With many new cryptocurrencies on the market, it’s more important than ever to understand the differences between them. To do this, we must first understand which broader category they fit into.
While there are many different uses, applications and types of cryptocurrencies, blockchains can be thought of as having two main categories.
When the pseudonymous developer Satoshi Nakomoto created the blockchain that Bitcoin uses, it was designed with the sole intention of enabling the world’s first cryptocurrency. Several others, such as Litecoin, followed which offered no major improvements, other than a faster transaction time.
Ethereum, created in 2015, presented the next major evolution in blockchain technology. Ethereum was the first blockchain that allowed for “smart contracts” and for a blockchain to store and process information that wasn’t limited to just financial transactions.
Ethereum was responsible for the creation of an entire industry, where products and SaaS companies are “built on” the blockchain. (You can learn more about the differences between Ethereum and Bitcoin in this article). There have been several new blockchains created that improve on this functionality or that have different utilisations in mind.
Thus, broadly speaking, we have the two main types of blockchains. Those that can be thought of as cryptocurrency-only and those that are designed for purposes beyond the enabling of a digital currency.
The reason this is important is because we have been seeing great increases in the use in the second type of blockchain. There have been many projects that have been expanding the scope of blockchain technology and many designed to increase enterprise adoption.
We haven’t been seeing as much growth of cryptocurrency-only blockchains, as it currently seems that no one will be able to take Bitcoin’s crown as the number one crypto.
The challenge for new arrivals in the space is that while Bitcoin may not be the most diverse or even most capable cryptocurrency, it is still the pioneer. Many people think synonymously of Bitcoin and cryptocurrencies. It will take quite a level of innovation to stand up against it.
Electroneum seems to have come across a way in which to create a cryptocurrency-purposed blockchain that may have a leg up on Bitcoin.
Introducing: Mobile Blockchain
Electroneum is the first British cryptocurrency. Its primary purpose is to act as a medium of exchange; that is, it is meant to be a cryptocurrency-only blockchain.
Richard Ells and his team set out with the following objectives when they started Electroneum:
- A low entry point to new users is one of the top priorities for the project.
This ideology is one of the driving forces behind having mobile mining (more on that later). It allows users to engage in the community and feel involved, in a way that they wouldn’t be able to with other cryptocurrencies. - Privacy is another top concern for the team behind ETN.
While blockchain technology operates on the concept of a public ledger, there’s nothing that mandates wallet balances being public information. Transactions on the Electroneum network are publicly visible, but to view the account balance of a particular wallet address, the private viewing key is required.
Electroneum’s use of three keys, a public, private viewing and pass key is uncommon, but it seems to be a smart move. - Security is a fundamental aspect of Electroneum.
The design of the app places emphasis on users using as many offline wallets as possible to store funds. Once the user is ready to make a transaction, the funds can very easily be imported into the digital wallet for use.
Electroneum’s unique value proposition lies not in how it’s used, but rather how it is mined.
Electroneum is the first cryptocurrency specifically designed for mobile use. With an estimated 2.2 billion smartphones in use, it certainly seems like a demographic worth targeting.
There are many existing online wallets for almost every cryptocurrency available. Most of these services offer mobile apps from which transactions can be made and balances viewed.
Where Electroneum stands out isn’t so much the fact that a mobile-oriented crypto is bound to have a much smoother experience on a mobile than those not designed for it. Its defining feature is the fact that it can be mined on mobile. Well, sort of. More on that in a minute.
Its unique selling point is that even a basic user, who would never go to the effort of mining cryptocurrencies on their computer, can benefit by earning ETN with ease.
Electroneum’s objectives are outlined in more detail in their whitepaper.
What Makes Electroneum Unique: Mining on Mobile
Current cryptocurrencies that aren’t 100% pre-mined work on what’s called Proof-of-Work.
Users are rewarded with payment of the given cryptocurrency for the amount of work that their device performs. The machines process transactions on the blockchain, working to verify them, and as part of the process they uncover new blocks, resulting in payments of the cryptocurrency.
Amateur mining of Bitcoin has become almost impossible as it requires more resources than the average person’s computer can offer. It’s not uncommon for the electricity use to cost more than the Bitcoin mined. With the use of ASICs (dedicated “mining machines”), Bitcoin mining has become an overly competitive space.
Electroneum can still be mined using a computer’s GPU. The entry barrier to mining Electroneum and similar cryptocurrencies is the technical nature required to configure the necessary programs. When their mobile mining application is released, Electroneum is going to stand out, thanks to its ease of use.
Here’s the catch: Electroneum can’t actually be mined on mobile, the way it is mined on a computer. Instead, the mobile application is designed to simulate the mining experience, rewarding users with pre-mined ETN relative to how long they leave the app open on their phones.
It’s clever marketing by Electroneum, and should lead to increased adoption and use of ETN. Some critics are questioning whether it’s just a gimmick and an unnecessary use of resources.
It seems though that the more important question is: will it be a successful gimmick?
Putting Electroneum Mining to the Test
It would be foolish to only compare Electroneum to Bitcoin, especially when the latter is in a league of its own. A more accurate test would be to compare it to other coins of similar value. At the time of writing, Electroneum is at $0.11 per coin.
To truly test what Electroneum is like to mine, I did just that.
My computer is certainly no ASIC, but it does have a lot of mining power for a PC. I’m running an i7-4820K CPU and an NVIDIA GeForce GTX 760 GPU. It was just enough hardware resources to enable me to join the “high spec” ETN mining pool.
After I configured my mining software with the relevant pool details and the address of my Electroneum paper wallet, I was all set.
Then my graphics card kept crashing. I was able to tweak the mining settings and get it under control.
After a day of letting it run, using the program Insomnia to stop my PC from sleeping, I had earned 0.56 ETN. I had grossed a total of ~$0.60 and it had probably only cost me $1.50 in electricity. Not the biggest loss I’ve had in the crypto space, but not great either.
What I have learned from this is that if I was bullish on ETN — expecting it to go up — I could maybe stick out the mining process, but it was probably still not enough to justify the effort.
There are many other cryptocurrencies of similar value that are just as easy to mine. Because of this, Electroneum doesn’t stand out. However, mining any other coin would still lead to so much lag that my computer is unusable when mining. This is where Electroneum does stand out.
Phones are not actually achieving a hash rate, but they are assigned a virtual hash rate for which they will be rewarded accordingly. It’s not yet known exactly what the synthetic hash rate will be as the mobile app is still in beta.
If it’s comparable to what I was achieving my PC, then leaving the app open on my phone would be a far more preferred and efficient option.
When mining with my PC’s GPU, I’m also wasting a lot of power running my CPU and its cooling system. My hard drive is still whizzing around and consuming power and those really cool-looking blue LEDs are still chugging along.
The Electroneum Team
Headed by Richard Ells, Electroneum has a very robust team with a great deal of combined experience.
Ells has a history of starting successful online business, that now have hundreds of thousands of combined users. With over 20 years experience in online-based business, he has demonstrated his ability to run large projects with many staff.
The team managed to raise a staggering $40 million during their ICO and the project has generated quite the buzz and following on social media.
When Bitcoin Runs Out
Bitcoin supply is limited to 21 million coins. Once this number has been mined, there will be no more coins to be discovered. With no more coins to be mined, the reward of uncovering new Bitcoin will be gone. Many people are asking why miners will continue to run their operations.
For the Bitcoin network to continue to operate, miners must still be running. Currently there is little money to be earned from the transaction fees that are charged when the transactions are processed by miners.
By the time all 21 million coins have been unhashed, it is likely that there will be enough transactions occurring at a frequency which will make mining profitable, solely off transaction fees. It’s likely, but not guaranteed. It’s not known whether it will be a smooth process or slow and clunky.
One of the fundamental differences between Bitcoin and Electroneum is that ETN has 21 billion coins available to be mined.
With 1,000 times as many coins to be mined, it’s easy to see a very stable future for ETN and perhaps a much smoother growth pattern than Bitcoin, as it will take far longer for unhashed coins to become scarce.
Where to Buy and Store Electroneum
Electroneum can currently be bought through Cryptopia, a New Zealand-based exchange. The only fiat currencies that can be exchanged through Cryptopia are USD and NZD (New Zealand Dollars). If you would like to exchange another cryptocurrency that you already have, they have a list of over 100 cryptocurrencies and altcoins.
It may be wearisome to have accounts with many different exchanges depending on which coins you are looking at purchasing. The benefit to this however, is that you will be perfectly placed in the marketplace should a new opportunity arise.
It may be wearisome to have accounts with many different exchanges depending on which coins you are looking at purchasing. The benefit to this however, is that you will be perfectly placed in the marketplace should a new opportunity arise.
Electroneum is currently applying for ETN to be sold through Liqui and HitBTC. They have stated on their website that they are actively considering other exchanges as well, and are assessing the exchanges and their reputations. It seems as though the team is very cautious about security, which is a good sign.
Electroneum Wallet
Electroneum recommends storing your ETN in a paper wallet (offline wallet) for security reasons. They can be set up instantly and for free here.
If cold storage isn’t your thing, you can download an Electroneum mobile wallet for Android devices.
Challenges and Competitors
As one of the world’s prominent finance leaders, it’s surprising that the UK hasn’t had a cryptocurrency project until now. As the first British crypto, is it possible that national pride and patriotism could drive growth for ETN?
One downside is that Electroneum is currently only available through Cryptopia. This could be problematic for potential customers who are only registered with other exchanges. It’s also possible that they won’t be taken seriously until they are listed on multiple exchanges.
Another potential setback for ETN could be the fact it only offers a medium of exchange and no other services. It remains to be seen whether or not being a mobile-driven crypto will be enough of a differentiator in this competitive marketplace.
Final Thoughts
With Electroneum being another in the long list of cryptocurrencies, it’s easy to dismiss it as having no advantage. The fact that it’s designed for mobile use is what does make it likely to succeed compared to other cryptocurrencies that offer no significant improvement over Bitcoin.
While raising the $40 million that they achieved during their ICO, the Electroneum team didn’t use traditional ICO marketing tactics. Richard Ells has said that they operated via handshakes and word of mouth, through their contacts at the City of London’s stock exchange. It can be encouraging to note that major players are also taking ETN seriously.
To learn more about Electroneum you can visit their website and read the whitepaper. You can also follow them on Twitter or join their Telegram.
