What's the Difference Between Bitcoin and Other Cryptos?

Here's what you need to know.

This post is presented in partnership with CoinJar. Student Edge members will receive AUD$10 worth of crypto and a free Swipe (EFTPOS) Card, valued at $29.

So, you like the sound of cryptocurrency, but you aren’t sure where to start.

You’re not alone. In much of the world, there’s widespread awareness of the concept, yet still quite a bit of confusion about how it works.

We’ve previously broken down what cryptocurrency actually is (and you can read about it here). However, if you need the reminder: cryptocurrency is 'digital money' that exists largely in the virtual space, and are generally 'decentralised', which means they’re shared across a variety of systems rather than one centralised source (meaning you’re not at risk of losing it all if one centralised safekeeper fails).

Got it? Great! You’re already ahead of most people!

Today, we’re taking it a step further to talk about the differences between certain cryptocurrencies, because it’s one thing to 'get the gist' and another thing to know how the coins themselves differ. After all, what if you want to buy some? You wouldn’t suddenly invest in the Ugandan shilling without doing your research first.

Let’s run down some examples of popular cryptocurrencies. But remember, there are thousands of cryptocurrencies out there, and their individual status will change depending on the events of the day, so don’t make this your last stop on the research train! Consider it the first stop to wrapping your head around the biggest coins out there. 

Bitcoin

 

The granddaddy of crypto. Bitcoin was the first cryptocurrency of them all, launched in 2009, in the timely wake of the Global Financial Crisis (in which the world saw how centralised systems, like banks, were vulnerable to collapse). Many of those who buy Bitcoin do so because they want a digital alternative to the traditional dollar—but because the demand is so intense, their value is (right now) much higher than the traditional dollar. You could always mine for Bitcoin (the process by which 'miners' earn tokens by painstakingly verifying transactions online) but setting up your own mining operation can become quite technical and expensive. The mining process also means there is a finite supply: only 21 million will ever be created. Most people who buy Bitcoin will do it with fiat currencies (traditional money) and they’ll use a cryptocurrency exchange (like CoinJar) as a Bitcoin wallet that’ll allow them to send or receive coins. Bitcoin relies on a public ledger typically known as the 'blockchain', recording the transfer of Bitcoin from one anonymous user to another.

Ethereum

 

Any cryptocurrency that isn’t Bitcoin is known as an 'altcoin', and Ether may be the biggest altcoin out there. It’s the cryptocurrency of the Ethereum network, launched in 2015, and in many ways, trades similarly to Bitcoin. The big difference is that Ether is largely used to power commands on the Ethereum platform, which has its own programming language and develops other applications of blockchain technology. However, it can still be traded like Bitcoin too. Oh, and it doesn't have an upper limit like Bitcoin.

Litecoin

On the other side of the coin (get it?) you have Litecoin, which has more coins than Bitcoin, maxing out at 84 million in total supply. It is also about four times faster to mine than Bitcoin. Founded in 2011, Litecoin uses a different blockchain to Bitcoin, which has a faster transaction or transfer speed (as does Ethereum). And it’s mined with the algorithm Scrypt, which is not quite as complex as the process behind mining Bitcoin, making it more accessible. Of course, that means it’s not as valuable.

Ripple

 

XRP are the crypto tokens of the Ripple network and, besides currently being a lot cheaper than Bitcoin and Ether, differs by largely being a currency exchange and payment-settling system, especially for those transferring across different currencies. Users can convert their fiat currency into XRP before trading, circumventing the fees that often come from transferring (for example, from AUD to USD). It’s not quite as limited as Bitcoin either: 100 billion XRP coins were created when the system launched in 2012.

Zcash

 

This crypto is similar to Bitcoin in that it also has a fixed total supply of 21 million coins. However, this 2016 release was created with the intention of providing traders with certainty that their coins haven’t been 'double sold' (which is what Bitcoin miners seek to audit while checking blockchains) while offering privacy. According to its website, Zcash allows "transactions to be verified without revealing the sender, receiver or transaction amount".

Again, this really just scratches the surface of the cryptocurrencies available to buy and sell (or mine). Yet even with just these five, you can see there are subtle (or not so subtle) differences between them all that are well worth understanding. If you’re gonna get into the crypto game, make sure you get to know your stuff!

CoinJar is the simplest way to buy & sell digital currency. Whether you're just starting or you're an experienced trader, it's easy to manage your digital currency portfolio on desktop and mobile with CoinJar. You can sign up in an instant and access digital currency anywhere you go, whenever you like. Start here. Student Edge members will receive AUD$10 worth of crypto and a free Swipe (EFTPOS) Card, valued at $29.

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