All crypto enthusiasts know what a mining algorithm is and what it does. A mining process involves validating transactions and generating new blocks, aka a new coin, and the algorithm increases in difficulty over time to adjust average generation times.
But there are some cryptocurrencies that cannot be mined, many of you may wonder what mine but this is for a later article. In today’s article, we will be looking at some of the more popular altcoins that lack a mining incentive but are still nonetheless valuable.
Ripple wasn’t created to act as a regular coin. It was designed to be used by institutions in the banking system rather than individual users, in order to speed up cross-border transactions and incur cheaper fees.
XRP, the native currency of the Ripple platform, cannot be mined and has no miners. The transactions are validated on a private blockchain to ensure reliability and speed.
But why exactly can’t you mine XRP? Well, the first reason is that all the Ripple coins have been created and managed by a single company, namely Ripple Labs. Even though they deny that they have complete control over the coin, which has led to many controversies regarding this aspect.
100 billion XRP have been created until now, and only 41 billion are currently in circulation. Unlike Bitcoin which has a growing circulating supply out of a max supply of 21 million, Ripple’s total supply cannot be modified, as all the coins that will ever exist have been pre-mined.
XRP is the second-ranking coin according to a market cap of $13,000,110,726, having a current trading price of $0.316764.
The Stellar blockchain has a native currency called Stellar Lumens, XLM, which also cannot be mined. When the platform was launched, a total cap of 100 billion XLM was created. The other way through which new Stellar is generated is via an inflation mechanism, which has a fixed rate of 1% per year. The new coins are issued each week and circulated by a voting system.
The Stellar Development Foundation is a non-profit organization which regulates the distribution of Stellars.
Stellar attains decentralized agreement by using its own proprietary consensus algorithm called Stellar Consensus Protocol (SCP), which uses quorums/ nodes to achieve agreement.
XLM hold the 7th position in terms of market cap, which is estimated to be at $1,948,363,405, being currently traded at $0.101850 per unit.
Cardano is another crypto which does not use the “Proof of Work” consensus for its coin generating process. Instead, it uses their proprietary Proof of Stake algorithm called The Ouroboros. When a new block is released no new ADA coins will be issued.
However, there is still a mining process which involved in the generation process and transaction fees are still given to “miners”. So let’s continue with WhatToMine and see how things are going on.
The miners are actually stakeholders, which are mining nodes that stake funds. All the stakeholders are obligated to select a slot leader which is the only entity that is able to release a block.
Every slot represents 20 seconds, meaning that a block is published at an interval of 20 seconds. A slot leader is elected by stakeholders for every slot.
ADA has a market cap of $1,113,758,798 and is priced at $0.042957, ranking as 11th.
EOS is a non-mineable coin which employs a delegated Proof of Work protocol for block distribution and consensus. The protocol ensures that all coin owners on the network are able to elect a block producer.
The new blocks are published after 21 rounds have been completed. The number of blocks a creator can release depends on how many votes he/she received from the coin owners.
EOS was initially based on the Ethereum blockchain, but in 2018 it launched its own mainnet and afterward the ERC-20 EOS tokens were swapped.
EOS ranks 5th, due to its cap of $2,199,769,490, being currently traded at $2.43.
NEO is another crypto which cannot be mined. After completing its development, the developers pre-mined 100 million coins.
The NEO blockchain uses a Proof of Stake protocol to distribute its NEO on the network. Long-term, the consensus is also distributed.
The platform also has another token aside from NEO which is called GAS, the latter token being given as a reward to those that stake NEO coins. GAS is used to pay for transaction fees on the network.
Most PoS cryptocurrencies require the user to keep their wallet open all the time to receive their stake rewards, but not with NEO. Users have claimed that their wallets with staked NEO can produce GAS which can be withdrawn every 5 minutes.
NEO is in 17th place for its market cap of $497,960,833 and the trading price of $7.66 is this coin recommended by Whattomine?.
The total supply of IOTA has been capped at 2,779,530,283 coins. All the coins were minted during its ICO phase, and like Ripple, the only way of getting IOTA is by purchasing it from an exchange or directly from its company. IOTA is a project created to establish communication between machines connected to the Internet of Things (IoT).
Its core technology, Tangle, is a new data structure which runs using a Directed Acyclic Graph instead of a blockchain. To make a payment on this atypical distributed ledger, you have to validate two other payments of other users.
MIOTA holds the 13th ranking for its cap of $818,027,285 and a value of $0.294304.
Final thoughts of what to mine edition
In cryptocurrency, mining incentives are what keep miners validating transactions and running the network.
But as some cryptos have shown us, there are other ways of keeping consensus and user motivation in a network, such as staking or developing a solid use case for the coin in question. We will see in the next article WhatToMine exactly so stay tuned.