Bitcoin has not only been the leader in ushering in a wave of cryptocurrencies built on decentralized peer-to-peer networks, it has also become the standard for all cryptocurrencies. It has inspired an ever-growing group of followers and creators who understand the power of newer, safer, harder, fairer and faster money. When it comes to commentary around all cryptocurrency globally, the first thing that springs to mind is understandably Bitcoin. Beyond the power, profit, brand recognition and opportunity Bitcoin provides, it is just one of so many cryptocurrencies that are changing the world for the better. There are currently about 3000 cryptocurrencies that have a purpose-built function to address the security, storage and distribution challenges of data well beyond just money.
What Are Cryptocurrencies?
Before we take a closer look at some of these alternatives to Bitcoin, let’s step back and briefly examine what we mean by the terms cryptocurrencies and altcoins. Firstly, a cryptocurrency is broadly defined as virtual or digital money that takes the form of tokens or “coins.” There is only one Bitcoin cryptocurrency and every other coin alternative to Bitcoin is referred to as an altcoin.
While some cryptocurrencies have ventured into the physical world with credit cards or other projects, the large majority of cryptocurrencies remain entirely intangible. Just as you don’t need to touch an email, digital image, file or video stream for it to have value and use, the same applies with money and information. However, the key difference between a digital file and a digital currency is that cryptocurrencies like Bitcoin cannot be copied. That is, while one can copy and paste a digital file, this is not the case with Bitcoin and other cryptocurrencies ensuring they maintain their value in scarcity and preventing counterfeiting.
The field of cryptocurrencies is consistently growing, and the next mammoth digital token may be released tomorrow. While Bitcoin is a pioneer in the era of cryptocurrencies, experts adopt many ways of evaluating tokens or coins. Analysts, commentators and investors alike assign a great deal of importance to the ranking of coins relative to one another in terms of their fiscal value within the crypto market. While a coin’s price and overall market value should be taken into consideration, there are other reasons why a cryptocurrency attracts attention and subsequent investment. Let’s look at the following alt coins that are proving their value through real-life use cases.
The Ethereum cryptocurrency (ETH) first appeared in 2015 as an open software platform based on blockchain technology. It allows developers to build and deploy their own decentralized applications on top of the Ethereum blockchain. Beyond a mere store of value or money network, Ethereum provides everyone with an opportunity to leverage off the power of blockchain technology with a programmable application. You may like to think of Ethereum to crypto as GoDaddy or Wix is to the internet. That is, before such sites existed, only qualified web creators could build a website as there wasn’t a user-friendly interface for the average person to do it themselves. Nowadays, through the power of sites such as GoDaddy and Wix, almost anyone can build their own website. This is synonymous to the power of Ethereum as we can see multiple projects built upon the Ethereum network due to its design, security, simplicity and reliability. At the time of this writing, the value of all Ethereum issued (known as a marketcap) reached $291 billion USD, with one “ETH” costing $2,524 USD per coin.
Ripple (with its cryptocurrency coin called XRP) was designed to speed up bank transactions while reducing the fees endured by the customer. You may like to think as Ripple replacing the very slow and very expensive SWIFT network that facilitates the international remittance market. Ripple technology is already in use by some banks. Unlike Bitcoin that was designed to replace banks, Ripple aims to aid banks through faster transactions at a lower cost. Dissimilar to Bitcoin and Ether, you cannot mine Ripple. Although XRP operates through blockchain technology, it’s very different to Bitcoin as it is a centralized system where all the digital money (ie XRP) already exists and belongs to an American company called Ripple Labs. Users, banks and investors can buy XRP tokens to either hold like a stock, or use on the Ripple network to quickly and cheaply transfer value from one user to another.
Charlie Lee, a former Google Engineer created and launched Litecoin in 2011. It was among the first cryptocurrencies to follow in the footsteps of Bitcoin and is often referred to as the “silver to Bitcoin’s gold.” The speed of Litecoin transaction processing is faster than Bitcoin and acts as both a store of value and payment network. Litecoin also uses far less power than the Bitcoin network due to the way in which it was designed.
Dash is a revolutionary digital money system that was launched in 2014. The network has grown to 4,1000 master nodes making it one of the largest peer-to-peer networks in the world. As a result of more nodes, the platform can offer more capacity and security for its users. Miners who support the Dash network are rewarded for securing its blockchain and master nodes through the payment of Dash coins.
The Nem cryptocurrency appeared at the end of 2015. Unlike most cryptocurrencies, it has its own unique code. The most significant feature of Nem is that it works using the POI (proof of importance) algorithm technology. This is a vastly different method of securing a network compared to Proof of Work and Proof of stake blockchains.