Most investors think about coins, tokens, and projects, not the blockchain networks supporting them. And that’s perfectly fine.
Understanding blockchain technology was critical in the early days of cryptocurrencies and crypto investing. Still, investing and prospering is reasonable without thinking about blockchains for a second.
However, blockchains are fascinating, both as the basis of every modern cryptocurrency and for how they are distinct from one another. Here’s a quick tour of the most commonly used blockchains in the cryptocurrency industry, prepared by journalists and writers from https://essayswriter.org/.
A bit of history
In many cases, blockchain and cryptocurrency are so closely related that it makes no sense to discuss them separately. Bitcoin’s blockchain is the foundation of Bitcoin. It is there for that. The answer to the question “what blockchain does Bitcoin use?” is simple and clear.
Similarly, and no pun intended, Ether runs on the Ethereum blockchain. Litecoin, XRP, Eos, Tron, Monero, Solana, Stellar, Neo, and Dogecoin are implemented on their own blockchain networks myetherwallet 私の財布にアクセスする.
But this story is not so simple. Some cryptocurrencies are implemented on already existing blockchains. For example, Maker, Uniswap, Chainlink, Axie Infinity, Aave, Compound, SushiSwap, Status, Kyber Network, Basic Attention Token, and Decentraland are based on the Ethereum blockchain.
The differences between these two groups are usually not important. All cryptocurrencies employ blockchain encryption methods to ensure that information is protected and transactions are validated. Although different blockchains use different consensus mechanisms, they all aggregate blocks using validation processes. However, there is a difference between cryptocurrencies with their own blockchains and those hosted on existing blockchain networks.
When a cryptocurrency is the native currency of its blockchain, we use the definition of its units as coins. Ether, NEO, and Dogecoin are all coins.
When a cryptocurrency is hosted on an existing blockchain, we refer to it as a token. MakerDAO, Chainlink, and BAT are all tokens because they are hosted on Ethereum rather than having their own blockchains.
Identifying the major blockchain networks
Bitcoin accounts for about 40% of the entire value of the cryptocurrency world, so it is reasonable to say that the Bitcoin blockchain is the most popular of them all. It certainly has the most value locked into it.
But, it is also true that the Ethereum blockchain is the most popular. How big is the Ethereum blockchain? It depends on how you measure it. For the first time in 2021, the total number of transactions in Ethereum exceeded the number of transactions in Bitcoin. Because Ethereum is the base network for many cryptocurrencies and most NFTs, it is reasonable to identify Ethereum as the most popular blockchain network worldwide.
Most of the other networks used exist to overcome the limitations of existing blockchains.
For example, the Solana blockchain is intended to function as a foundation for cryptocurrencies and distributed applications. Like Ethereum, Solana’s protocol supports executable code in the form of smart contracts. Solana’s key advantage is its unique Proof-of-Story consensus mechanism that allows the network to process tens of thousands of transactions per second. This is a big deal for a global network. In comparison, Bitcoin supports seven tps, and Ethereum supports 15 tps. This innovative blockchain charges much lower fees than Ethereum as well. So it is no wonder it is growing in popularity so fast.
Dogecoin was created as a joke in 2013, but it has become a serious currency. At least part of the transformation is due to Dogecoin’s blockchain handles transactions ten times faster than Bitcoin’s blockchain.
Chia’s blockchain network uses a consensus mechanism known as “Nakamoto.” According to Chia, this Proof of Space and Time mechanism uses only 0.16% per year of Bitcoin’s energy consumption and 0.36% of Ethereum’s.
Ripple’s XRP Ledger blockchain was created to support the RippleNet, an international network intended to make instant worldwide money transfers of both cryptocurrencies and fiat.
The Monero blockchain was created with an emphasis on privacy. All blockchains encrypt personal and identifiable information, but the Monero protocol includes additional features to hide all transaction information.
Different needs, different blockchains
It only takes a few minutes to see that each blockchain network has a different purpose. Some are created to support a particular initiative or project or even a single application, particularly in the world of decentralized finance. Others are created as replacements for existing blockchains that have technical limitations. Ethereum’s programmability makes it work as an operating system for blockchain-based applications and resources. And Bitcoin’s network has all the necessary functions for its currency to serve as a multi-purpose replacement for government-issued currencies.