s success. The Bitcoin community includes people like crypto enthusiasts, coders, technology developers, Bitcoin users and block chain startups. Reddit and Telegram are two popular and active Bitcoin communities where ideas and information is shared regarding Bitcoin.
A Decade of Successful Bitcoin
Bitcoin was first introduced to the world in January 2009, more than 11 years ago. Many people doubted its efficacy and durability. In fact, many writers announced that Bitcoin was dead on numerous occasions. For example, in September 2017, Jamie Dimon, CEO for JP Morgan Chase Bank, said that Bitcoin was a “fraud” and it was “worse than tulip bulbs.” However, Mr. Dimon reversed course in 2019 and began developing a digital coin similar to Bitcoin.
$200 Billion Market Capitalization of Bitcoin
The total market investment in Bitcoin is around $200 Billion dollars and growing. Bitcoin has always been the dominant cryptocurrency in the market and remains so. Moreover, its market dominance is approximately 60% against the other cryptocurrencies. In addition, approximately $6 out of every $10 in the cryptocurrency market is used to purchase Bitcoin.
Bitcoin Continues to Grow
There are a couple of things to understand about Bitcoin growth. First, Bitcoin is growing in popularity and use worldwide. Users are adopting Bitcoin as a store of value like gold and using it as a payment method in places where banks don’t exist. Second, Bitcoin is growing in price.
When users began mining Bitcoin on laptops in 2009, it had little value. One popular story about Bitcoin value is that a miner paid 10,000 Bitcoin for 2 pizzas in 2010 in Florida. Yet, today 1 Bitcoin is worth approximately $10,000!
In 2020, billions of Dollars of institutional money began to flow into Bitcoin investments. For example, ARK Investment Management and Kinetic Portfolios Trust, two large investment funds representing wealthy clients, have begun investing in the Grayscale Bitcoin Trust. In addition, legendary Wall Street billionaire investor Paul Tudor Jones has invested approximately 2% of his investment portfolio in Bitcoin.
Caveat for the Best Cryptocurrency
Although we have selected Bitcoin as the best cryptocurrency, there are many other projects that are promising. In addition, there are many other cryptocurrencies that a different use case than Bitcoin that have a high chance of success and have demonstrated security and longevity.
Other Cryptocurrencies to Consider
Here are some other cryptocurrencies that are worth looking at more deeply. Although Bitcoin is the most dominant and most secure cryptocurrency, there are many other cryptocurrencies that have strong security and strong use case value.
A Block Chain Project That Uses Smart Contracts to Power Other Projects
Ethereum is an open-source, decentralized block chain project that is known for its smart contracts. It provides open access to money, via the Ether cryptocurrency coin (ETH), and technology, exemplified by the thousands of applications that are operating on the Ethereum network. The ETH coin of Ethereum is second only to bitcoin in market capitalization.
Like Bitcoin, Ethereum is a Proof of Work consensus system. This means that powerful computers all over the world are continuously solving complexed equations in order to build blocks on the Ethereum block chain. Whichever machine or miner solves the problem quickest, completes the block and receives a reward as payment: ETH coin.
Although Ethereum shares some features with Bitcoin, such as being able to make peer-to-peer transactions, they serve different purposes and audiences. Bitcoin was the original decentralized payment system that didn’t require a middleman bank to conduct payments. Although Ethereum is used for payment sometimes, its primary purpose is to serve as the core block chain on which newer projects operate.
Ethereum uses a payment system for ETH. In addition, it implements smart contracts and allowing whole new projects to run on top of the Ethereum block chain. For example, in November 2017, the decentralized application “CryptoKitties” was launched. It is a digital collecting and trading app of virtual felines that works on Ethereum.
Created in 2014 from a fork in the Bitcoin block chain, Monero is a privacy coin. Monero uses what it calls an “obfuscated public ledger” which makes transactions of Monero private. Moreover, Monero is a tested privacy payment method. The project has longevity and a working record of privacy.
Monero gets a bad reputation because it has been used on the dark web for payments for potentially illegal products or services. However, it should be noted that paper currency also serves the same purpose. Privacy for legal transactions is an important aspect for money and Monero is the foremost privacy currency on the web.
XRP is a currency that operates on a digital payment platform known as RippleNet. The company known as Ripple operates XRP. The currency is not technically a cryptocurrency and doesn’t operate on a block chain. Instead, XRP is a centralized, distributed ledger technology. XRP was designed as a scalable payment system. It is considered to be a competitor to the SWIFT payment system used by banks worldwide.
Developed in 2017, Chainlink is a decentralized network that connects smart contracts with real world data. The Chainlink decentralized oracle network is operated by node operators. Operators are paid LINK to maintain nodes, which connect the system like links in a chain. Chainlink runs on the Ethereum network and plays a critical role in execution of smart contracts. It is one of the new rising stars of the cryptocurrency revolution.
Another new rising star in the cryptocurrency space is Polkadot. The Web3 Foundation created Polkadot. Its primary function is to facilitate the operation of block chains together. The DOT coin functions in three ways: staking, bonding and networking. Finally, Polkadot contains special tools like specialization, scale and inoperability which act as catalysts between block chains.
Binance Coin (BNB)
Binance coin is a utility token used to pay for fees on the Binance exchange. It also helps power the Binance decentralized exchange (DEX). The Binance coin is a deflationary coin that is burned frequently by Binance. Part of the reason that BNB is so popular and successful is due the success of the Binance exchange.
For a long time, Litecoin was silver as Bitcoin is to gold. It was the little brother of Bitcoin. And much like Bitcoin, it is a peer-to-peer payment method using block chain technology. Created by legendary crypto investor, Charlie Lee, Litecoin is slower than bitcoin and has been the quiet cryptocurrency for a long time. Litecoin has a strong support network online. In addition, it is accepted as a payment method throughout the world. There are many Litecoin wallets.
Named after Gerolamo Cardano, a 16th century Italian genius, the Cardano project began in 2015. It is an open-source software project that innovates the way cryptocurrency is designed and developed with a real long-term plan. Cardano’s most notorious feature is its implementation of the use of peer-reviewed research that is conducted for each portion of Cardano development. It has a $3 Billion market capitalization.
The Cardano Foundation was co-founded by Charles Hoskinson. Hoskinson was an early developer at Ethereum. He formed a team of academics, researchers and developers who are focused on building a project that solves cryptocurrency problems. The project has operated in a methodical, planned, evolutionary process since its inception with a clear and transparent roadmap. Cardano doesn’t focus on one use case scenario for cryptocurrency; instead it appears to be tacking many problems at once, such as currency, proof of stake, smart contracts, scalability, security and even scripting.
Cardano uses the delegated proof-of-stake method to maintain the network functionality. This is different from Bitcoin because Bitcoin uses proof-of-work to maintain network, which requires that huge computing farms conduct mining operations. These mining operations then use large amounts of electricity.
Upside of Owning Cryptocurrency
Owning Cryptocurrencies Requires Belief That They Will Save a Failing System
Let’s be honest: owning Bitcoin and other cryptocurrencies requires some dogmatic belief that they can save our failing system. In addition, cryptocurrency is inherently risky for investors. Furthermore, Bitcoin and other cryptocurrencies are highly volatile. If you believe that the financial system is failing, then crypto might save it.
Bitcoin doesn’t require using a bank; the bitcoin holder is the bank. Making borderless payments between friends became easier and more private. In addition, Bitcoin is deflationary, with only 21 million Bitcoins available for use. And if you are starting to have doubts about government money printing and overspending, then Bitcoin is an obvious candidate for safe haven status.
Downside of Owning Cryptocurrency
Fraud, Theft and Volatility Are Still Issues with Cryptocurrencies
There are some downsides to owning cryptocurrency. Cryptocurrency and the block chain space are a very new industry. Bitcoin is only 11 years old and there have been growing pains in the space. First, cryptocurrency has been vulnerable to fraud in the past. For example, $800 Million in Bitcoin was stolen from “Mt. Gox” crypto exchange in 2014. Second, scams have been a problem in the industry, especially with new projects. Finally, price volatility has frightened away many new potential Bitcoin users.
Bitcoin Exchanges and More Information
Hopefully this article has helped you determine the best cryptocurrency. Cryptocurrency can be purchased on several exchanges. Binance, Gemini, Kraken, Coinbase and so many more. Please do your research if you decide to invest. There are many scams in the crypto industry that are searching for an easy mark. If you want to learn more about Bitcoin and cryptocurrency, one place to start might be Investopedia.
Disclaimer: It is important to note that Piggy Bank Coins does not provide financial advice. We don’t endorse or recommend any cryptocurrencies or investments. Instead, we provide information for educational purposes to those seeking knowledge regarding personal finance. However, in the spirit of transparency, note that the author is an investor in cryptocurrencies, including, but not limited to Bitcoin and Ethereum.