Ethereum’s “currency” is called Ether, which like other cryptocurrencies is “mined” by solving equations to validate new transactions on the network. Transactions can be processed more quickly and efficiently than with Bitcoin.
Its price has risen 75pc in the past month and 1,500pc over 12 months. One Ether costs $3,800 (£2,700) and can be bought and sold on the major crypto exchanges, including eToro and Coinbase.
Litecoin began life in 2011 in an attempt to improve on Bitcoin. It has been described as the “silver to Bitcoin’s gold”. It is a cryptocurrency that also involves “mining”, but has some technical differences.
These include the ability to confirm transactions more quickly and the use of different algorithms when it comes to mining. Like other cryptocurrencies, its price has rallied significantly in the past year.
One Litecoin now costs $320 (£226), around 6 times more than it did 12 months ago. Tokens can be bought and sold on most major exchanges.
Ripple is significantly different from the other currencies here. It still uses a blockchain network to validate transactions, but that network consists of participating financial institutions.
Ripple’s finite number of coins, called “XRP”, were not “mined” but issued. Ripple itself is a company, which has received funding from investors, so the currency has central control.
Transactions are instant, and in place of a transaction fee a small amount of XRP is destroyed every time a transaction is made. This is for security reasons – to make it very expensive for someone to attempt to overload the network by putting through lots of transactions.
Unlike Bitcoin, Ripple is not aiming to replace the world’s existing financial system; just to upgrade it. Tokens have risen 450pc in the past year and now cost $1.30 (£0.93)