What to know about 7 major types of cryptocurrencies

As bitcoin becomes a household name, other types of digital currency that thrive off blockchain technology are gaining legitimacy, too.

Cryptocurrency refers to a digital or virtual currency that uses cryptography for security. Exchanges of these types of digital coins are thought to be hyper-secure because of the blockchain infrastructure on which they take place. In Bitcoin's case, each transaction is verified through mining, a system of mathematical calculations that double check the authenticity of each exchange.

Many cryptocurrencies are decentralized, meaning they lack a governing authority or data warehouse. They often operate off peer-to-peer protocols and users communicate amongst each other instead of through a middleman, like a bank.

Though a cryptocurrency trader cannot physically hold a digital coin, their values have been rising at astounding rates. Back in 2008 when the bitcoin network launched, one bitcoin was worth about $0.0008. As of Dec. 18, one bitcoin is worth more than $18,000. To put this into perspective, in August Becker's Hospital Review reported one bitcoin was worth $4,200. But by the end of October, Becker's reported its value had increased to $4,861. By the beginning of December, Becker's learned bitcoin's newest value: $17,475.

Aside from their rising value, what makes cryptocurrencies so sought after? Only a certain amount of each will ever be distributed. Although some lesser known players — like tezos — are uncapped as of today, meaning their supplies will never run out, only about 21 million total bitcoin will ever be issued.

More than 1,300 types of cryptocurrencies exist today. While the bitcoin network may reign supreme, others like ethereum, litecoin and monero are capturing investors' attention. Here is what healthcare IT leaders should know about seven different types of cryptocurrencies gaining traction.

Editor's Note: The cryptocurrencies on this list were chosen because they hold top spots on Cryptocurrency Market Capitalizations and, based on various media reports, have been widely regarded by investors as potential disruptors in the market. They are listed by value.

Bitcoin

  • Valuation as of Dec. 20: 1 BTC = $17,022.10
  • Market capitalization as of Dec. 20: $285,185,284,532
  • Circulation supply as of Dec. 20: 16.7 million BTC
  • Percent change year-over-year: +2,283.58 percent

Bitcoin is the 2008 brainchild of the mysterious scholar Satoshi Nakamoto, whose real identity has yet to be revealed. In his original white paper, Mr. Nakamoto described bitcoin as "peer-to-peer version of electronic cash would allow online payments to be sent directly from one party to another without going through a financial institution." Bitcoin aims to become a globally adopted currency that could one day replace conventional money.

Bitcoin Cash

  • Valuation as of Dec. 20: 1 BCH = $3,899.76
  • Market capitalization as of Dec. 20: $65,776,569,462
  • Circulation supply as of Dec. 20: 16.9 million BTC
  • Percent change year-over-year: +742.31 percent

Bitcoin Cash is marketed as "a fork of the Bitcoin blockchain ledger, with upgraded consensus rules that allow it to grow and scale," according to the network's website. It split from the original bitcoin network Aug. 1 when a group of developers sought to improve the cryptocurrency's transaction speed and cost. The cryptocurrency essentially emerged overnight, after Coinbase, the leading bitcoin exchange, announced Dec. 19 it would support the cryptocurrency spin-out. After the announcement, bitcoin's price plunged nearly 10 percent.

Dash

  • Valuation as of Dec. 20: 1 DASH = $1,609.58
  • Market capitalization as of Dec. 20: $12,498,273,491
  • Circulation supply as of Dec. 20: 7.8 million DASH
  • Percent change year-over-year: +11,664.83 percent

Originally called darkcoin, the dash network, which was developed by Evan Duffield, a software developer who has since stepped down from his role as CEO of the company, and rolled out in 2014, offers more anonymity than bitcoin. It operates on a decentralized mastercode network that makes transactions almost untraceable. Dash differs from bitcoin in that its two-tier network structure improves transaction speed, anonymity and governance.

Ethereum

  • Valuation as of Dec. 20: 1 ETH = $825.79
  • Market capitalization as of Dec. 20: $79,657,561,400
  • Circulation supply as of Dec. 20: 96.4 million ETH
  • Percent change year-over-year: +9,925.96 percent

Vitalik Buterin, a Canadian programmer born in Russia, invented ethereum in 2015, according to Android Authority. Ethereum is  the name of the blockchain company that stores transactions of the cryptocurrency called ethereum or ether. Developers seeking to build apps on the ethereum blockchain or users who want to access and interact with smart contracts on the ethereum blockchain need ether.

Monero

  • Valuation as of Dec. 20: 1 XMR = $449.55
  • Market capitalization as of Dec. 20: $6,969,179,021
  • Circulation supply as of Dec. 20: 15.5 million XMR
  • Percent change year-over-year: +3,712.5 percent

Monero is an open-source cryptocurrency that launched in 2014. The network enables privacy by using a technique known as "ring signatures," in which a group of cryptographic signatures — including at least one real participant — appear. Since all the signatures seem valid, the real one cannot be isolated. All transaction amounts are hidden, adding to its privacy- and security-focused design.  

Litecoin

  • Valuation as of Dec. 20: 1 LTC = $327.62
  • Market capitalization as of Dec. 20: $17,820,663,237
  • Circulation supply as of Dec. 20: 54.4 million LTC
  • Percent change year-over-year: +9,799.46 percent

In 2011, Charlie Lee, a Massachusetts Institute of Technology graduate and former Google engineer, launched litecoin based on an open-source, decentralized global payment network. It uses "scrypt" as its proof of work algorithm — or a way of verifying ledgers to ensure transactions are valid —  which can be decoded with computer processing units. The litecoin network is scheduled to produce 84 million litecoins, which is four times as many "coins" as bitcoin. What's more, the litecoin network is able to process transactions in just over two minutes, which is much faster than bitcoin's nearly 300-minute processing time.

Ripple

  • Valuation as of Dec. 20: 1 XRP = $0.78
  • Market capitalization as of Dec. 20: $30,190,810,189
  • Circulation supply as of Dec. 20: 38.7 billion XRP
  • Percent change year-over-year: +11,618.75 percent

Released in 2012, ripple differs from the other cryptocurrencies on this list in that it is not minable, meaning no new coins are introduced to the project, as opposed to minable, which rewards those individuals that maintain the system via setting up a computer system to solve math problems generated by the network at a consistent rate. Its consensus ledger — or its method of confirmation — reduces the computing power needed and minimizes network latency. Ripple is marketed as a way to enable "banks to settle cross-border (global) payments in real time, with end-to-end transparency and at lower costs," a previously timely, tedious task. The company said transactions in XRP can be settled in just four seconds, faster than any major cryptocurrency right now.

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