This year the value of Bitcoin has increased, even more than an ounce of gold. There are also new cryptocurrencies on the market, which is even more surprising as it brings the value of cryptocurrencies to more than a hundred billion. On the other hand, the longer-term outlook for cryptocurrency is a bit blurry. There are squabbles of lack of progress among its core developers that make it less enticing as a long-term investment and as a payment system.
Still the most popular, Bitcoin is the cryptocurrency that started it all. It is currently the largest market capitalization at about $41 billion and has been for the past 8 years. All over the world, Bitcoin has been widely used and so far it is not easy to exploit the weakness in the method that works. Both as a payment system and as a stored value, Bitcoin allows users to receive and send bitcoins easily. The concept of the blockchain is the basis on which Bitcoin is based. It is necessary to understand the concept of blockchain to get a sense of what all cryptocurrencies are.
To put it simply, blockchain is a distributed database that stores each network transaction as a piece of data called a “block”. Every user has copies of the blockchain so when Alice sends 1 bitcoin to Mark, every person on the network knows.
An alternative to Bitcoin, Litecoin tries to solve many of the problems that hold Bitcoin back. It is not as resilient as Ethereum with its value derived mostly from solid user adoption. It is worth noting that Charlie Lee, ex-Googler leads Litecoin. He also practices transparency with what he does with Litecoin and is quite active on Twitter.
Litecoin was second fiddle to Bitcoin for a long time, but things started to change before the year 2017. First, Litecoin was adopted by Coinbase along with Ethereum and Bitcoin. Later, Litecoin fixed Bitcoin’s problem by adopting Segregated Witness technology. This gave them the ability to lower transaction fees and do more. The decisive factor, however, was when Charlie Lee decided to put his sole focus on Litecoin and even left Coinbase, where he was the Director of Engineering, just for Litecoin. Due to this, the price of Litecoin has increased in the last two months with its strongest factor being the fact that it could be a real alternative to Bitcoin.
Vitalik Buterin, superstar programmer designed Ethereum, which can do everything Bitcoin is capable of doing. However, its main purpose is to be a platform for building decentralized applications. Blockchains are where the differences between the two lie. Basically, the Bitcoin blockchain records a type of contract, one that indicates whether funds have been moved from one digital address to another. However, there is a significant expansion with Ethereum, as it has a more advanced language script and has a more complex and wider scope of applications.
Projects started popping up on Ethereum when developers started to notice its better qualities. Through the crowd token sale, some have even raised millions of dollars and this is still a continuing trend even to this day. The fact that you can build wonderful things on the Ethereum platform makes it almost like the internet itself. This caused a crash in the price so if you bought a hundred dollars of Ethereum earlier this year, it would not be valued at almost $3000.
Monero aims to solve the problem of anonymous transactions. Although this currency has been perceived to be a method of money laundering, Monero aims to change this. Basically, the difference between Monero and Bitcoin is that Bitcoin features a transparent blockchain with every transaction public and recorded. With Bitcoin, anyone can see how and where money has been moved. However, there is some imperfect anonymity about Bitcoin. In contrast, Monero has an opaque rather than transparent transaction method. No one is quite sold on this method, but since some love privacy for any purpose, Monero is here to stay.
Not unlike Monero, Zcash also aims to solve the problems that Bitcoin has. The difference is that instead of being completely transparent, Monero is only partially public in its blockchain style. Zcash also aims to solve the problem of anonymous transactions. After all, not every person likes to show how much money they really spent on memorabilia from Star Wars. Thus, the conclusion is that this type of cryptocoin really has an audience and a demand, although it is difficult to indicate which cryptocurrency that focuses on privacy will eventually come out on top of the pile.
Also known as “smart token”, Bancor is the new generation standard of cryptocurrencies that can contain more than one token in reserve. Basically, Bancor is trying to make it easier to trade, manage and create tokens by increasing their level of liquidity and letting them have a market price that is automated. At the moment, Bancor has a front-end product that includes a wallet and the creation of a smart token. There are also community features such as stats, profiles and discussions. In a nutshell, Bancor’s protocol enables integrated price discovery as well as a liquidity mechanism for smart contractual tokens through an innovative reserve mechanism. Through the smart contract, you can instantly liquidate or buy any of the tokens in Bancor’s reserve. With Bancor, you can create new cryptocoins with ease. Now who wouldn’t want that?
Another competitor of Ethereum, EOS promises to solve Ethereum’s scaling problem through the provision of a set of tools that are more robust to run and create apps on the platform.
An alternative to Ethereum, Tezos can be updated consensually without too much effort. This new blockchain is decentralized in the sense that it is self-governing through the creation of a true digital commons. It facilitates the mathematical technique called formal verification and has features to enhance the security of the most financially weighted and sensitive smart contract. Definitely a great investment in the coming months.
It is incredibly difficult to predict which Bitcoin in the list will become the next superstar. However, user adoption has always been a key success factor when it comes to cryptocurrencies. Both Ethereum and Bitcoin have this, and although there is a lot of support from the early adopters of each cryptocurrency on the list, some have yet to prove their staying power. However, these are the ones to invest in and watch out for in the coming months.