Bitcoin has recently become a viral topic in the media and can often be seen as a trending topic of discussion on social networks. But in case you haven't stumbled across Bitcoin, I'll briefly explain what Bitcoin is and why its importance and influence is on the rise. Then we can look at some alternatives to Bitcoin, and how they are different.
Bitcoin is a cryptocurrency, a digital asset and represent value in a digital form — an attempt to be an alternative to traditional fiat currencies. One of the defining characteristics of Bitcoin, and most cryptocurrencies, is that they are decentralized. What does this mean? Well, for a cryptocurrency, being decentralized means that there is no single governing body that oversees or controls the asset. This means that anyone can use it, it is open to everyone and is global (unless, of course, your local laws impose restrictions on Bitcoin, but Bitcoin itself does not impose restrictions).
The technical details of Bitcoin and other cryptocurrencies work can be rather dense. It would take more than this short post to explain, in detail, how it all works and what it all means. Because of that, and to avoid confusion, I have decided not to discuss the technical details in this short post. But I do encourage you, if you're curious or interested, to check out the links I've included at the bottom of this post.
Bitcoin has dramatically increased in popularity and usage since it was first released in 2009. Since then, with Bitcoin's rise in usage, other cryptocurrencies have been created (many other ones, approximately 1,600). Some of them have been based off of Bitcoin directly and are derivatives of Bitcoin, others are only similar in that they are themselves digital currencies or cryptocurrencies, some using a different encryption algorithm or intended to serve a different purpose and use-case.
In any case, there is no doubt that there is a lot of attention being devoted to cryptocurrencies and decentralized currencies. Now that Bitcoin has recently risen to over $15,000 per Bitcoin, more people are curious and eager to see if there are other alternatives that may see a similar increase in value and popularity.
With so many cryptocurrencies that exist, I found that it may be helpful to condense the information into a list. This list contains some of the alternatives to Bitcoin that are currently on the rise in popularity and use. Please note, the value per coin of the cryptocurrencies below varies significantly. Their value (and potential value) is dictated by more than just popularity.
Ethereum is likely the second most popular cryptocurrency and digital asset based technology. Its uses are more diverse than Bitcoin, in that it acts as much more than a virtual currency meant to replace traditional methods of payment. It is a cryptocurrency that allows you to build and use smart contracts. Contracts which automatically arbitrate an exchange between two parties. There are a tremendous amount of use-cases and practical applications for this type of technology, and it really requires reading up more on Ethereum to truely appreciate and understand what it is able to accomplish.
Differences of opinions and views between developers of the original Bitcoin source led to this fork, Bitcoin Cash, now a separate cryptocurrency. Bitcoin Cash was created in an effort to improve upon some of the deficiencies people thought existed in Bitcoin, such as block size.
Similar to Bitcoin, but with a couple main differences. Litecoin aims to have faster transaction times, compared to Bitcoin, and Litecoin mining uses the Scrypt algorithm rather than the SHA 256 that Bitcoin uses. The goal of the different algorithm is to make Litecoin easier and more efficient to mine for the average user/miner.
Ripple is a bit different from other cryptocurrencies and its name isn't often heard, however it is among the Top 5 most widely used cryptocurrencies. Ripple acts as both a payment network and a cryptocurrency and is meant to be an improvement in how current banks process transactions, aimed at financial instituions.
Factom is built upon the Bitcoin Blockchain and is meant to be a data layer built on top of the Bitcoin Blockchain. What this means, and what Factom does, is provide a secure and reliable method of data verification and identification. Due to the way the blockchain works, it cannot be modified or deleted, this means that data stored on the blockchain can be easily verified and you can know that it was not tampered with nor modified in any way. This also allows you to verify the existence of data or information, without necessarily having to see the data or information, allowing privacy to be maintained.
Think of Storj as the decentralized and distributed alternative to Dropbox. Storj is a cloud shared by the users. When you use Storj, you can rent out your extra hard drive space to the entire Storj network. This allows Storj users who are looking for cloud file storage to pay to rent that extra hard drive space. All the information is secure, private and encrypted.
Bitcoin is a peer-to-peer digital currency. Peer-to-peer (P2P) means that there is no central authority to issue new money or keep track of transactions. Instead, these tasks are managed collectively by the nodes of the network.
Bitcoins can be sent easily through the Internet, without having to trust middlemen.
Transactions are designed to be computationally prohibitive to reverse.
Be safe from instability caused by fractional reserve banking and central banks. The limited inflation of the Bitcoin system’s money supply is distributed evenly (by CPU power) throughout the network, not monopolized by banks.