My opinions on different cryptocurrencies
Interested in cryptocurrency? Well, finding good information, or even a no BS guide can be tricky.
I think newcommers should find trustworthy people online, see what they are interested in, and make sense of the crypto space this way.
That is what I aim to do today, talk about crypto from my perspective. Hopefully this will give you a good starting place.
Before we start let me talk about frequent terms:
- Mining: The process of verifying transactions. Uses a lot of computing power, but miners get a bit of crypto coin to encourage the survival of the network. This is also known as "proof of work"
- Staking: An alternative to mining used by some coins. Participants will be assigned the duty of verifying transactions, when they do they stake their coin. Once they verify they keep the staked coins as well as the transaction fee. If they incorrectly verify transactions, some of their stake is lost.
- Block: Best thought of a container of transactions. Created during mining or staking
- Blockchain: A chain of blocks. The cryptography is deterministic so the encryption on the next block is directly influenced by the last block. You are able to mathematically confirm each block is valid going back to the first block, hence the "chain".
I am not a finacial advisor. All information here is for educational purposes.
Monero is basically what most people think Bitcoin is. When people see the "crypto" in cryptocurreny, they seem to jump to the conclusion that this somehow makes transactions secret. But really the "crypto" refers more to the cryptographic proof of ownership. Most cryptocurrencies are completely traceable back to when they were first minted.
This is actually a big problem if you intend to use cryptocurrency as a currency, since large portions of the coin could be tainted if it becomes associated with a shady history. This reduces the value of the tainted coin, and the everyday person doesn't have the tools to check if they have tainted coin.
However with Monero, all transactions are obfuscated, using ring signatures (mixes your transaction in with other junk transactions), and one-time stealth addresses.
All of this works toward the goal of fungible digital tokens. With no way to tell history, all XMR will have the same value.
But perhaps the biggest advantage of all, is that no one knows balance by default.
Anonymity isn't the only strength of Monero though.
The mining algorithm is actively hostile to ASICs and even GPUs. Monero's RandomX algorithm is designed to be mined on consumer-grade CPU's. This tries to keep mining decentralised, because as we will find with Bitcoin, the only way to realistically mine Bitcoin is a warehouse in China full of ASICs. With Monero, if you want to mine it, you probably can.
Monero gets de-listed from many centralised exchanges, since most governments have KYC (know your customer) laws. So common options for obtaining XMR include, mining, localmonero.co, or using a decentralised exchange to swap another crypto.
The tooling, community and documentation make getting started with it easy. The culture surrounding Monero, is very much like the original spirit behind Bitcoin (a digital peer-to-peer currency).
Anyone can get started by downloading the excellent open-source Monero wallet software from the official site. You have a graphical or command-line option. Just be warned that you need to synchronise the whole blockchain to get started (~80GB at time of writing), or find a remote node to take care of that for you.
You can take a look at the
--sync-pruned-blocks options which cuts out 2/3 of the data if you are limited. That is an option if you are running
monerod directly. If you use the GUI wallet,
monerod is integrated, so I'm not sure if you can pass options to it. You can always pick a remote node however, so you could choose to host
monerod on a server elsewhere.
If you are running your own node, I would suggest taking a look at the background solo mining options. You probably won't earn much, since you will be vastly outgunned by the mining pools, but you will help secure the network. Background mining also won't slow down the PC.
My current stake: <$500 USD
Bitcoin Core, the original cryptocurrency. It's limited supply of 21 million coins makes it very valuable. Bitcoin really hasn't changed since its inception, which presents some growing pains.
Bitcoin mining isn't ASIC resistant. ASIC = Application-specific integrated circuit. This is a custom chip specifically designed to mine bitcoin. It's important to try and thwart efficiency for ASICs, otherwise you will push out everyday Joe's with gaming rigs, and instead centralise your mining efforts in Chinese warehouses stacked with thousands of these ASICs. This is exactly the case with Bitcoin, don't bother trying to mine it.
It is not good having a single entity controlling most of the flow of a cryptocurrency, as they can use their power to control the ledger and do things like doublespending. This alone would collapse Bitcoin.
Bitcoin has honestly outlived its expected lifespan, and I am not confident in it long term. The community seems to be in a stalemate on block size, the most important factor in scalability.
Blocks are what contains transactions, so the smaller the block, the harder it is to fit your transaction in. So currently fees are at all-time highs, it's basic supply and demand. Bitcoin has a pretty small blocksize of 1MB and new blocks are issued every 10 minutes, so it can only handle about 7 transactions per second. This is abysmal compared to other crypto and even the banking system.
The problem is that the Bitcoin community can't figure out if BTC more of a cash system or a store of value like gold. Sadly the later seems to have taken prescident, which is not what Bitcoin was designed for (original title of the Bitcoin whitepaper describes it as a digital peer-to-peer cash system).
If you intend to use BTC as an investment tool, please don't invest at all-time highs (Bitcoin doesn't just go up). Also consider utility. At this point BTC seems like an investment tool used by retail, and now institutional investors. It's completely impractical as a currency, so what is it's value then? Well it more or less follows the stock market as many Wall Street investors are now on board.
Why the #1 cryptocurrency then? Because it is the first and most publicised. So that is where people go regardless of the technical superiority other coins may offer.
The conflict in vision has resulted in an incompatible offshoot called Bitcoin Cash (BCH). The blocksize is larger, and thus it transacts faster and has a much lower fee.
By the way. The Lightning network proposed to solve this issue just seems like giving up to me. A stupid workaround that helps keep the whales rich, while giving the normals a way to transfer small amounts. Maybe someone can change my mind on this.
My current stake: 0 BTC
Ethereum was the next big thing after Bitcoin. It introduced smart contracts. So now not only can you have an immutable decentralised ledger through the blockchain. You can create a contract, an agreement between several parties.
This can be used in ensure a small group working on a project can be verifiably paid. People even use these smart contracts to build new coins on top of Ethereum.
Ethereum is currently the sliver to Bitcoin's gold, but has a pretty good chance of overtaking it in the future. We are currently on the verge of ETH 2.0 being released. Which involves the following
Ethereum will be switching over to a proof-of-stake model by the end of 2021. In other words mining will be replaced with staking. This will slash energy consumption, and will hopefully improve the scalability issues. A number of smaller coins have already toyed with this model. So I'm keen to see how it plays out with the second biggest crypto.
Sharding is also due in 2022, this will split the ethereum blockchain into 64 seperate parts, which aims to further improve scaling.
I use MetaMask as my wallet, and would recommend it to everyone. It is a browser extension, but it isn't an online service. Rather the wallet is created locally, and is not controlled by a third-party. You don't have to download the blockchain to use it, and it is compatible with ERC20 tokens. So any cryptocurrency built on the Ethereum network can be held in MetaMask.
My current stake: <$1000 USD
Sorry, I don't want to regeritate basic facts about every crypto. You can look that up yourself. But since you insist, here are other token that might interest you...
- BAT: Used as a reward for browsing with the Brave browser. The browser is alright from a functionlity and privacy perspective. Introducing tokens as an alternative to advertising is pretty cool. This token has utility.
- LBC: Is a token for the LBRY network. The Odysee website is how most people will interact with LBRY. It's primary real-world use is a video platform alternative to YouTube. Very cool, also has utility.
- ADA: It basically did ETH 2.0 before Ethereum.
- RVN: Ravencoin probably has a good chance at being the next minable crypto after Ethereum. Otherwise nothing special.