Cryptocurrencies are built on computer networks. They make use of an underlying data structure called a blockchain. A blockchain, simply put, is a decentralized digital ledger. It consists of a collection of blocks or nodes that maintain transactions taking place within the blockchain across multiple computers. They also contain a link to their previous block along with a timestamp. This ensures that none of the blocks can be modified, without the alteration of all subsequent blocks. For this reason, blockchains are very secure.
There are many blockchains, with different use-cases. Here are some of them that are majorly known in the crypto world –
Satoshi Nakamoto is the pseudonymous creator of Bitcoin. They refer to the coin as ‘a new electronic cash system that’s fully peer-to-peer, with no trusted third party’.
Bitcoin was the earliest cryptocurrency blockchain. It was first launched all the way back in 2009 and is considered the building block of the crypto industry. By coin market capitalization, it is also the biggest cryptocurrency. It is a gold standard by which other cryptocurrencies are measured.
As a result of this, there exists a crypto market parameter called Bitcoin Dominance. This parameter measures the percentage of Bitcoin market capitalization compared to the total crypto market cap.
The creator of Bitcoin wanted to ensure that the maximum number of bitcoins never exceeds 21 million BTC. Therefore, they employed a halving mechanism where the number of rewarded bitcoins for each new block is halved. When bitcoin first started circulation in 2009, the reward was 50 BTC per new block. However, after three halvings, the latest one in 2020, the reward has been dropped to 6.25 BTC per new block.
The main functionality of Bitcoin is to record transactions in a transparent fashion. Even so, blockchains can have various other use-cases like elections, digital medical records, insurance, real estate, etc.
Bitcoin was created with the intention to provide a substitute for fiat currency. On the other hand, Ethereum enables the deployment of permanent and immutable decentralized applications on its blockchain apart from the cryptocurrency it offers. The idea for this blockchain was conceived by Vitalik Buterin in 2013. Vitalik, along with the additional founders Gavin Wood, Charles Hoskinson, Anthony Di Iorio and Joseph Lubin, launched Ethereum in 2015.
In the crypto world, where Bitcoin is analogous to gold, Ethereum’s native coin ‘Ether’ is referred to as silver. It is the second-largest cryptocurrency by market volume, and you can buy it here. Ethereum does not have a cap on the total maximum supply. However, the yearly maximum supply is fixed at 18 million ETH.
Ethereum is gradually moving from Proof-of-Work to the Proof-of-Stake consensus mechanism and has started to implement some updates. This new fork would be called Ethereum 2.0. Moreover, it would have a better transaction speed as well.
Ethereum, like Bitcoin and some other blockchains, allows users to build tokens on their blockchain. One such token is the iOWN Token. It is a multi-utility token that can be used within iOWNX. Furthermore, it is accepted as a payment method by several vendors.
Cardano was founded in 2015 by Charles Hoskinson, who is one of the co-founders of the Ethereum network. It uses the Proof-of-Stake consensus model, Ouroboros. It is highly energy-efficient and is the most well-known of all of the green cryptocurrencies.
Cardano utilizes dual-level architecture. Its native coin Ada exists on the first layer. This layer is called the settlement layer (CSL) and is mainly the transaction recording layer. The next layer is the computational layer (CCL) which enables the creation of smart contracts and applications to run on the platform. This mechanism makes Cardano highly scalable and provides increased throughput.
Cardano has a maximum supply of 45 billion ADA. At the time of this writing, 34 billion ADA is already in circulation.
Solana is another crypto blockchain that supports the development of decentralized applications (DApps) and smart contracts. It was officially launched in March 2020 under the Solana Foundation by co-founders Anatoly Yakovenko, Greg Fitzgerald, Stephen Akridge, Raj Gokal, and others.
Solana uses a combination of Proof-of-History and Proof-of-Stake mechanisms, thus claiming to improve scalability.
Proof-of-History is responsible for processing transactions by recording successful operations and the time that has passed between them. The Proof-of-Stake keeps track of the PoH processes. Additionally, it validates each sequence of blocks produced by it.
In 2017, Binance hosted its native token Binance Coin on the Ethereum blockchain as an ERC 20 token. But in 2019, Binance launched their own blockchain, which is the Binance Chain. The ERC 20 token was then substituted by Binance network’s native token, Binance Coin. In 2020, the creator and CEO of the Binance network, Changpeng Zhao launched the Binance Smart Chain to run in parallel with the Binance Chain. This new chain is EVM (Ethereum Virtual Machine) compatible and supports applications based on Ethereum.
BNB Chain is a fusion of the Binance Chain (now called BNB Beacon Chain) and the Binance Smart Chain (now called BNB Smart Chain) and was introduced by Binance in early 2022. The chain employs the Proof-of-Staked Authority (PoSA) consensus mechanism. It combines the elements from PoS and PoA.
Nevertheless, it is important to note that not all cryptocurrencies are based on blockchains. One such example is IOTA. It was founded in 2016 by Sergey Ivancheglo, Serguei Popov, David Sønstebø and Dominik Schiener.
Although it is a distributed ledger technology, similar to blockchains, it was actually built using a directed acyclic graph called Tangle. Instead of recording transactions in blocks, it allows multiple transactions to connect with each other. Moreover, for entering any new transaction within the network, you need to validate two or more previous transactions.
To ensure network security, a simple Proof-of-Work puzzle is included in the process of validating a transaction. IOTA’s native coin is IOTA, however, for trading purposes, MIOTA(Mega-IOTA) is used more commonly. One MIOTA is equivalent to one million IOTAs. The maximum total supply of IOTA is 2.78B MIOTA, all of which are currently in circulation.
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