Bitcoin was not only a pioneer, ushering in a rising tide of cryptocurrencies built on an autonomous peer-to-peer network, but it has also become the standard for cryptocurrencies, inspiring an ever-growing legion of followers and spinoffs.
The term “crypto” refers to the complex encryption that enables the creation and processing of digital currency as well as their transactions across decentralized platforms.
Cryptocurrencies are supposed to be free of government influence and control, but as the industry has grown in popularity, this fundamental aspect of the business has been called into doubt. Altcoins, as well as other off-brand coins, are currencies modeled after Bitcoin that usually advertise themselves as better or altered versions of Bitcoin. While some of these currencies may have certain unique qualities that Bitcoin does not, no altcoin has yet to meet the level of security that Bitcoin’s networks achieve.
Here are some Bitcoin alternatives that are becoming popular.
Ethereum, the first Bitcoin alternative on the list, is a decentralized software platform that allows smart contracts and decentralized applications (dapps) to be written and run without the need for third-party downtime, fraud, control, or intervention. Ethereum’s goal is to establish a decentralized suite of financial goods that anybody in the world, regardless of nationality, ethnicity, or beliefs, can freely access.
This factor amplifies the consequences for those in some countries, as those who lack access to governmental infrastructure and identities can get bank accounts, loans, insurance, and a variety of other financial services. While it might not have much to do with a good telecom billing software, Ethereum is at the top of the list for a good reason.
Using a research-based approach and developed by mathematicians, crypto professionals, and engineers, Cardano is an “ouroboros proof-of-stake” cryptocurrency. After some differences with Ethereum’s direction, Charles Hoskinson, a member of Ethereum’s startup team, quit and later assisted in the creation of Cardano.
Cardano’s blockchain was developed through considerable testing and peer-reviewed research by the Cardano team. The project’s researchers have authored over 90 papers on blockchain technology, covering a wide range of issues. Cardano’s research is its foundation.
Litecoin, following in Bitcoin’s tracks, debuted in 2011 and has been dubbed the “silver to Bitcoin’s gold.” It was designed by Charlie Lee, a former Google developer, and MIT graduate.
Litecoin is not controlled by a central body and is based on an open-source worldwide payment network that employs the “scrypt” proof-of-work algorithm, which can be decoded using consumer-grade CPUs.
While Litecoin and Bitcoin are similar in many aspects, it has a higher block creation rate, which means transactions are confirmed faster. Litecoin is now accepted by an increasing number of retailers, as well as developers. Litecoin is the world’s sixth-largest cryptocurrency, with a market capitalization of $10.1 billion and a per-token value of $153.88, as of January 2021.
Polkadot is a one-of-a-kind proof-of-stake coin that aims to provide interoperability between different blockchains. Its protocol connects permissioned and permissionless blockchains and oracles, allowing systems to all work together.
Polkadot’s essential component is its relay chain, which enables network interoperability. For specific use scenarios, it also allows for “parachains,” or alternative blockchains with their own native currency.
Polkadot differs from Ethereum in that instead of constructing just decentralized applications on the platform, developers can establish their own blockchain while still benefiting from the security provided by Polkadot’s chain. Developers can establish new blockchains with Ethereum, but they must implement their own security mechanisms, which could expose new and smaller projects to attack, as the larger a blockchain is, the more secure it is. Polkadot refers to this concept as “shared security.”
The world of cryptocurrency is continually evolving and may be positioned to compete with traditional banking models. Having a solid understanding of these systems will help the investor make wise choices on which currency will serve them best. In some cases, while the initial investment is reasonable, now may be a good time to jump on board and invest.