The bitcoin system, can process only between 3.3 and 7 transactions per second, therefore growing demand has stressed bitcoin’s network, making transactions really expensive. That and few other flaws encouraged the search of alternative solutions. Since the release of bitcoin as open-source software in 2009, over 4,000 alternative variants of bitcoin have been created.
The alternative cryptocurrencies, launched after the great success of bitcoin, are called “altcoins”. Many of the altcoins are built up on the basic framework provided by bitcoin. Thus most altcoins are peer-to-peer, involve a mining process by which users solve difficult problems to unlock blocks, and offer efficient and cheap ways to carry out transactions on the web.
In in April 2011, the earliest notable altcoin called Namecoin, was introduced to the public. It was based on the bitcoin code and used the same proof-of-work algorithm – and like bitcoin, Namecoin is limited to 21 million coins. Current leading examples of altcoin include Litecoin, Ethereum, Ripple, Cardano, Neo, Eos, Monero, etc.
How big is altcoin market?
Bitcoin currently holds a market value of $163 billion. Following, it’s success Litecoin was launched in 2011, and was seen as the closest competitor to bitcoin. It’s current market value is $10 billion. While fundamentally similar in code and functionality to bitcoin, Litecoin differs in several essential ways. It allows mining transactions to be approved four times faster than bitcoin. Litecoin system also allows for a total of 84 million coins to be mined – exactly 4 times higher than bitcoin’s and Namecon’s. It also uses a different proof-of-work algorithm – scrypt, a sequential function that is much more memory-hard than most proof-of-work algorithms.
Litecoin was believed to be the strongest altcoin up until 2015, when Ethereum hit the market. Just in three years of existence Ethereum has reached market value of $70 billion and it seen as the only equivalent competitor to bitcoin. Ethereum introduced decentralized software platform that enables Smart Contracts and Distributed Applications to be built and run without any downtime, fraud, control or interference from a third party. Ethereum is not just a platform but also a programming language running on a blockchain, helping developers to build and publish distributed applications. Most of initial coin offerings (ICO) have been based on Ethereum Smart Contract technology.
Not every digital currency is mineable like bitcoin, Litecoin or Ethereum. Some crypto currencies are created with the entire supply released all at once, in which case the total supply is either held or in circulation and there is no way to mine or mint new coins. Some examples of non-mineable digital currencies are – Ripple, IOTA, NEM, NEO, and EOS.
Up to his day over 4,000 alternative variants of Bitcoin have been already created and probably there are even more to come. The strongest bitcoin competitors are Litecoin, Ethereum, Ripple, Bitcoin Cash, Cardano, Neo, Eos, Monero, Dash, QASH and many more.
What is the future of crypto currencies?
Since the middleman is no longer required for authorizing and authenticating transactions, the fees are minimal, as low as a couple of cents in some of cryptocurrencies. Also, transactions occur in a matter of seconds and minutes. Not to mention, the allure of anonymity and privacy that is associated with cryptocurrency payments. That is why cryptocurrencies are causing a huge disruption to the global payment system.
Since making a block chain payment is fast, convenient, and extremely secure. Not to mention, users don’t have to enter any sensitive personal information. No wonder people are starting to turn their backs on traditional banking system. Bitcoin, Ethereum, Ripple, Litecoin and many other crypto currencies continue their massive growth in price, market capitalization, and mainstream adoption.
The cryptocurrencies are providing features and functions that are changing, and maybe even improving, the way we execute every day transactions. It is no longer a question of whether crypto currencies are disrupting the global economy, but by how much and what does the future hold. Only time can tell how far this revolution will go.