Bitcoin, Ethereum, Litecoin and Altcoins – What Are They? How can you buy and sell them?
Posted On July 15, 2018
I’ve made it no secret – I think the banking and financial systems of every country on the planet are corrupt and need to be replaced. The problem, of course, is that whatever you replace them with has the potential to also be corrupt as long as you are relying on trust. This is why I love Bitcoin and cryptocurrency. Trust is not an issue – or at least it shouldn’t be.
From the moment that Satoshi Nakamoto released his bitcoin white paper on the internet, Bitcoin has existed without the need for trust. Satoshi, the almost (or perhaps completely) mythical creator and father of bitcoin – concieved of Bitcoiin in the wake of the 2008 financial crisis when financial institutions had once again clearly shown that the entire financial system was completely untrustworthy.
Bitcoin was born during the last economic crisis when someone (or a group of someones) saw the need for a break from trusting government and financial institutions to take care of the needs of people. Blockchain (the technology bitcoin is built on) works like this – a group of unrelated individuals (miners) use complex math to encode (crypto) multiple transactions into a permanent ledger which cannot be changed or altered and is not owned or operated by any individual entities. Blockchain is built to eliminate the need for trust. For example in regular finance: I write a check to you. You take the check to the bank. The bank takes my money and puts it in your account. We have to trust each other and we have to trust the bank – the middle man, the intermediary. Blockchain takes the bank out of the picture and makes our transaction a permanent part of the record. There is no need for trust – it is trustless. It eliminates the need for banks as well. Bitcoin is the currency built on top of that chain of transaction blocks (get it? Blocks of transactions in a chain where each transaction is necessary to validate every other transaction – a blockchain).
Ethereum (ETH) is a newer blockchain based computing platform developed by Vitalik Buterin which allowed for scripting on the network (i.e. computing and building applications aka smart contracts).
Litecoin (LTC) is a cryptocurrency started by Charlie Lee. It was a sort of clone of bitcoin with some improvements to make it faster and cheaper to conduct transactions. Lee said it was silver to bitcoin’s gold.
At this point, you now know as much or more about bitcoin and cryptocurrency than 90% of the population. It’s very early in the game. As of writing this, there are nearly 2000 additonal cryptocurrencies. Many (most actually)of them are built on the Ethereum protocol and are called ERC-20 compliant – which means if you have an ethereum wallet – you can use those tokens with it. Some well known examples are Golem, 0x, Basic Attention Token, and Ziliqa. Each of them has their own use cases and eventually will have their own blockchains.
And that is the key, each of these projects eventually has a blockchain of their own. Some well known examples of other coins with their own blockchains are Ripple, Digibyte, EOS, Stellar, Cardano, Bitcoin Cash, Tron, and Neo. To be clear, both Litecoin and Ethereum area also coins. Coins have their own blockchain, tokens use the blockchain of another project. So there are coins on the Stellar, Neo, and Tron networks – as well as on Ethereum.
Bitcoin is the one and only first blockchain project. It has a founder but no hierarchy, no controlling body, and no central authority. The Bitcoin Foundation manages governance – but, as the case with Bitcoin Cash (and Litecoin among others) when there is a schism between the nodes – it is possible to ‘fork’ and thus create a new coin with new rules. Bitcoin Cash was born of such a disagreement among miners. The Bitcoin Cash people claim that they are more closely aligned with the original vision of the Bitcoin white paper. The Bitcoin (aka Bitcoin Core) miners say that Bitcoin Cash is a centralized monster that distorts the vision of Satoshi Nakamoto.
Within all the coins above, there are privacy coins, function coins, and exchange coins. Privacy coins like Monero and Dash are built to hide the identity of the user – something which bitcoin is known for but actually doesn’t do. Function coins allow you to use the coin for a specific funtion – a good example is Docademic (an ERC-20 token) which allows you to purchase online medical advising for tokens. Exchange coins such as Binance Coin (also ERC-20 token) allows you to purchase token and pay fees with your tokens.
Coinbase, the largest exchange has not issued their own coin – yet – maybe they never will. Binance is the main exchange for most alt-coins. A third place you can buy and sell crypto is the phone based stock trading app RobinHood. The difference between the three is that coinbase is the most highly regulated and probably the most hackproof – you can buy only Bitcoin, Litecoin, Ethereum and Bitcoin Cash on Coinbase at the moment, though Ethereum Classic (a fork of Ethereum) will be coming soon and Coinbase has announced that they are exploring adding Cardano, Stellar, 0x, Zcash, and Basic Attention Token sometime in the coming months. You can buy for fiat currency, sell for fiat currency and send/recieve to and from other wallets at Coinbase.
Binance does not have fiat currency enabled and has many many more coins and tokens. The catch is, you have to fund your Binance account with cryptocurrency from elsewhere and if you want to change for currency, you need to go to Coinbase or another fiat enabled exchange. Robinhood allows you to buy and sell a basket of cryptos but you cannot transfer to or from and you do not control the private keys of your wallets – thus – it eliminates what many consider to be the most important feature of cryptocurrency – trustlessness.