In 2021, the crypto space experienced a significant boom. Every element in the crypto space got the major visibility that it needed. Of course, cryptocurrencies being significant players in this space were not left out.
People began to understand other elements like the Web3.0 sector, gaming in the Metaverse, and NFTs. It did not stop there, with the massive understanding came massive adoption in significant parts of the globe.
In 2022, we saw other cryptocurrency trends come into the scene. Many of the other technologies that are related to cryptocurrency and blockchain technology, in general, began to witness a serious boom.
Blockchain technology is the technology that powers the cryptocurrency ecosystem, and it is a technology that a lot of people ought to look out for and embrace.
Here are five elements in the cryptocurrency space;
- Gaming and Metaverse
- Medium of Exchange
- Decentralized Finance (Defi)
Categories of Cryptocurrency
Most of the blockchains we will be talking about in this article are cryptocurrency blockchains. They are the blockchains that top the list, and because of that, I want us to take a look into the three major categories of cryptocurrencies that we have today.
- Cryptocurrency coins
- Protocol coins
These coins are used as either a means of exchange or to transfer value. The original purpose of cryptocurrency coins is to serve as a form of digital money. These coins run on their native blockchain. Examples of such coins are Bitcoin, Bitcoin Cash, and Monero.
A token refers to a digital asset developed on another digital asset running on its native blockchain. Tokens do not have their blockchain.
Protocol coins are protocol blockchain natives. They maintain additional features and are for the building of dApps (Decentralized Applications). They are also used for digital smart contract automation processes. Protocol coins also have their native blockchain on which they run.
More than 90% of the cryptocurrencies in the blockchain ecosystem are Tokens. They are tokens because they are built on already existing blockchains. They issue their coins by leveraging blockchains that are already in existence.
When people talk about the blockchains that are available in the cryptocurrency ecosystem, the most referenced type of cryptocurrency is the Protocol Coins.
For the sake of clarity; in simple terms, cryptocurrencies are value manifestations of the blockchain technology already in existence. So, the many cryptocurrencies that run on blockchain technology are different value manifestations of the blockchain network.
Therefore, we will be referring to Protocol Coins as Protocol Platforms. We will be referring to Protocol Coins in this manner because a public blockchain platform will always have its native coins.
It is the reason why people talk about Protocol Coins, you should know that they are referring to the fact that the native Protocol Coins are the underlying Protocol Coins. So, the Protocol Coins and the native coins are the same.
5 Biggest Blockchains
Blockchains are decentralized public ledgers. They are safe, transparent, and open to anyone. It is not like there are no private blockchains in the market today, of course, there are a number of them.
It is just that originally, blockchain technology came into the scene as a public platform. It came as a public ledger. It did not come as a permitted blockchain, so we will not be talking about permitted blockchains in the list.
Blockchain Protocols support the building of applications and as infrastructures, they benefit from any growth in the ecosystem.
Here are the top 5 blockchains in 2022.
Bitcoin is the first cryptocurrency in the cryptocurrency ecosystem. It is the first decentralized digital currency that came into the scene in the blockchain network. Bitcoin was created in 2008, and it is the leading currency driving the ecosystem of coins and tokens.
Although bitcoin works primarily as an exchange medium, it is also a blockchain protocol. It is the underlying blockchain protocol on which many of the cryptocurrencies run. The other blockchains that power some other cryptocurrencies are built to almost look like the blockchain technology.’
Bitcoin creation became the beginning of cryptocurrencies, and the blockchain on which bitcoin runs (Bitcoin Blockchain) is the most prominent blockchain technology.
The bitcoin blockchain is a secure blockchain due to its transparency. Data on the bitcoin blockchain is stored securely. The blockchain uses a POW (Proof-of-Work) mechanism for consensus establishment throughout its network distribution.
Transacting a single block of transactions on the bitcoin blockchain can take up to 10 mins and a single block can contain 2000 transactions. This means that the bitcoin blockchain can execute up to 7 transactions per second.
Ethereum unlike Bitcoin is neither a cryptocurrency nor a blockchain. Ethereum is a protocol. A protocol is a set of procedures or rules, just like we have the internet “HTTP” or “HTTPS”
The Ethereum protocol can house a lot of multiple blockchains that are independent of each other. Most of the time, when you hear people talk about Ethereum, they are referring to Mainnet.
Mainnet is the basic Ethereum production blockchain, this production blockchain is public. On this Mainnet is where transactions of actual value take place on the blockchain. Ethereum has a native cryptocurrency called Ether (ETH).
Up till today, the EVM (Ethereum Virtual Machine) is one of the greatest blockchain innovations that entered the blockchain ecosystem. The EVM is an environment that houses all the Ethereum accounts and the smart contracts in the Ethereum ecosystem.
Smart contracts are automated programs that get activated when some set of rules are obeyed. Ethereum has standards and these standards of operations, these standards are;
- ERC-20 (fungible tokens run on this standard)
- ERC-721 (non-fungible tokens run on this standard)
- RC-777 (improving ERC-20)
- ERC-1155 (containing both fungible and non-fungible tokens).
Gas talks about the unit of effort computationally that the system will use for executing transactions on the network. To execute a transaction, you will need to pay a gas fee. The denotation of the fee is Gwei and it is paid in ETH. I Gwei is 0.000000001 ETH.
On the Ethereum network, it takes about 14 seconds to mine a new block. Decentralized Finance (Defi) as a concept began with Ethereum. Today, this concept has produced several ecosystems, even the NFT and Metaverse ecosystems. The Ethereum consensus mechanism is the Proof-of-Work mechanism.
The former name for this blockchain was Antshares. This blockchain was designed to serve decentralized application networks. Although this blockchain has some modifications that make it perfect for scalable networks.
Neo Focuses on asset digitization, and it is the first blockchain platform in China. The Chinese government built the Neo blockchain to get themselves ahead of other countries in establishing themselves as pathfinders in the blockchain ecosystem.
Neo is not like Ethereum. The blockchain takes a position that pays attention to building a smart economy.
The aim is to build this smart economy by digitizing assets in the real world that allows registration, clearing, trading, depositing, clearing, and settlement through peer-to-peer networks. What this means is that Neo wants to build an ecosystem that supports the digital economy organically.
Neo blockchain has a native token called non-divisible NEO. The Neo token is used for generating gas that is used to pay for transactions on the network. The consensus algorithm of Neo is the Delegated Byzantine Fault Tolerance (dBFT).
The dBFT consensus algorithm does not use a lot of resources like other consensuses to validate transactions and can validate up to 1000 transactions in one second. While these are advantages the Neo blockchain has over other blockchains, the blockchain is limited because it is a centralized blockchain.
Binance Smart Chain
Binance blockchain development started with Binance Chain. Binance developed the blockchain to offer decentralized trading in the fastest ways possible. As much as the Binance chain is fast, the programmability is not so solid, and it does not have smart contracts.
These limitations of the Binance Chain led to the development of the Binance Smart Chain (BSC). The BSC and BC ran alongside each other, and the BSC was fortified with the limitations of the BC.
Interestingly, the BSC has EVM compatibility. Binance Smart Chain is one of the independent blockchains that exists today. The block time of BSC is 3 seconds, and both BC and BSC have a native token called BNB.
Validators in the Binance Network can receive fees for transactions by staking BNB. The Finance blockchain is not like bitcoin rewards in blocks for every BTC that users mint.
So, Binance uses Proof of Stake as a consensus mechanism and not Proof of Work like the Bitcoin blockchain.
BNB is a deflationary token. From time to time, the Finance team burns the tokens and this burning decreases the supply from time to time.
It might interest you to know that you can swap BEP-8 and BEP-2 tokens for BEP-20 tokens on the Balance Smart Chain. You can carry out this swapping through the Binance Chain Wallet.
Avalanche sits as a very popular blockchain in the Defi ecosystem. Topping the list of protocols that run on the Avalanche Blockchain are AAVE, Wonderland, Curve, Benqi, and Trader Joe.
Using Avalanche, you can launch any kind of blockchain you want, private or public. The blockchain performs transactions faster than the Bitcoin, Ethereum, and even Polkadot blockchains.
The transaction validation time of Avalanche blockchain is less than 3 seconds, and it uses the Snow protocol family as its consensus mechanism. AVAX is the native token of the Avalanche blockchain and you can use the token for paying fees and staking.