I wrote before about cryptocurrency and Ethereum. As I explained, Bitcoin is a virtual currency, using a blockchain to offer a safer way to store your money than the classic solutions. And Ethereum is a platform to allow development of decentralized network application based on blockchain technology.
What are altcoins?
Altcoins is just a nickname. It refers to all crypto coins that are not bitcoin because the general public only knows about Bitcoin.
But there are actually 900 different cryptocurrencies on the market these days and new ones created daily. A lot of them are scams. It is easy to create a new cryptocurrency. Some copy the Bitcoin source code and make some changes, others create tokens using the Ethereum platform. With Ethereum, it actually takes less than 100 lines of code to create a new coin.
But just because a lot of these new coins are scams, it doesn’t mean they are all scams. Some of them have great value and potentially a great future.
Here is an overview of some of the more well-known altcoins that are worth looking into. One of the things worth looking at is the market cap of each coin. At the time of writing, Bitcoin has a market cap of $93.5 billion and Ethereum has $32.6 billion market cap (source coinmarketcap.com).
Litecoin was created in 2011 as a fork of Bitcoin by former Google employee Charlie Lee. It tries to fix some of Bitcoins shortcomings, such as shorter transaction time and lower payment fees. Litecoin keeps evolving with new features and technical upgrades (SegWit Upgrade, Lightning Networks). Those upgrades will allow Litecoin to scale and make it usable by more users in the future.
Current market cap: $3.4 billion.
Ripple is not a cryptocurrency like Bitcoin and Litecoin. Instead, it is a distributed, real-time payment protocol than can be used to trade anything of value. Its aim is to make payments easier and cheaper, replacing systems such as SWIFT. XRP is the token used for paying the cost of a Ripple transaction.
Ripple now has over 75 banks signed up that are experimenting with XRP. Just last month they recruited the former business director at SWIFT.
Current market cap: $10 billion.
Dash is another cryptocurrency originally based on Bitcoin, created by Evan Duffield in 2014. The first name was XCoin, later it became DarkCoin before changing the name again to Dash (short forDigital Cash). Dash aims to be faster, more private and more secure than Bitcoin.
Current market cap: $2.3 billion.
NEM (New Economy Movement) was launched in 2015 and is based on its own original source code. Instead of copying an existing technology and modifying it, NEM was written from scratch, trying to fix some of the shortcomings of other cryptos. For example, it uses its own POI (Proof of Importance) algorithm. NEM was developed in Java under the Test Driven Development (TDD) methodology, improving the stability of the code. The goal of NEM is to improve scalability, ease of use, energy consumption of cryptocurrencies.
NEM is not only a coin but also a platform that allows companies to easily create special blockchains for different purposes using Java programming language. The difference with Ethereum is that NEM offers an API to write smart contracts while Ethereum allows you to write the entire contract code. This creates some limitation on the side of NEM but also makes the smart contracts more robust (less chance of bugs).
Current market cap: $1.8 billion.
Monero was created in 2014. Monero is esperanto for coin. The original name was BitMonero. Monero source code is writting from scratch, so not a copy of existing technology. Its main focus is privacy. While with Bitcoin, it is possible to trace back all transactions made with a bitcoin address, the Monero wallet address is not shown in the public blockchain. Also the transaction amounts are encrypted.
Current market cap: $1.4 billion.
There are many cryptocoins out there, some are fighting to be the best cryptocurrency of the future, trying to improve some of the short comings of Bitcoin. Others are just part of a bigger platform, such as Ethereum, Ripple and NEM, that offer a range of features.
There will be not 1 sole survivor in this race to become the best cryptocurrency. Bitcoin is the biggest and will keep growing because it is the most well-known name. Ethereum and Litecoin have the benefit of being sold on Coinbase. As long as Coinbase is the easiest place to buy and sell cryptocurrencies, that will have an effect on the adoption of a coin.
But we are still at the beginning of the crypto age. A lot can change and no one can predict the future.
There are many other interesting altcoins but I wanted to keep this post short. I will do a follow-up post soon with some more of my favourite coins.