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The Most Popular Blockchain Networks

The Most Popular Blockchain Networks

Most investors think about profitable cryptocurrencies, tokens and projects rather than the blockchain networks that support them. And that’s perfectly legitimate.

Understanding blockchain technology was critical in the early days of cryptocurrencies and investing in them, but today it makes sense to invest and prosper without thinking about blockchains.

Still, blockchains are fascinating, both as the foundation of every modern cryptocurrency and in the ways they differ from one another. Here’s a tour of the cryptocurrency industry’s most widely used blockchains.

A bit of Blockchain History

Before we begin, let’s make sure we’re on the same page. If you haven’t figured out what a peer-to-peer blockchain-type database is and why it’s central to cryptocurrencies, check out our overview, “What Is Blockchain Technology and How Does It Work?”

In many cases, blockchain and its cryptocurrency counterpart are so closely related that it makes no sense to discuss them separately. The Bitcoin blockchain is the foundation of Bitcoin. That’s why it exists. The answer to the question, “What blockchain does Bitcoin use?” it is simple and obvious.

By the same token, Ether runs on the Ethereum blockchain. Litecoin, XRP, Eos, Tron, Monero, Solana, Stellar, Neo, Dogecoin blockchain.

But things are not that simple. Some cryptocurrencies are implemented on existing blockchains. For example, Maker, Uniswap, Chainlink, Axie Infinity, Aave, Compound, SushiSwap, Status, Kyber Network, Basic Attention Token, Decentraland are all based on the Ethereum blockchain.

The differences between these two groups are generally not significant. All cryptocurrencies use blockchain encryption methods to ensure that data is secure and transactions are validated.

Although different blockchains use different consensus mechanisms, they all add blocks through a validation process.

However, there is a difference between cryptocurrencies that have their own chains and those that are hosted on existing blockchain networks.

When a cryptocurrency is the native currency of its blockchain, we refer to its units of denomination as “coins”. Ether, NEO and Dogecoin are all coins.

When the cryptocurrency is hosted on an existing blockchain, we now refer to a “token”. LYO, MakerDAO, Chainlink, and BAT are all tokenized because they are hosted on Ethereum rather than having their own blockchains.

The Top Blockchain Networks

Bitcoin accounts for nearly 40% of the total value of the cryptocurrency world, so it’s fair to say that the Bitcoin blockchain is the most popular. It is certainly the one that has accumulated the most value.

But it is equally true that the Ethereum blockchain is the most popular. How big is the Ethereum blockchain chain? It depends on how you measure it.

In 2021, the total number of Ethereum transactions surpassed the number of Bitcoin transactions for the first time. Because Ethereum is the foundation network for so many cryptocurrencies – and most NFTs as well – it makes sense to identify Ethereum as the most popular blockchain network in the world.

Most of the other widely used networks exist to overcome the limitations of existing blockchains.

For example, the Solana blockchain is intended to serve as a foundation network for cryptocurrencies and distributed applications. Like Ethereum, the Solana protocol supports executable code in the form of smart contracts. Solana’s key advantage 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 issue for a global network. To compare, Bitcoin supports 7 tps (transactions per second) and Ethereum supports around 15 tps. In addition, this innovative chain charges much less transaction fees than Ethereum. No wonder it is rapidly growing in popularity.

Dogecoin was created as a joke in 2013, but has now become a serious currency. At least part of this transformation is due to the fact that the Dogecoin blockchain handles transactions about 10 times faster than the Bitcoin blockchain.

The Chia blockchain uses a consensus mechanism it calls “Nakamoto”. This Proof of Space and Time mechanism uses just 0.16% of Bitcoin’s annual energy consumption, Chia claims, and 0.36% of Ethereum’s equivalent energy.

Ripple’s XRP Ledger blockchain was created to support RippleNet, an international network intended to facilitate instant transfers of money worldwide – both cryptocurrencies and fiat currencies.

The Monero blockchain was created with privacy in mind. All blockchains encrypt personal data, but the Monero protocol includes additional features to hide all transaction information.

Different Needs, Different Blockchains

It only takes a few minutes to see that each blockchain network serves a distinct purpose. Some are built to support a specific initiative or project – or even a single application, particularly in the world of decentralized finance.

Others are created as replacements for existing chains that suffer from technical limitations. Ethereum’s programmability makes it usable as an operating system for blockchain-based applications and resources.

And the Bitcoin network has all the necessary features for its currency to serve as a general-purpose substitute for government currencies.

 

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