This article will give you a thorough introduction to the most accessible cryptocurrency coins for South Africans.
You’ll learn the essential info for each coin, where each of them can be bought, as well as the pros and cons of being invested in each coin:
Throughout the article, we’ll compare each coin with Bitcoin as it was the blockchain that introduced cryptocurrency to the world and is still the most widely used. This comparison will help you understand how the technology has transcended its original limitations since the launch of Bitcoin and help you make your decision on which cryptocurrency is the best fit for you.
Bitcoin was introduced to the world in 2009 by someone under the alias “Satoshi Nakamoto”, although his actual identity has never been revealed.
Since then, Bitcoin has grown in popularity as evident by its growing market capitalisation – it comfortably has the largest capitalisation of all the cryptocurrencies. It was the first successful implementation of blockchain and cryptocurrency technology and continues to lead the way in the adoption of cryptocurrencies.
Bitcoin has a fixed supply of 21 million coins. There are no signs that indicate the development team behind Bitcoin will increase the supply.
Where Bitcoin can be bought
Advantages of Bitcoin
Bitcoin is the most well-established of all the cryptocurrencies and has been around the longest. This adds to the coin’s credibility.
Since Bitcoin is the most well-established cryptocurrency, it can be purchased on all of the available exchanges. This gives you a lot of possibilities where you can purchase it.
Access to other cryptocurrencies
Bitcoin can be exchanged or traded for all of the cryptocurrencies out there. This opens up the opportunity to invest in every blockchain project and cryptocurrency that makes its way to the cryptocurrency world.
Disadvantages of bitcoin
Slow transaction speed
Bitcoin is the slowest in transaction speed of all the cryptocurrencies: not all technology that is the first of its kind has all the bugs figured out yet. On average Bitcoin can only process 7 transactions per second, which means that it can take 10 minutes for a trade to be made. There are improvements being made to increase its transaction capabilities.
Bitcoin has the largest market capitalisation and the highest trading volume when compared to other cryptocurrencies. With this high trading volume comes high volatility in price as “market makers” influence the price of Bitcoin and traders then react to the price movements. Some traders like this high volatility as they aim to trade on the swings in value, but if you are considering investing for the long term, this short-term volatility shouldn’t be a concern.
Bitcoins are mined using computers, which now use significant amounts of electricity. In fact, mining bitcoin uses about the same amount of power each year as the country of Switzerland!
As the difficulty to mine Bitcoin increases, the computational requirements to mine Bitcoin will follow the same trend. These machines will just get bigger and stress the supply of the world’s energy providers and the continued use of ‘proof of work‘ means that this is unlikely to change in the future.
Bitcoin was designed for one purpose – a payment provider. Although Bitcoin is staying true to its purpose, it would be great if the technology it introduced to the world could be applied to other use cases. This could either be through another cryptocurrency project or through Bitcoin itself.
Litecoin was introduced to the world in 2011 by Charlie Lee, an MIT-educated computer scientist. Litecoin is technically similar to Bitcoin but with a few improvements which allow it to process transactions faster, avoiding the common criticism of Bitcoin around speed. As a piece of engineering, it does offer a solution to Bitcoins major issues – slow transaction speed and the small total supply and it is a credible alternative.
Litecoin has a total supply of 84 million coins. Charlie Lee suggested that the large supply will slow down the price increase and will make Litecoin accessible for longer than Bitcoin. This is achieved by there being a larger supply of coins to meet the demand of the cryptocurrency.
Where Litecoin can be bought
Litecoin is also available on all of the exchanges available to South Africans and can be purchased on Luno, Ice3, VALR, and Binance.
Advantages of Litecoin
Faster transaction speeds
Litecoin’s transaction speed is 4x faster than Bitcoin. This makes it easier to trade and spend with less waiting time, which also makes it a better option for adoption as a global payment system than Bitcoin.
More strategic partnerships
Litecoin has made a point of forming strategic partnerships with companies that can enhance its technical capabilities as well as give it more publicity with the aim of increasing the adoption of the cryptocurrency. This may increase its value over the medium to long term.
More price stability
Litecoin’s larger supply than Bitcoin allows the price to stabilise more since there is a greater supply to meet the same demand. In effect, a large investor buying 1 million Litecoin won’t have the same effect on its price as buying 1 million Bitcoin would have on Bitcoin’s price.
Disadvantages of Litecoin
Shadow of Bitcoin
Litecoin is constantly in the shadow of Bitcoin. The two are technically similar and there are major improvements evident in Litecoin that Bitcoin is yet to adopt. However, there appears to be a general feeling in the market that ‘if Litecoin and Bitcoin are technically similar then why not just invest in Bitcoin?’
Popular on dark web
A 2018 study found that Litecoin is the second-most used on the Dark Web, with 30% of underground vendors accepting Litecoin. This may harm the reputation of Litecoin as people link it to funding malicious activity.
Ethereum was launched in July 2015 by Vitalik Buterin and is the second largest cryptocurrency by market cap. We briefly discussed that one of the disadvantages that Bitcoin has is that its underlying technology could not be used for purposes outside of finance. This is where Ethereum comes in.
Ethereum allows developers to utilise Bitcoin’s underlying technology to build ‘decentralised applications’, dApps for short. Ethereum charges a fee to use the infrastructure, which is considered the “gas” of the applications and is paid for in Ethereum’s currency.
Ethereum does not have a fixed supply of coins. This is because Ethereum makes use of their cryptocurrency to power decentralised applications on their blockchain. If the total supply was capped this would lead to a cap on the number of apps that could be developed on the Ethereum blockchain, resulting in high operating costs. At the time of writing, Ethereum just crossed the 100 million coin mark.
Where Ethereum can be bought
Similar to Bitcoin and Litecoin, Ethereum can be purchased on any of the exchanges available to South Africans.
Advantages of Ethereum
Ease of access to blockchain technology
Ethereum allows developers to build decentralised applications on top of its blockchain. This enables the developer community to explore new ways to use blockchain technology. This could result in us having applications that we once thought were impossible to exist and that could benefit people on a global scale.
Less impact on the environment
Ethereum’s mining difficulty allows people to still mine with the Graphical Processing Units (GPU’s) found in a normal computer. Although still harmful to the environment, it is less harmful than Bitcoin mining, which requires a specialist computer. Also, at the time of writing Ethereum was switching to a new type of mining (known as ‘proof of stake‘) that will decrease its impact on the environment significantly.
A Robust Developer Community
Ethereum has a great team of developers behind it. They are constantly looking for ways to improve the user experience when interacting with the Ethereum blockchain.
Disadvantages of Ethereum
Expensive to run some applications
The increase in Ethereum price results in it costing more to run applications on the Ethereum blockchain. On average, every 1,080,000 transactions on your app would cost you $32,400 on the Ethereum blockchain.
Although twice as fast as Bitcoin at 15 transactions per second, Ethereum still has slow transaction speeds. Bitcoin only has to run one application on its blockchain whereas Ethereum has hundreds of applications running on its blockchain. Ethereum developers are busy exploring potential advancements to help Ethereum scale up.
The Programming Language
If developers want to create applications on the Ethereum blockchain then they have to learn a new programming language. The programming language, Solidity, is used to write these decentralised applications. Ethereum does not yet support any other programming languages for application development. This does limit its adoption as some developers may not want to learn Solidity.
Bitcoin Cash (BCH)
Bitcoin Cash is a solution that was introduced to the world in 2017 by developers and cryptocurrency miners to overcome the limitations of Bitcoin. It is a copy of the Bitcoin blockchain with a few changes made to Bitcoin’s underlying technology. One of the major changes is the increase in block size. Blocks on Bitcoin Cash’s blockchain can store 8 times more transactions which accelerates the verification process of transactions.
Similar to Bitcoin, Bitcoin Cash has a total supply of coins capped at 21 million coins.
Where Bitcoin Cash can be bought
Bitcoin Cash is available on all of the exchanges available to South Africans and can be purchased on Luno, Ice3, VALR, and Binance.
Larger block size
Bitcoin Cash has larger blocks than Bitcoin, which means that it can process and verify transactions a lot quicker than Bitcoin.
The increase in block size (blocks of transactions) allows Bitcoin Cash to scale a lot better than Bitcoin. This is because more transactions can take place on it in a shorter amount of time.
The increase in block size has lowered transaction fees on Bitcoin Cash when compared to Bitcoin. This is because users don’t need to pay as high transaction fees for their transaction to be put in the next block of transactions.
Disadvantages of Bitcoin Cash
Fewer trading opportunities
Unlike Bitcoin, Bitcoin Cash cannot be exchanged for as many cryptocurrencies as Bitcoin can. This limits your trading opportunities when using Bitcoin Cash as a base currency.
Low rates of adoption
Most people see Bitcoin Cash as a “copy” of Bitcoin. For this reason most people would rather invest in Bitcoin since it has been around longer.
Launched in 2012 by Chris Larsen, Ripple is a technology that acts as both a cryptocurrency and a digital payment network for financial transactions. Ripple utilises blockchain technology to facilitate cross border payments. They provide this functionality to both large financial institutions and cryptocurrency users and facilitate both fiat and cryptocurrency payments, essentially using blockchain technology to act as a middleman.
At the time of writing, Ripple’s circulating supply is just over 41 billion coins. Ripple keeps the rest in escrow and releases 1 billion coins every month. However, any Ripple that is not being used is sent back to escrow. Ripple’s max supply is 100 billion coins.
Where Ripple can be bought
Ripple can be bought on all of the exchanges available to South Africans such as Luno, Ice3, VALR, and Binance.
Advantages of Ripple
Fast transaction times
Ripple can confirm a transaction in under 4 seconds and can process 10,000 transactions per second. This is great for anyone that wants to send a global payment to a family member living abroad. It could also be considered a better mainstream cryptocurrency solution than Bitcoin, Bitcoin Cash, and Litecoin.
Ripple targets large institutions
Ripple is in some way helping with the mass adoption of cryptocurrency. It provides its payment service to some large financial institutions. This will positively affect the price of its cryptocurrency as the project gains traction. This could lead to a potential competitive long term return on investment.
Disadvantages of Ripple
The main attribute of blockchain and cryptocurrencies is the decentralised nature of the technology. Ripple is one of the most centralised cryptocurrencies. The Ripple team own and hold about 60% of the Ripple coin supply as opposed to the coins being spread across the community. This control over the supply could have a negative effect on the price as the Ripple team can just add more tokens to the supply. This will in turn dilute the value of your cryptocurrency holding.
No incentives for common nodes
All of the Ripple coins are pre-mined. This leaves little to no incentive for peers to mine on the network. This will result in less people wanting to mine Ripple, which will result in the system not being as distributed as it can be.
Binance Coin (BNB)
Launched in July 2017 by Changpeng Zhai, Binance Coin was originally built as a decentralised application on Ethereum but has now migrated to Binance’s own blockchain. Binance Coin is a utility token native to the Binance exchange and is expected to fuel the operations on the Binance exchange and ecosystem. This mainly includes paying for the various trading fees.
Binance has a strict limit on its supply of 200 million coins.
Where Binance coin can be bought
Binance Coin is only available for exchange on Binance and Ice3. Unfortunately, there are no options available for Rand to be exchanged for Binance Coin. If you’d like to invest in Binance Coin you’ll have to purchase Bitcoin first and exchange the Bitcoin for Binance Coin.
Advantages of Binance Coin
Binance exchange’s reputation
The Binance exchange won the award as the most popular cryptocurrency exchange with regards to the trading volume that took place on the platform. It continues to maintain its good reputation in the cryptocurrency world. Binance Coin’s value is linked mainly to the reputation of the Binance exchange. The reputation of the exchange adds to the value and credibility of Binance Coin.
High speed of transactions
Cryptocurrency transaction speeds is one of the major obstacles stopping cryptocurrency from becoming a mainstream payment solution. Binance Coin can process 1.4 million transactions per second. This makes it a very fast alternative to all of the older and more established cryptocurrencies that came before it.
Low transaction fee
Binance Coin transaction fees are as low as 0.1% of the amount being transacted. This, together with its fast transaction speeds, makes Binance Coin a good value for money.
Disadvantages of Binance Coin
Limited to the Binance exchange
Binance Coin is restricted from taking off as its own entity as it’s linked to the Binance exchange.
Impact of Chinese regulatory policies
The Binance Coin is based out of Shanghai, China. Chinese regulators are very tough on cryptocurrencies. This being the case, there is the constant threat that cryptocurrency will become more restricted in China. Any changes in regulation could negatively impact Binance Coin. These difficulties could include the available options to buy the cryptocurrency or even the ability to spend it across borders.