What is Bitcoin, Ethereum and Ripple?
With all the hype, it can be difficult to understand what Bitcoin is, what it could be and more importantly what people want it to be.
Bitcoin, Ethereum and Ripple
These three cryptocurrencies are currently the three wise men of the crypto market. Bitcoin is the first real cryptocurrency that was developed by Statoshi Nakamoto in 2009 and led to the development of the over 2,000 cryptocurrencies that are in existence today. Ethereum and Ripple are two of the closest contenders for well known, broadly held and best understood of the cryptocurrencies.
That being said, all three of the crypto currencies have very different ways of operating/functioning and should not be considered the same thing. The other 2,000 cryptocurrencies will be collectively discussed in the section on Altcoins. We won't go into each one of them but you will get a general overview of what they are, why they are being developed and a few other key points.
Keep in mind that nothing that I'm writing here is advocating for a particular investment strategy, particular coin, or as advice that you should take to make investments. Crypto is the Wild West of the financial world and there are no clear and durable principles to trade in the market effectively. So take this information for informational purposes only and not as investment advice.
The coin that started it all. Created by an individual or group that goes by the name of Satoshi Nakamoto on January 3rd 2009. Designed as the first legitimate digital currency based on a decentralized blockchain, Bitcoin built upon the earlier work done by Hal Finney and other cypherpunks on other digital currencies decades earlier.
Bitcoin while built on a blockchain has a singular purpose: to validate and monitor Bitcoin ownership. The Bitcoin system is hard capped at 21 million coins total with no possibility of additional coins being added to the system. This self imposed scarcity of the system is what many users have used to justify the rise in market value.
The process of validating and monitoring Bitcoin transactions and ownership is called mining. Miners use sophisticated and powerful servers to crack complex cryptographic problems and in the process of validating every transaction they receive a 12.5 bitcoins payout as a reward. Every few years the payout is halved, making future payout per block 6.25, 3.125, 1.5625 and so on.
Developed by Vitalik Buterin, Ethereum is the second most popular altcoin by market cap and name recognition. While it does share some similarities with Bitcoin like operating on a decentralized public blockchain it has more capabilities than Bitcoin. Ethereum was designed to broaden the applications of blockchain technology beyond the singular application of Bitcoin blockchain to monitor coin ownership.
Ethereum's core innovation is the Ethereum Virtual Machine (EVM) which allows developers to run programs on the EVM regardless of the programming language. This gives the the Ethereum community the capacity to develop thousands of applications which could all run seamlessly off one single Ethereum blockchain. Other blockchain systems would require that every application have their own unique blockchain. Kinda lame.
Ethereum is also widely associated with Smart Contracts, Enterprise Ethereum Alliance (EEA) and Ethereum Classic which will be discussed more in depth later in the Crypto Section.
Ripple is another of the main players in the altcoin universe but it too is very different from Ethereum and Bitcoin. Unlike Bitcoin, Ripple coins are generated by Ripple Labs itself and distributed to users at the discretion of Ripple Labs. As a result there are no miners, server farms or earned distributions of coins for solving blocks.
The main goal of Ripple is to provide an alternative for people to break away from the financial networks.