10 Evolving Cryptocurrencies Other Than Bitcoin
Following financial sanctions imposed by the EU and other nations on Russian entities, there is the presumption that these entities may utilize cryptocurrencies to stimulate transfers of money beyond the standard banking system. Elsewhere in the world, a Brazilian administration bill that would handle certain facets of the cryptocurrency market has progressed to a vote on the country’s Senate floor.
Bitcoin has not only been a trendsetter, conducting in a wave of cryptocurrencies built on a decentralized peer-to-peer network but includes becoming the de facto benchmark for cryptocurrencies, illuminating an ever-growing unit of followers and spinoffs.
- A cryptocurrency is broadly considered as a form of digital tokens or “coins” that exist on a dispersed and decentralized ledger called a blockchain.
- Beyond that, the field of cryptocurrencies has developed dramatically since Bitcoin was embarked over a decade ago, and the next great digital token may be discharged tomorrow.
- Bitcoin resumes leading the group of cryptocurrencies in terms of market capitalization, user command, and popularity.
- Other virtual currencies such as Ethereum are enabling the creation of decentralized financial (Defi) systems.
- Some altcoins have been supported as having newer components than Bitcoin, such as the ability, to handle more transactions per second or use distinct agreement algorithms such as proof of stake.
What Are Cryptocurrencies?
Before we take the nearest look at some of these alternatives to Bitcoin (BTC), let’s step back and pithily analyze what we mean by terms like cryptocurrencies and altcoins. A cryptocurrency, largely defined, is virtual or digital money that carries the form of tokens or “coins.” Though some cryptocurrencies have embarked into the material world with credit cards or other projects, the immense majority remain completely supernatural.
The “crypto” in cryptocurrencies refers to complicated cryptography that allows for the creation and processing of digital currencies and their transactions across decentralized systems. Alongside this important “crypto” feature is a common commitment to decentralization; cryptocurrencies are typically developed as code by teams who build in mechanisms for issuance (often, although not always, through a process called mining) and other controls.
Cryptocurrencies are designed to be free from government manipulation and authority—although, as they have grown more popular, this foundational facet of the industry has come under fire. The cryptocurrencies structured after Bitcoin are altogether called altcoins, and in some cases, shitcoins, and have often attempted to present themselves as altered or enhanced versions of Bitcoin. Though some of these currencies may have some amazing features that Bitcoin does not, comparing the level of security that Bitcoin’s networks accomplish largely has yet to be noticed by an altcoin.
Below, we’ll analyze some of the most significant digital currencies other than Bitcoin. First, though, a caveat: A list like this can’t be wholly comprehensive. One cause for this is the fact that there are about 10,000 cryptocurrencies in existence as of February 2022.1
Though many of these cryptos have small to no subsequent trading volume, some appreciate enormous popularity among faithful communities of supporters and investors.
Apart from that, the field of cryptocurrencies is always developing, and the next great digital token may be unleashed tomorrow. Though Bitcoin is widely seen as a pioneer in the world of cryptocurrencies, analysts adopt many techniques for estimating tokens other than BTC. It’s expected, for instance, for analysts to attribute a great deal of significance to ranking coins relative to one another in terms of market capitalization. We’ve factored this into our thinking, but there are other reasons why a digital token might have been included in the list.
Types of Altcoins
Cryptocurrencies are planned for payments, transferring value (akin to digital money) across a decentralized network of users. Many altcoins (i.e., those that are not Bitcoin or sometimes Ethereum) are categorized in this way and may sometimes be called value tokens
There are also blockchain-based tokens that are meant to serve a distinct purpose from that of money. One example could be a token issued as part of an initial coin offering (ICO) that represents a stake in a blockchain or decentralized finance (Defi) project. If the tokens are linked to the value of the company or project, they can be called guard tokens (as in securities like stocks, not safety).
Other tokens have a special use case or function. Examples include Storj tokens, which allow individuals to share files across a decentralized network, or Namecoin, which provides decentralized Domain Name System (DNS) service for Internet addresses.23 These are known as utility tokens.
Today, while many users of crypto comprehend and appreciate these differences, traders and lay investors may not notice the difference because all classifications of tokens tend to trade on crypto exchanges in the same way.
- Ethereum (ETH)
The alternative of bitcoin on our list, Ethereum (ETH), is a decentralized software platform that enables smart contracts and decentralized applications (dApps) to be produced and run without any downtime, fraud, control, or interference from a third party. The goal behind Ethereum is to create a decentralized suite of financial outcomes that anyone in the world can freely access, nevertheless of nationality, ethnicity, or faith.4 This aspect makes the importance for those in some countries more effective because those without state infrastructure and state designations can get access to bank accounts, loans, insurance, or a variety of other financial outcomes.
The applications on Ethereum are run on ether, its platform-
explicit cryptographic token. Ether (ETH) is like a vehicle for moving around on the Ethereum platform and is sought mostly by developers examining to develop and run applications inside Ethereum, or now, by investors examining to make purchases of other digital currencies using ether. Ether, launched in 2015, is currently the second-largest digital currency by market capitalization after Bitcoin, although it lags behind the prevailing cryptocurrency by a substantial margin.5 Trading at around $3,150 per ETH as of February 2022, ether’s market cap is just over half of bitcoin’s.6
In 2014, Ethereum was considered as a presale for ether, which received an amazing response; this helped to usher in the age of the ICO. According to Ethereum, it can be used to “codify, decentralize, safe and trade just about anything.” Following the attack on the decentralized independent organization (DAO) in 2016, Ethereum was split into Ethereum (ETH) and Ethereum Classic (ETC).7
In December 2020, Ethereum transitioned its agreement algorithm from proof of work (PoW) to proof-of-stake (PoS).8 This move is intended to allow Ethereum’s network to run itself with far less energy and improved transaction speed, as well as to make for a more deflationary economic environment. PoS allows network participants to “stake” their ether to the network. This approach helps to ensure the network and process the transactions that occur. Those who do this are awarded ether, likewise to how an impressive account works.9 This is an alternative to Bitcoin’s PoW mechanism, by which miners receive more BTCs for processing transactions.10
2. Litecoin (LTC)
Litecoin (LTC), launched in 2011, was among the first cryptocurrencies to follow in the footsteps of Bitcoin and has often been directed to as “silver to Bitcoin’s gold.”11 It was produced by Charlie Lee, an MIT graduate, and former Google engineer.
Litecoin is based on an open-source global payment network that is not regulated by any central control and uses the script as a PoW, which can be interpreted with the help of consumer-grade central processing units (CPUs). Although Litecoin is like Bitcoin in many ways, it has a quicker block generation rate and thus offers a quicker transaction confirmation time.
Other than developers, there are a growing number of merchants that accept Litecoin. As of February 2022, Litecoin has a market capitalization of $9.3 billion and a per token value of around $135, making it the 21st-largest cryptocurrency in the world.12
3. Cardano (ADA)
Cardano (ADA) is an “Ouroboros proof-of-stake” cryptocurrency that was built with a research-based practice by engineers, mathematicians, and cryptography experts.13 The project was co-founded by Charles Hoskinson, one of the five initial founding members of Ethereum. After having some conflicts with the direction that Ethereum was taking, he left and later helped to create Cardano.
The team behind Cardano formed its blockchain through vast experimentation and peer-reviewed research. The researchers behind the project have written more than 120 papers on blockchain technology across a range of topics.14 This research is the spine of Cardano.
Due to this stringent process, Cardano seems to stand out among its PoS peers as well as other large cryptocurrencies. Cardano has also been anointed the “Ethereum killer” because its blockchain is said to be qualified of more. That said, Cardano is still in its early stages. Though it has outperformed Ethereum to the PoS consensus model, it still has a long way to go in terms of DeFi applications.
4. Polkadot (DOT)
Polkadot (DOT) is a remarkable PoS cryptocurrency aimed at delivering interoperability among other blockchains. Its protocol is developed to connect permissioned and permissionless blockchains as well as oracles to permit systems to work together under one roof. Polkadot’s core feature is its relay chain, which allows the interoperability of varying networks. It also allows for parachains or parallel blockchains with their own native tokens for specific-use cases.16
Where Polkadot differs from Ethereum is that rather than completing just dApps on Polkadot, innovators can create their own blockchain while also using the security that Polkadot’s chain already has. With Ethereum, developers can create new blockchains but need to create their own safety measures, which can leave new and less projects open to attack because the larger a blockchain, the more safety it has. This concept in Polkadot is known as conveyed security.
Polkadot was developed by Gavin Wood, another member of the core founders of the Ethereum project who had differing opinions about the project’s future. As of February 2022, Polkadot has a market capitalization of roughly $24.5 billion, and one DOT trades for $22.60.17.
5. Bitcoin Cash (BCH)
Bitcoin Cash BCH holds an important place in the history of altcoins because it is one of the earlier and most successful hard forks of the initial Bitcoin. In the cryptocurrency world, a fork takes place as the result of discussions and arguments between developers and miners. Due to the decentralized nature of digital currencies, wholesale changes to the code underlying the token or coin at hand must be made due to general agreement; the mechanism for this process differs according to the respective cryptocurrency.
When different factions can’t agree, sometimes the digital currency is split, with the initial chain staying true to its original code and the new chain starting life as a new interpretation of the prior coin, complete with modifications to its code.
BCH began its life in August 2017 as a consequence of one of these divisions. The argument that led to the design of BCH had to do with the issue of scalability; the Bitcoin network has a limitation on the size of blocks: 1 megabyte (MB). BCH improves the block size from 1MB to 8MBs, with the idea being that bigger blocks can hold more transactions within them, and the transaction speed would therefore increase.18 It also makes other changes, including the reduction of the Segregated Witness protocol that impacts block space.
As of February 2022, BCH has a market cap of about $6.5 billion and a value per token of $340.19