Most investors think about profitable coins, tokens and projects, not about the blockchain networks behind them. And this is certainly not a problem.
Understanding blockchain technology was critical in the early days of cryptocurrencies and crypto investing, but nowadays, it makes sense to invest and profit without thinking twice about blockchains.
Still, blockchains are fascinating both for what every modern cryptocurrency is built on and how they differ from one another. Let’s take a quick look at the most commonly used blockchains in the crypto industry.
In most cases, the blockchain and cryptocurrency are so inextricably linked that it doesn’t make sense to consider them separately. The Bitcoin is the foundation of Bitcoin. This is the purpose for which it was developed. The question ‘Which blockchain does Bitcoin use?’ has a simple and obvious answer.
Likewise, Ether runs on the Ethereum blockchain. Coins such as Litecoin, XRP, Eos, Tron, Monero, Solana, Stellar, Neo and Dogecoin are all traded on their own networks.
Recognising the Best Blockchain Networks
Bitcoin accounts for about 40% of the value of the entire cryptocurrency world, so the Bitcoin blockchain is the most popular chain. It certainly has the most value locked in it.
It’s equally true to say that the Ethereum is the most popular. How big is the Ethereum? It depends on how you measure it. The total number of transactions on Ethereum surpassed the number of Bitcoin transactions for the first time in 2021. Since Ethereum is the network behind many cryptocurrencies and most NFTs, it makes sense to describe Ethereum as the world’s most popular blockchain network.
Most of the other frequently used networks were launched aiming to overcome the limitations of existing blockchains.
For example, the Solana blockchain aims to serve as a foundation for cryptocurrencies and distributed applications. Like Ethereum, the Solana protocol supports executable code in the form of smart contracts. The key advantage of Solana is that its unique Proof of History consensus mechanism allows the network to process tens of thousands of transactions per second. This is an important consideration for a worldwide network. For comparison, Bitcoin supports 7 tps and Ethereum supports around 15 tps. This innovative blockchain also charges much less than Ethereum in transaction fees. It is not surprising that its popularity is growing rapidly.
Dogecoin was created in 2013 as a joke, but has grown into a serious coin. One of the aspects behind this transformation was that the Dogecoin executes transactions about 10 times faster than the Bitcoin blockchain.
The Chia blockchain network uses a consensus mechanism called ‘Nakamoto’. This Proof of Space and Time mechanism is said to use only 0.16% of Bitcoin’s annual energy consumption and 0.36% of Ethereum.
Ripple’s XRP Ledger blockchain was created to support RippleNet, an international network that aims to instantly transfer money worldwide, both crypto funds and official currencies.
The Monero blockchain was created with an emphasis on privacy. All blockchains encrypt personally identifiable information, but the Monero protocol includes additional features to hide all transaction information.