As a beginner in the world of cryptocurrency investments, taking the first steps can feel truly intimidating. Questions like “Is it too late to get started?”, “Will I be able to make it in the world of blockchain and cryptocurrencies?”, “What are the investment options that I have?”, and so many more, are surely on your mind 24/7 when attempting to find the cheapest cryptocurrency.
Misconception and Confusion Surrounding which the Cheapest Cryptocurrency is
Truth be told, cryptocurrencies have always gained a bad rep and the multiple misconceptions surrounding it worsen the situation. From people believing that you need to be really tech-savvy to get into the world of cryptocurrency, to doubting its security, to having the idea that Bitcoin and blockchain are one and the same, the misconceptions about the cheapest cryptocurrency are too many to count.
On that note, here’s to clearing up all the confusion and misconception, and giving you a comprehensive idea about the world of cryptocurrencies available in the market. So, let’s get started!
What are cryptocurrencies?
Before taking a closer look at Bitcoin, its alternatives, and discussing the investment tips, let’s take a step back and examine the meaning of terms like blockchain and cryptocurrency. Speaking in simple terms, cryptocurrency can be defined as digital or virtual money that takes the form of ‘coins’ or tokens. Though cryptocurrency has entered the physical world through credit cards and the like, the majority of them still remain intangible.
The word ‘crypto’ in the term cryptocurrency refers to the cryptography that lets a specific digital token be stored, generated, and securely and anonymously transacted. All of these currencies are also closely committed to decentralisation. Cryptocurrency is usually developed as a code by the teams that also dabble in the mechanisms of issuing, called mining, along with other controls. An important feature of cryptocurrency is that these are completely free from any government control and manipulation, and this is one of the main sources of their popularity.
A cryptocurrency that is like Bitcoins are collectively known as altcoins, and they are like the improved or modified versions of the Bitcoin. Some of these currencies are much easier to mine compared to Bitcoin, but in some cases, the trade-offs related to cryptocurrency bring in a higher risk with less acceptance, value retention, and liquidity.
Now that you have an idea about what cryptocurrencies are, let’s delve deeper into what the most viable cryptocurrency in the world is. However, when it comes to discussing cryptocurrency, there has to be a disclaimer mentioned at the onset: any list about cryptocurrencies can never be completely comprehensive because there are more than 16,000 cryptocurrencies present in the world. In fact, many of those coins are very popular among a small community but are hardly used at all by a bigger group of investors. So, what you will find in this guide is a list of the cheapest cryptocurrency that is used most widely all over the world.
What are the different types of cryptocurrencies?
The arena of cryptocurrencies is expanding continually. You never know, maybe the next digital token is getting released as you are reading this! Though Bitcoin is seen widely as the cheapest cryptocurrency, there are many others that are equally making a name in the world. The rankings are largely based on market cap, and thus, it is usual for one set of tokens to rank higher than another at any given point in time. So, taking that and other factors into consideration, the following are the different types of cryptocurrencies that you need to watch out for: Bitcoin
Bitcoin is a digital currency that was established in 2009. In simple terms, it is a peer-to-peer digital currency that can be transferred securely and instantly between any two individuals. People who accept Bitcoins can involve themselves in the exchange of this cryptocurrency. When you hear the words ‘digital currency’, what do you understand? Digital currency or cash is what individuals can exchange through an online platform. Bitcoin is digital cash that a user can send to any other Bitcoin user in the world. It has the same transfer value when you exchange traditional currencies. The only difference between cryptocurrency and the traditional currency is the existence of these currencies in digital form.
Bitcoin was released in January 2009 as open-source software, which was open for everyone to examine the code and add to their Bitcoin network. Another interesting feature about Bitcoin is that it is decentralised, which means that there are no central authorities that control the movement of Bitcoin.
Ethereum is the second-largest cryptocurrency in the world. When it comes to market cap, it stands just behind Bitcoin. Ethereum was launched in 2015 and it is a decentralised software platform. Being a decentralised platform, Smart contracts and Distributed Applications can be built and run without any external control, fraud or downtime interference. All the applications that run on this cryptocurrency are operated on a platform-specific cryptographic token known as ‘ether’. You can think of ether as a vehicle that enables the users to navigate through the Ethereum platform.
Developers look after it so that they can develop and run applications inside Ethereum, but in recent years, investors have started making purchases of other digital currencies through ether.
The Enterprise Ethereum Alliance was established in early 2017 and now has 200 organisations under it. All these organisations are testing out different versions of Ethereum blockchain.
3. Litecoin (LTC)
Litecoin was launched in 2011 and was one of the early cryptocurrencies that launched after Bitcoin. People usually refer to Litecoin as the “silver to Bitcoin’s gold”. Charlie Lee, an MIT graduate who was also a former Google engineer, created Litecoin. Litecoin is also based on an open-source global payment network, which has no central authority whatsoever. This means that this cryptocurrency is not controlled by anyone and all it uses is a ‘Scrypt ’ as an evidence of work. Scrypt can be decoded with the help of consumer-grade CPUs.
Litecoin sounds similar to Bitcoin and has similar traits as well, but it has a faster block generation rate, which allows people to get a faster confirmation for their transaction. As well as developers, there is a large group of investors and merchants that have started accepting Litecoin in recent years.
Ripple is a real-time payment network that is accepted globally. It helps in offering instant, cost-effective and stable methods of international payments. Ripple was launched in 2012 and since then has helped banks in settling cross-border payments in real-time. It also allows for end-to-end transparency, which means there is complete transparency between the banks and the users. Ripple is great as it allows for trade exchange at lower costs. Consensus ledger is Ripple’s method of confirmation[SM1] and it is a unique method as it requires no mining. This is how Ripple is different from Bitcoin and many other of the cryptocurrencies.
Ripple is made in a structure that does not require mining; it helps in reducing the usage of computing power and network latency. It is quite different from Stellar [SM2] and Ethereum and has a mission to become one of the most reliable blockchains for bigger banks.
5. Zcash (ZEC)
Zcash is another decentralised and open-source cryptocurrency that was launched in 2016. The best way to understand Zcash is by giving an example of HTTP and HTTPS. Say, for example, if Bitcoin is HTTP, then Zcash will be HTTPS. This is the analogy that Zcash has been using to make people understand its definition. This cryptocurrency offers complete privacy and selective transparency in transactions. Just like HTTPS, Zcash promises to deliver extra privacy and security to those transactions that are recorded and published on the blockchain.
It is the cheapest cryptocurrency and keeps details, including amount, sender and receiver, private. It also provides all its users with the choice of a “shielded” transaction, which allows the content to be encrypted through an advanced cryptographic technique or zero-knowledge proof construction, which is also known as zk-SNARK.
Monero is secure, private and is the cheapest cryptocurrency that cannot be traced. It is another open-source cryptocurrency. Monero was launched in 2014 and it soon gained a lot of popularity in the cryptography community. Enthusiasts were enthralled to learn more about the digital currency. The most interesting part about Monero is that its development was donation-based and community-driven. It was launched, keeping in mind and paying close attention to decentralisation and scalability. This is why Monero is allowed complete privacy and uses a unique technique known as ‘ring signatures’.
This technique allows a group of cryptographic signatures, including at least one participant, to be real. They all seem to be real; hence, there is no reason why the real one has to be isolated. Monero has an exceptional security system but has developed an unsavoury reputation, as it has also been linked to criminal operations. However, one cannot deny the fact that Monero has introduced critical technological advances to the cryptocurrency space.
Dash was also known as Darkcoin. The best way to describe this is that it is a private version of Bitcoin. A decentralised master code network works to make Dash more anonymous as a cryptocurrency and its transactions nearly untraceable. It was launched in January 2014, and has experienced a rising fan following in a short time. Evan Duffield created and developed it using a GPU or CPU.
The rebranding from the name Darkcoin to Dash happened in 2015. Dash stands for ‘digital cash’ and it operates under the label ‘DASH.’ The technological features of this cryptocurrency did not get affected by this rebranding. As of February 2019, it had a market cap of 640.76 million dollars.
The journey of NEO began in 2014. This cryptocurrency was called AntShares and Da Hongfei, its creator, was the brain behind the rebranding. This cryptocurrency is the largest to have emerged from China, and it has even earned the moniker of ‘Chinese Ethereum’ because of the similarity in features. 2017 was the most successful year for this currency, ensured by its return of more than 111,000 per cent.
The key to its success also comes from the use of high-end languages such as C++, Java and Go. NEO, as a cryptocurrency, also benefits from the fact that it maintains good relations with the Chinese government, which is where many cryptocurrencies fail to work.
Charles Hoskinson, the co-founder of Ethereum, launched the cryptocurrency, Cardano, in 2017. Cardano comes with all kinds of benefits for Ethereum and many others. It is also a platform for smart contracts and Dapps, much like the cryptocurrency, Ethereum, before it.
It also helps in solving the problems of scalability and interoperability that plagues many of the cryptocurrencies in the world. The other issues like the time-taking and expensive international payments are also effectively tackled by Cardano. As of February[SM3] , it had a market cap of 1.16 billion dollars.
The newest digital currency that has made it to the list is the EOS. Launched as recently as June 2018, EOS was made by Dan Larimer. Before working on EOS, he founded Bitshares, as well as Steemit. EOS was also made after Ethereum and thus has several similar features. It comes with all kinds of benefits for Ethereum and many others. It is also a platform for smart contracts and Dapps, like Ethereum before it.
The first run of cryptocurrency was the most profitable and longest in history. It raked in a record four billion dollars in its first year, which was quite an achievement. The use of multiple high-end programming languages and the use of facilities that make international transactions easier also come into play to make this token so popular.
Tips before investing in cryptocurrencies
If you are a new cryptocurrency user or investor and kicking off your shoes to take the first step in this huge world, wait. There are a few things that you should first know before you take this huge step. The cryptocurrency market is meant for everyone, but not everyone can ace it. If you are here to ace your game, you have to be well prepared and know the tips and tricks. You might have asked yourself questions like, “Am I too late for Bitcoin now?”, “Is it too late to get started?”, “What are the other alternatives I can explore?” and “What are the best tips to successful trade in the cryptocurrency market?”.
While you have been lost in this big pile of questions, you may have failed to notice the prolonged bear market changes cryptocurrencies have undergone in the last year[SM4] . The market was especially bad for Bitcoin ever since its launch in 2011. Every day you listen to various reports and news channels showing different graphs of the cryptocurrency market.
The market of cryptocurrency has been in a state of confusion recently, and it is natural for newbies to feel lost and confused. Everybody is so busy pointing out the mistakes that no one is providing the solution. How can you ensure you are on the green side of this market all the time? Go through the points mentioned below thoroughly, and make sure you pay close attention to the supply and demand chain of the market to know when to apply which tip.
1. Have a motive behind each trade
Motive is very important wherever you go. Before you get into the cryptocurrency trade, have a clear vision and purpose. Trading in digital currencies is a no-brainer; the only thing you have to realise is that for every win, there is an equivalent loss. The cryptocurrency market is handled by the large whales, and whales are great at remaining calm. Wait for innocent traders to make a mistake, and grab the opportunity.
2. Set up profit targets
Every time you step into a trade requires you to know when to get out, no matter if you are making a profit or not. It is important to establish a clear stop loss level as it will help you in cutting your losses – a skill that is very rare in traders today. Choosing a stop loss is not a random plan. Do not get carried away emotionally and be practical as to what targets you are setting.
3. FOMO should be your friend
For those of you who don’t know what FOMO is, it stands for ‘Fear of Missing Out’. Not every opportunity is a green light, and not all green lights are really ‘green’ lights. Beware of the moments when green lights are screaming at you to jump in; this is exactly where whales come into the picture. They will wait patiently for you to make a mistake, and voilà, the next thing you see is losses flowing from the cryptocurrency investment you made.
4. Putting all your eggs in one basket
Diversification is the key when it comes to investing in the cryptocurrency. As any financial advisor will tell you, investing in different types of stocks and other such investments is the key to earning the most profit. The same thing is applied for the investment in the cryptocurrency market. After you have done the research, seize the opportunities for investing in multiple tokens.
For instance, you get to invest in different sectors that serve different uses. Think about how you always think of travelling in a group in an unknown land, rather than having a go at it alone. The same thing happens with a diversified portfolio. It just gives your investments in the cryptocurrency much more security than usual.
5. For both cold and hot wallets
You can store the cryptocurrency either through the cold wallet offline or the hot wallet. Ease of accessing it makes the hot wallets a way more desirable option for the investor who is just setting foot into this world. The hot wallet is susceptible to hacking, which is one advantage that the cold wallets have over them. However, you need to go for either the hot or cold wallet, because mixing the two is never a good idea.
6. The trap of the mobile wallets
You can trade or store a large sum of the cryptocurrency through mobile phones, but the only trouble, in this case, is that it is not safe at all. The convenience that it offers is understandable but that does not change the fact that it is not secure. Hackers abound in the world of cryptocurrencies, and the mobile storage of the entire sum and every single piece of data can end up doing you more harm than good in your bid to go for convenience.
The art is to take it easy when you are trading in the cryptocurrency market. The best traders are the ones who have maintained their calm and patience when things are not going right.
We hope these tips were helpful to you. A bonus tip is to not get into trading until you are sure that you have a strong mind to get in and out of trades. After you are absolutely sure that you will be able to handle it all in this world of digital currencies, by all means, invest in it, and we can assure you that it will change your world!