Bitcoin may have set the standard and made cryptocurrencies a reality, but protocols with greater functionality have been developed over the years. Recently Weiss Ratings came up with a unique model to identify some of the better networks using a few data points. This model measures a cryptocurrency’s potential to achieve specific goals, including governance capabilities, high transaction speed, scaling solutions, flexibility to upgrade, energy efficiency, decentralization, and how well the cryptocurrency’s technology has sophisticated the monetary policy.
Cryptocurrencies such as XRP, Ethereum, and Cardano have developed technology solutions that solve different challenges in different sectors, including the financial industry.
Protocols for payment providers
An example of a protocol that is taking care of payment providers is RippleNet. Its solution caters to institutional payment providers such as money service businesses and banks that use Ripple’s solutions to provide easy global payment solutions. This technology has contributed significantly to increased XRP investment on platforms like PrimeXBT, where users can trade the asset using CFDs with low fees and excellent security for their funds.
This platform works by connecting buyers and sellers. Imagine the case of Mr. Ed, who lives in Los Angeles and has a chocolate box that he no longer needs. But he is interested in watching a baseball game, but he doesn’t have a ticket. Then there is Joan, who lives in New York and has extra tickets she doesn’t need. Interestingly she wants a chocolate box. Normally, these two are unlikely to find each other and exchange the undesired items.
However, with the Ripple platform, both can find each other and exchange the items. Moreover, this platform allows payment in multiple currencies, including Bitcoin. The minimum transaction cost is $0.00001.
Such advantages make this protocol so attractive to many investors on PrimeXBT, Bitiq and other platforms, since it allows users to send money faster, cheaper, and more conveniently.
Smart contract protocols
Ethereum is another platform with superior technology to Bitcoin. Applications built on the blockchain make it possible to create new digital assets, build decentralized companies, virtual worlds, and manage property. These applications, better known as dApps, are unstoppable and uncensorable.
Dapps are web applications built on smart contracts. Instead of using a centralized database or server, these applications rely on blockchain for storage and program logic. Consequently, developers can create unstoppable applications.
Over a decade ago, the birth of Bitcoin made us reassess what we consider as a store of value. The technology also helped us get an idea of what the future holds. And protocols that followed have been improving on its capabilities, at least some of them like Ethereum through smart contracts and decentralized applications.
These dApps are resilient, transparent, distributed, and incentivized. They have changed the technological landscape.
Additionally, dApps are governed by autonomy, and all changes and developments are decided by consensus. This gives the public power to choose and allows scrutiny. Validators of the blockchain are incentivized using tokens. These rewards motivate the developers to create even better-decentralized applications that are changing different industries today.
Cardano is another excellent example of a platform that uses smart contracts to improve on Bitcoin’s shortcomings. The platform has two main layers, the Cardano Settlement Layer (CSL) and the control layer. The CSL is used to settle transactions using ADA.
The Control Layer, which is still under development, will be used for smart contracts. The cryptocurrency’s hierarchical structure enables Cardano to be used as a medium of exchange and generate smart contracts.
Cardano ensures security through the peer-review process required for new updates. The founders of this platform want to ensure that anything new introduced to the ecosystem is not compromised. Other cryptocurrencies have experienced challenges with security. For instance, the Verge experienced multiple hacks. Other projects were criticized for adding a new algorithm that was untested.
Cardano’s new concept ensures that the relevant individuals first scrutinize all algorithms added to the platform.
Cardano also solves the scalability issue by taking ideas from cryptography researchers. Some of the ideas have been implemented and are being tested. However, most ideas are still in the research phase. Cardano has not deployed any smart contract platform yet, but things look promising.
Conclusion
Since Bitcoin was launched, consequent digital currencies have sought to develop solutions for different market challenges and industries. Solutions such as RippleNet, dApps, and Cardano aim to provide solutions to challenges that Bitcoin has not.
However, there are many challenges that should be overcome before the masses can widely adopt these protocols.
