Ethereum still has an uncapped total supply of ETH, its cryptocurrency. However, it does have a fixed yearly supply of 18 million ETH – something which Ethereum Classic does not.
Ethereum Classic has changed from an uncapped total supply to a total supply of somewhere between 210 million ETC and 230 million ETC. This change in and of itself is a massive difference between the two networks and will have varying impacts on the future of the projects.
The DAO Hard Fork
Following the DAO hack in 2016, Ethereum split into two blockchains – Ethereum and Ethereum Classic. Ethereum was the result of the hard fork, which reversed the $50 million (at the time) USD theft. The hard fork made the hack transaction invalid, so investors in DAO could make up their losses.
Supporters of Ethereum Classic opted not to move to the new Ethereum blockchain following the DAO attack. However, they were in the minority (only about 10% of users remained on the Ethereum Classic blockchain), and therefore they never regained the $50 million USD lost in the theft.
ICOs and Investor Confidence
Ethereum is the leading blockchain for ICOs, holding over 80% of the market share. The ICO tokens are generally based on the ERC-20 token model. Ethereum is also constantly expanding its functionalities, and has better developer support than Ethereum Classic. Overall, Ethereum seems to enjoy vastly more investor confidence, and it remains the second-largest blockchain (at the time of writing).
While Ethereum Classic still works with smart contracts and dApps, it is a far less popular choice for ICOs than Ethereum. Ethereum has greater support from investors, and all round functionality is better on the new blockchain.
Consensus Algorithm
Ethereum is in the process of moving to a Proof of Stake (PoS) consensus algorithm. This will make the blockchain faster, safer, and more democratic.
Ethereum Classic functions using a Proof of Work consensus algorithm, and has no plans to switch to PoS.
Market Cap
At the time of writing, Ethereum has a market cap of $19 billion USD.
At the time of writing, Ethereum Classic has a market cap of $531 million USD.
Ethereum is a public, open-source software platform built to support smart contract functionality. The network uses Ether (ETH) as its currency to process transactions and provide computational power to developers. The network also allows developers to build decentralised smart contract applications on top of it. For example, both Tether and Augur run on the Ethereum network.
The concept of a smart contract is critical to the understanding of Ethereum (ETH) vs Ethereum Classic (ETC). In simple terms, a smart contract is an agreement between two parties written in code. It sets out conditions that have to be met by each party for the contract to be executed. Once conditions are met, the contract is processed by the blockchain and executed without a need for third-party verification. Coupled with the immutability of the blockchain and its open-source design, smart contracts present an opportunity for many businesses. In fact, in 2019, Forbes identified more than 100 large American companies actively exploring blockchain technology, with many of them using the Ethereum network.
Ethereum Classic (ETC) is the original Ethereum blockchain. ETH and ETC share the same blockchain record before the July 2016 hard fork. Because of that, the initial design and functionality of these two networks were essentially the same. The hard fork in 2016 split the blockchain into Ethereum Classic and Ethereum, dividing the community at the time. Most developers chose to upgrade to the new Ethereum protocol, limiting the size of the ETC community and its ability to improve the network.
Uniswap is a popular decentralized exchange for cryptocurrency. It is one of the cornerstone projects of the Ethereum and decentralized finance (DeFi) ecosystem.
In this post we’ll break down what Uniswap is, how it works and why it matters. We make some generalizations for simplicity and assume no prior knowledge of Uniswap.
To fully appreciate Uniswap and decentralized exchange, it helps to first understand how traditional trading works using services such as Vanguard or Coinbase.
When you buy a share of Apple (AAPL) on Vanguard or units of Bitcoin (BTC) on Coinbase, you are “hiring” Vanguard and Coinbase as a middle man. They take your money and buy the given asset off an exchange order book: a list of buyers and sellers. The price you get for AAPL or BTC is the price another party has pre-agreed to sell or buy at.
Traditional trading generally has these characteristics:
There is a trusted middle man to execute your trades (Vanguard, Coinbase)
There is an order book filled with buyers (bids) and sellers (asks) that determine the value of your trade
You don’t directly hold your own assets – the middle men hold them on your behalf
You are required to provide personal information and be known to trade
An order book for Bitcoin (BTC) on Coinbase Pro (traditional trading model)
There are many advantages to this traditional trading model. For example – it is very well-established and powers very large, efficient markets. If you’ve bought a stock at a brokerage, or cryptocurrency on any major exchange (Coinbase, Binance, Kraken, etc.) this is the model you were interacting with.
What is Uniswap?
Uniswap is an exchange system for cryptocurrency that operates on the Ethereum blockchain. Uniswap is an open source protocol, meaning anyone can interact with it and understand how it works.
Uniswap focuses exclusively on trading Ether (ETH) and Ethereum-based assets. At the time of writing, the size of this market was over $100 billion.
So how does Uniswap compare to the traditional trading model?
Here are 4 interesting examples of how Uniswap differs:
There is no trusted middle man to make trades. You trade directly from your own Ethereum self-custody wallet (e.g. MetaMask) using the Ethereum blockchain. This is what makes Uniswap a decentralized exchange (DEX)
There is no order book! The price for buying or selling is determined through automated market making, which is handled by smart contracts on the Ethereum blockchain (more on this later)
You directly hold your Ethereum-based assets in your own wallet. There is no custody middle man
Your personal identity is not known (or required) to use Uniswap or Ethereum directly
Making a trade on the Uniswap exchange app
Automated market making
If Uniswap isn’t using an order book, how exactly does it figure out what the price is for buying and selling in any given moment?
Instead of an order book, Uniswap developed a clever mechanism called automated market making (AMM). AMM allows Uniswap exchanges to always provide a price, even for very small markets, without requiring buyers and sellers to pre-list their orders at fixed prices.
For this automated market making design to work, Uniswap replaced order books with a new, novel concept: liquidity pools.
Liquidity pools
Instead of relying on buyers and sellers who pre-agree on prices to form an order book, Uniswap incentivizes investors (aka “LPs” or “Liquidity Providers”) to pool their Ethereum-based assets into Uniswap smart contracts in exchange for a share of the transaction fees.
These invested Ethereum-based assets are allocated to trades automatically by smart contracts based on the rules of the Uniswap protocol. As more trades are made, the investors (LPs) accrue more transaction fees.
Every trading pair on Uniswap has a liquidity pool. Anyone in the world can create Uniswap trading pairs or provide liquidity to them without permission.
One of the most popular trading pairs on Uniswap at the time of writing is USDC-ETH. This pair let’s you exchange USDC for ETH or vice versa.
To become an investor in the USDC-ETH liquidity pool you must contribute an equal ratio (50%/50%) of both assets into the pool. To invest $1,000 you would need to contribute $500 in USDC and $500 in ETH.
The top 10 exchanges, sorted by pool size, at the time of writing
Liquidity tokens (LP tokens)
Investors are willing to pool their assets in Uniswap because there is a financial incentive: they get a share of transaction fees (currently: 0.30% of every trade).
When investors pool their assets into Uniswap, they get liquidity tokens (“LP tokens”) back in return. These LP tokens are conceptually similar to owning stock or equity – they represent a direct claim on a portion of the total liquidity pool and accumulated transaction fees.
If you become an investor in the USDC-ETH trading pair, you will contribute USDC and ETH in equal amounts and get a Uniswap USDC-ETH LP token in return.
When investors want to cash out of a given pool, they simply trade in their Uniswap LP token and are given assets from the pool according to their percentage ownership. Because of the accumulation of fees, the amount of assets you receive should be greater than what you put in.
We won’t go deeply into Uniswap LP returns analysis here, but if you are interested in learning more, we suggest understanding more about impermanent loss (divergence loss). Impermanent loss is a key factor to consider when investing in Uniswap liquidity pools.
Using this liquidity pool system, Uniswap has attracted billions (in USD terms) of capital from investors. At the time of writing, there is over $1.5B invested, which is powering thousands of decentralized trading pairs!
Uniswap vs Coinbase Example
To further highlight the differences (and similarities) between traditional trading and decentralized trading using Uniswap, we can compare the same trade on both platforms.
Buying $100 of USDC with Ether (ETH) on Coinbase
Pre-trade Approval: Sign up and go through identity verification process
Price discovery: Order book (bids and asks) – you are matched with an existing price on the USDC-ETH order book
Speed: Near-instant
Custody: Custodial. You trust Coinbase to keep assets safe while holding them on platform (unless you transfer to a self-custody wallet)
Buying $100 of USDC with Ether (ETH) on Uniswap
Approval to trade: None. You need only an Ethereum wallet
Speed: Depends on transaction fees you specify to Ethereum, but likely 15 – 45 seconds
Custody: Self-custody. You trust yourself to keep assets safe in your own wallet
Why use Uniswap?
We’ve covered how Uniswap is different than traditional trading and exchanges, but why is it useful?
Where are the areas where someone might prefer Uniswap over a custodial alternative like Coinbase?
1. It’s non-custodial
While the quality and security of cryptocurrency exchanges has improved dramatically in the past decade, there still are an alarming number of exchange hacks that result in loss of customer funds.
Because custodial exchanges hold huge sums of assets on behalf of users, they are constantly under attack. When these attacks succeed, customers holding their assets at the exchange are often left powerless.
Uniswap, as a decentralized exchange, does not require you to give up control of your assets to trade. You can trade on Uniswap via Ethereum from the comfort of your own wallet.
Self-custodying cryptocurrency is not a riskless activity and requires its own set of best practices, but it does eliminate exchange hack risk.
2. It’s completely permissionless
Trading on traditional exchanges requires permission in at least two forms:
You have to be approved to trade or transfer by providing your identity and sensitive personal information
The assets that are available are selected at the discretion of the exchange
On Uniswap, you don’t need to be approved to trade, transfer or invest in liquidity pools. Anyone in the world with an internet connection and an Ethereum wallet can participate. Users who value privacy or those living in countries with restrictive capital controls may appreciate this aspect of Uniswap and decentralized exchange.
Uniswap is also not limited in what trading pairs it can offer or support. Any person can create a trading pair between two Ethereum-based assets and seed the initial liquidity pool. This results in a huge combination of trading pairs for a myriad of assets.
3. It has unique trading pair support
Thanks to the permissionless nature, there’s assets and trading pairs on Uniswap you simply can’t get on custodial alternatives.
Because it so easy to spin up a trading pair on Uniswap, it’s often the very first place new Ethereum-based assets are listed and available. Even when trading pairs are later added on custodial exchanges (Coinbase Pro, Binance et al) – Uniswap often has very competitive liquidity and fees.
Final thoughts
Uniswap is one of the breakaway success stories of Ethereum and DeFi. It has become one of the most important parts of the DeFi ecosystem and has proven that decentralized applications can compete (and sometimes win) versus centralized alternatives.
It will be exciting to watch what innovations the Uniswap team comes up with next and seeing the project grow as crypto becomes increasingly mainstream.
Monero (XMR) is a cryptocurrency which focuses on being untraceable and private. Its design differs from Bitcoin’s in a few key ways, but it should be understood as a cryptocurrency similar to Bitcoin – it can be used to buy and sell things, and can be exchanged for other coins or tokens.
So Monero XMR is a cryptocurrency focused on privacy and anonymity. Bitcoin is actually pseudonymous and BTC transactions are still traceable, but XMR transactions can be fully anonymized like physical cash. It is a fork of Bytecoin, the original privacy coin.
Of course, each physical dollar has a serial number on it that’s traced by FDIC-insured banks and governments. But it’s not necessary to see someone’s bank account balance to accept their dollar bill. In the same way, retailers only need to verify you have enough to cover your transaction when you use a debit or credit card.
Monero uses ring signature cryptography to reduce the amount of information used in cryptocurrency transactions. This gives the sender and receiver of XMR transactions the ability to verify the transaction in privacy.
Strong encryption, a streamlined blockchain, and infinite supply make Monero a strong privacy coin with a solid future ahead of it. Before diving into the nuts and bolts of the project, let’s look at the crypto market performance of the Monero XMR crypto coin.
XMR’s Crypto Market Performance
The peak price of XMR so far was $494.16, which occurred on January 6, 2018. As mentioned above, there’s no total supply cap, but over 16,500,000 XMR are in circulation.
Like BTC, XMR is a Proof of Work cryptocurrency. Unlike BTC, however, it uses a variation of the CryptoNote cryptocurrency mining algorithm, which making it more CPU-friendly. In fact, Monero continues updating its blockchain protocol to be ASIC resistant, much to the chagrin of ASIC rig manufacturers like Bitmain. It hard forked in both 2017 and 2018 in its war on ASICs.
Monero opposes ASIC mining because of its centralization of cryptocurrencies like Bitcoin and Ethereum, which are now moving toward Proof-of-Stake. It spent much of 2017 and 2018 continuously upgrading both ASIC resistance and privacy on the network. These are great signs of development support in a blockchain market filled with vaporware.
This caused a lot of Monero forks, including Monero Original (XMO), Monero 0 (ZMR), Monero Classic (XMC), and MoneroV (XMV).
Monero is traded on a variety of cryptocurrency markets, including Bithumb, Binance, HitBTC, Poloniex, Bitfinex, and CoinEx. It has a ton trading pairs, including BTC, BCH, USDT, LTC, ETH, EOS, DASH, and even fiat currencies like USD and EUR. Over $25 million worth of XMR is traded on a daily basis.
The Monero community built wallets for pretty much every OS, and a hardware XMR wallet is on the way. In addition, third-party wallets like Cake Wallet, Monerujo, My Monero, and Ledger’s hardware wallets support XMR.
Behind the Veil of Anonymous
Anonymity online is a hot-button issue that’s important for everyone. Every time you log in to your Samsung device using Google’s OS to connect to AT&T’s network and browse Amazon’s app, a lot of hands are touching, monitoring, and even selling your data and habits. Tech-savvy people use VPNs, proxies, and TOR networks to avoid being traced.
However, financial transactions and other personal information were used to track people centuries before we walked around with the internet in our pockets.
Using XMR for dark-web transactions, you have the best chance at anonymous online transactions…at least that’s what they say.
Monero aggressively defends its platform’s privacy, pointing out a CryptoNote bug that affects privacy coins like Bytecoin. But privacy and anonymity online are never guaranteed, even with Monero’s dedication.
Monero still uses a similar two-key authentication method for transactions on other blockchains. It just adds an extra step. Your public key is used by the sender to generate a random one-time key, and the receiver uses a private key to receive. Brute-forcing such a system would be difficult, even with quantum computing, but no matter how much you encrypt an individual transaction, metadata holds answers.
This is where ring signatures come in to make things even more difficult. Essentially every output also has multiple false outputs to trick the system. Picture the most complicated bank vault you ever saw in a major Hollywood movie, multiply by ten, and this is what Monero promises.
Tor traffic has long been monitored by government watchdogs like the NSA using the Navy’s powerful networking tools. And even reducing transactions to minimal data hasn’t stopped researchers from reportedly using big-data analytics to trace over 80 percent of XMR transactions on the Monero blockchain.
While the actual transaction itself is being veiled, all the contextual information around it can help pinpoint transactions. In addition, if your private key is compromised, someone could trace all your individual transactions, so it’s vital you keep your private Monero key secure.
Still, the anonymous core development team led by Riccardo “fluffypony” Spagni and David Latapie built a lean, secure, and efficient blockchain-based cryptocurrency. He’s also quick to point out shortcomings in other crypto projects like BAT.
Disparaging the security of a system like Monero isn’t exactly fair, as it’s still more secure than most blockchains and at least as secure as systems used by Bank of America, Visa, Wall Street, and other financial institutions. It’s using government-grade encryption, and that’s good enough for now.
Privacy coins are in the crosshairs of regulators, and even though transactions can be secure on their blockchains, most market trades are required to be logged.
Monero Summary
Monero XMR is a privacy coin that forked from Bytecoin to become one of the highest ranked cryptocurrencies by market cap. It’s widely used in darknet marketplaces instead of Bitcoin because it promises anonymity instead of pseudonymity. Monero’s success depends on these key factors:
Monero XMR uses ring signatures to mask randomly-generated authentication keys and keep transactions both secure and slimmed down to only pertinent information.
Mining XMR can still be done on home PCs. In fact, the Monero community aggressively upgrades its network to remain ASIC resistant.
Monero has a lot of trading pairs, making it easy to get into and out of. This accessibility will help it maintain high trading volumes for years to come.
So long as Monero and privacy coins like it don’t come under regulatory fire, XMR is a solid cryptocurrency that’s seen a lot of use since its inception. An active development team and community make this privacy coin one to watch for years to come.
Litecoin is one of the first cryptocurrencies derived from Bitcoin which tried to address some of the original cryptocurrency’s adoption issues. Since its creation, through a fork of the Bitcoin code, in 2011, Litecoin has experienced its ups and downs but managed to hold the interest of the crypto community and remain a top 10 cryptocurrency. Even so, it faces stiff competition from other protocols such as Bitcoin Cash and Bitcoin SV in its positioning as a viable protocol for mass on-chain transactions.
Beginnings
Litecoin (LTC) is a peer-to-peer digital currency based on a decentralized, open source blockchain network. It was created in 2011 by the MIT graduate and former Google employee Charlie Lee.
Lee designed Litecoin based on the Bitcoin code and protocol, with some modifications that he believed addressed certain barriers to its wider adoption. Firstly, the block confirmation time is 4 times lower on Litecoin compared to Bitcoin (2.5 min vs. 10 min) which allows Litecoin to confirm transactions much faster. Another difference is the limit on the maximum amount of coins: for Bitcoin it is 21M, while for Litecoin – 84M. Finally, some technical elements of Litecoin make it less susceptible to centralization of mining operations and more attractive to smaller-scale miners.
Litecoin was one of the first altcoins to spring from the Bitcoin protocol. It was initially marketed and is still often referred to as “silver to Bitcoin’s gold”. Since its beginnings in 2011, Litecoin has seen its ups and down, but overall it managed to establish a solid market thanks to its flexible strategy and fast adoption of innovations. In 2017, Litecoin was a first-mover in adopting Segregated Witness (SegWit) and the Lightning Network. Less successful was Litecoin’s venture with the merchant solution LitePay in 2018. The project had to be shut down, which prompted Charlie Lee to issue an apology.
The development of the Litecoin project is overseen by a non-profit Singapore-based Litecoin Foundation, with Charlie Lee as a managing director. Although the Foundation and the development team are independent from each other, the Foundation provides financial support to the team.
Uses
Litecoin functionality is overall quite similar to Bitcoin, i.e. it is meant to be a digital currency which is free from any centralized influence. The LTC philosophy is formulated by the Litecoin Foundation on their website, “We Believe That When It Comes To Your Money, You Deserve 100%”. The statement generally refers to the promises common to most cryptocurrencies: constant availability and absolute control of the funds by the owners, and the accessibility to everyone.
LTC can be purchased on any major crypto exchange, and stored in digital wallets, specialized hardware, or crypto custody providers. Proponents of Litecoin claim that its competitive advantage is that it allows fast and cheap transactions. Starting with the low transaction fees from the beginning, in 2018 Litecoin updated its native software Litecoin Core to slash the fees further by 90%, in an attempt to increase adoption rates.
Speed and low fees should make it attractive for individuals to use Litecoin for peer-to-peer transfers and digital purchases, and for businesses – as a payment system. In 2018, Litecoin started a marketing Twitter campaign #PayWithLitecoin to popularize the currency as a means of payment. However, the list of businesses accepting it remains limited.
As most crypto assets, LTC experienced some serious price volatility since it started trading. The price has reached its peak above $300 in the end of 2017. During 2020, LTC was mostly trailing just below the $50 mark. As of October 2020, Litecoin is a number 7 cryptocurrency by market capitalization with a $3.6B market cap (for comparison, Bitcoin’s market cap is $256B).
Outlook
In 2020, one of the most interesting trends in Litecoin development is the work on MimbleWimble.. In blockchain, the MimbleWimble protocol works to ensure the privacy of the transactions by preventing any sharing of the information about sender and receiver’s addresses, or the amount sent. Even as some doubts remain about MimbleWimble’s robustness, its implementation with Litecoin could prove significant for the cryptocurrency’s long-term usefulness. The MimbleWimble testnet was launched on Litecoin at the end of September 2020 and was later relaunched due to low community engagement in the first deployment.
Another interesting development that could influence the future of Litecoin is its venture into the gaming industry. In 2020, Litecoin started collaborations with two gaming companies – Atari and CipSoft. Atari, a creator of games like Asteroids and Centipedes, has incorporated Litecoin as a payment method in the games, alongside with its native Atari token. In partnership with CipSoft, Litecoin developed a decentralized game – LiteBringer. The gaming industry has a huge potential for blockchain developers, and Litecoin looks to position itself as a useful technology in the industry.
On the whole, Litecoin’s development and usage trails that of other top ten cryptocurrencies as the industry grows beyond a simple focus on payments and looks towards the wider horizons of Web 3.0.
