Like most aspects of the tech industry, cryptocurrencies have evolved quite a bit since the hype started a few years back. Currently, investment in cryptocurrencies is no longer only for the techies. The rising number of platforms trading cryptocurrencies has made it possible for anyone who has a few dollars to spare to feel confident enough to invest in cryptocurrency.
Despite the ease with which one can access crypto today, the industry’s volatility and robustness call for caution for anyone hoping to make returns from cryptocurrencies. More so, we are not in the Bitcoin dominant era anymore. Many more crypto coins have entered the market, making it even more confusing for newcomers.
Fortunately, infographics such as this one published by Bitcoinfy.net on have made it a bit easier for people to find information regarding their coin of choice.
The following four elements can form the basis upon which to compare different cryptocurrencies.
Mining difficulty refers to the relative ease with which the players involved in a certain cryptocurrency can approve transactions. Different coins will have different levels of difficulty.
According to the infographic mentioned above, Ethereum has its mining difficulty adjusted dynamically allowing the entire system to produce a block in every 12 seconds. It also claims that Litecoin’s block generation time is maintained at 150 seconds.
Bitcoin, on the other hand, has an adjustment mechanism that maintains block generation time at 600 seconds. The same applies to Bitcoin Cash too.
Mining rewards is also an important aspect to consider when looking to invest in cryptocurrencies. This is what miners get for ensuring the network is secure and for confirming transactions in the generated blockchains.
Most transactions need about 6 confirmations before they are considered secure.
Bitcoin, having been in the market for the longest time now, leads the race in terms of mining rewards with $71,151.34 while the second most rewarding digital coin is Bitcoin Cash at $4,269.46. Litecoin follows at third with rewards amounting to $1,065.78.
It is also important to look at the dynamics of these rewards before making the final decision on the coin to mine. For instance, did you know that in every 230,000 blocks, the Bitcoin mining rewards get halved? The next reward drop will halve in 2020.
Transactions Per Hour
Another important aspect to consider is the number of transactions per hour that a given cryptocurrency network can sustain. Although Ethereum doesn’t fetch a very high price in terms of mining rewards, it has the highest number of transactions confirmed per hour at 24,210.
Bitcoin follows second with 12,521 confirmed transactions per hour. Bitcoin cash and Litecoin come third and fourth respectively with 3,828 and 1,138 confirmed transactions per hour.
A network might be able to handle a lot of transactions in a second but have a lower number of transactions confirmed in an hour. These are the intricacies of cryptocurrencies you should not miss out on. Therefore, to get a clear representation of the speed of each cryptocurrency, we look at the transaction settlement time.
This race is not really a close one because the Ethereum network’s average transaction speed is only about 6 minutes while the second-placed Litecoin takes an average of 30 minutes.
Bitcoin Cash has the third fastest transactions settlement time with 60 minutes. Bitcoin is the slowest of the top four digital currencies, with a transaction speed of 78 minutes.
With these four aspects in mind, it now becomes a lot easier to compare your cryptocurrencies of choice against their main competitors. These dynamics keep on changing and you will need to keep checking and updating your knowledge of the best performing cryptocurrencies.
By; Karthik Reddy