Bitcoin has not just been a trendsetter, ushering in a wave of cryptocurrencies built on a decentralized peer-to-peer network. It’s become the de facto standard for cryptocurrencies, inspiring an ever-growing legion of followers and spinoffs. How many of you invested in Bitcoin? How many of you invested early? I can’t help but notice a lot of people who have invested extremely late or not at all are the ones who throw the most shade (hate) on Bitcoin and cryptocurrency. With that being said we usually automatically hate on things we don’t understand don’t we?
What is Cryptocurrency?
Before we take a closer look at some of these alternatives to bitcoin, let’s step back and briefly examine what I mean by cryptocurrency. A cryptocurrency, broadly defined, is virtual or digital money which takes the form of tokens or “coins.” While some cryptocurrencies have ventured into the physical world with credit cards or other projects, the large majority remain entirely intangible.
The “crypto” in cryptocurrency refers to complicated cryptography. This allows for a particular digital token to be generated, stored, and transacted securely and anonymously. Alongside this important “crypto” feature of these currencies is a common commitment to decentralization. Cryptocurrencies are typically developed as code by teams who build in mechanisms for issuance. This is called the mining of coins.
Cryptocurrencies are almost always designed to be free from government manipulation and control. However as they have grown more popular this foundational aspect of the industry has come under fire. While some of these currencies are easier to mine than bitcoin is, there are tradeoffs, including greater risk brought on by lesser liquidity, acceptance and value retention.
Before I get to my list it is impossible for a list like this to be entirely comprehensive. I mean let’s face it, there are more than 1,600 cryptocurrencies out there at the moment. Many of those tokens and coins enjoy immense popularity among a dedicated community of backers and investors. The field of cryptocurrencies are always expanding, and the next great digital token may be released tomorrow, for all we know. While bitcoin is known as the pioneer in the world of cryptocurrencies, analysts adopt many approaches for evaluating tokens other than BTC. So let’s get to my top 10 and why.
1.) XRP (Ripple)
XRP is a real-time global settlement network that offers instant, certain and low-cost international payments. XRP launched officially in 2012. XRP enables banks to settle cross-border payments in real-time, with end-to-end transparency, and at lower costs.Their consensus ledger (its method of conformation) is unique in that it doesn’t require mining. In this way, XRP sets itself apart from bitcoin and many other currencies. Since structure doesn’t require mining, it reduces the usage of computing power and minimizes network latency.
XRP believes that “distributing value is a powerful way to incentivize certain behaviors.” They currently have plans to distribute XRP primarily “through business development deals, incentives to liquidity providers. These providers offer tighter spreads for payments, and selling XRP to institutional buyers interested in investing in XRP.” So far they remain one of the most enticing digital currencies among traditional financial institutions looking for ways to revolutionize cross-border payments.
2.) Litecoin (LTC)
Litecoin launched in 2011, and was among the initial cryptocurrencies following bitcoin. It was created by Charlie Lee, an MIT graduate, and former Google engineer. Litecoin is based on an open-source global payment network that is not controlled by any central authority. It also uses “scrypt” as a proof of work, which can be decoded with the help of CPUs of consumer-grade. Although Litecoin is like bitcoin in many ways, it has a faster block generation rate and hence offers a faster transaction confirmation. Other than developers, there are a growing number of merchants who accept Litecoin.
3.) Ethereum (ETH)
Launched in 2015, Ethereum is a decentralized software platform that enables distributed applications (DApps) to be built and run without any downtime, fraud, control or interference from a third party. The applications on Ethereum are run on its platform-specific cryptographic token, ether. Ether is like a vehicle for moving around on the ethereum platform and is sought by mostly developers. Developers who are looking to create and run applications inside ethereum, or now by investors looking to make purchases of other digital currencies using ether. According to ethereum, it can be used to “codify, decentralize, secure and trade just about anything.” Following the attack on the DAO in 2016, Ethereum was split into Ethereum (ETH) and Ethereum Classic (ETC).
4.) Bitcoin Cash (BCH)
Bitcoin Cash holds an important place in the history of altcoins. This is because it is one of the earliest and most successful hard forks of the original bitcoin. In the cryptocurrency world, a fork takes place as the result of debates and arguments between developers and miners. Because of the decentralized nature of digital currencies, wholesale changes to the code underlying the token or coin at hand must be made due to general consensus. Which is the mechanism for this process varies according to the particular cryptocurrency.
When different factions aren’t able to come to an agreement, sometimes the digital currency is split. Split with the original remaining true to its original code and the other copy beginning life as a new version of the prior coin. This is complete with change to its code. Bitcoin cash began its life in August of 2017 as a result of one of these splits. The debate which led to the creation of BCH had to do with the issue of scalability. Bitcoin has a strict limit on the size of blocks which is 1MB. BCH increases the block size from 1 MB to 8 MB, with the idea being that larger blocks will allow for faster transaction times. It also makes other changes, including the removal of the Segregated Witness protocol which impacts block space.
5.) Zcash (ZEC)
Zcash is a a decentralized and open-source cryptocurrency launched in the latter part of 2016, and it’s looking promising. “If bitcoin is like HTTP for money, Zcash is HTTPS.” This is one analogy Zcash uses to define itself. Zcash offers privacy and selective transparency of transactions. Thus, like an https website, Zcash claims to provide extra security or privacy where all transactions are recorded and published on a blockchain, but details such as the sender, recipient, and amount remain private. Zcash offers its users the choice of “shielded” transactions, which allow for content to be encrypted using an advanced cryptographic technique or zero-knowledge proof construction called a ZK-Snark
At the End of the Day
Bitcoin continues to lead the pack of cryptocurrencies by far, in terms of market capitalization, user base, and popularity. Nevertheless, virtual currencies such as XRP and Litecoin, are being used more for enterprise solutions, and becoming more popular. Meanwhile some altcoins are being endorsed for superior or advanced features. If we go by the current trend, cryptocurrencies are here to stay but how many of them will emerge as leaders amid the growing competition within the space will only be revealed with time.
Thank you for checking out my post and stay tuned for additional “My random thoughts”
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