This year, the value of Bitcoin has increased, even surpassing one ounce of gold. There are also new cryptocurrencies in the market, which is even more amazing, which makes the value of cryptocoins more than hundred billion. On the other hand, the long-term outlook for cryptocurrency is somewhat murky. There are arguments among its core developers about the lack of progress, which makes it less attractive as a long-term investment and as a payment system.
Most famously yet, Bitcoin is the cryptocurrency that started it all. It currently has the largest market cap of around $41 billion and has been around for the past 8 years. Bitcoin has been widely used all over the world and so far it is not easy to exploit the weakness of its working method. As both a payment system and a stored value, Bitcoin enables users to easily receive and send Bitcoins. The blockchain concept is the foundation upon which Bitcoin is based. It is necessary to understand the concept of blockchain to understand what cryptocurrencies are talking about.
Simply put, blockchain is a distributed database that stores each transaction on the network as a piece of data called a “block”. Every user has copies of the blockchain, so when Alice sends 1 bitcoin to Mark, everyone on the network knows it.
One alternative to Bitcoin, Litecoin tries to solve many of the issues that hold Bitcoin back. It is not as durable as Ethereum, with its value largely derived from strong user adoption. It’s worth noting that Charlie Lee, a former Google employee, runs Litecoin. He is also transparent with everything he does with Litecoin and is quite active on Twitter.
Litecoin has been second fiddle to Bitcoin for quite some time, but things started to change in early 2017. First, Litecoin was accepted by Coinbase along with Ethereum and Bitcoin. Next, Litecoin fixed Bitcoin’s problem by adopting Segregated Witness technology. This enabled it to reduce transaction fees and do more. However, the deciding factor was when Charlie Lee decided to focus his sole attention on Litecoin and even left Coinbase, where he was the Director of Engineering, solely for Litecoin. Due to this, the price of Litecoin has increased in the last few months, the strongest factor of which was that it can be a real alternative to Bitcoin.
Superstar developer Vitalik Buterin came up with Ethereum, which can do everything Bitcoin can do. However, its purpose is primarily 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 that indicates whether funds have been moved from one digital address to another. However, there is significant expansion with Ethereum, as it has a more advanced language script and has a more complex, wider scope of applications.
Projects began to sprout on top of Ethereum as developers began to notice its better qualities. Some have even raised millions of dollars through token crowd sales, and this is still an ongoing trend even today. The fact that you can build amazing things on the Ethereum platform makes it almost the same as the Internet. This caused the price to skyrocket, so that if you bought a hundred dollars worth of Ethereum earlier this year, it wouldn’t be worth nearly $3,000.
Monero aims to solve the issue of anonymous transactions. Even if this currency was perceived as a method of money laundering, Monero aims to change that. Essentially, 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 a non-transparent transaction method. No one is really sold on this method, but since some people love privacy at any cost, 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 everyone likes to show off how much they actually spent on Star Wars memorabilia. So the bottom line is that this type of cryptocoin does have an audience and demand, although it’s hard to say which cryptocurrency that focuses on privacy will ultimately come out on top of the heap.
Also known as a “smart token,” Bancor is the standard for a new generation of cryptocurrencies that can hold more than one token in reserve. Basically, Bancor seeks to facilitate the trading, management and creation of tokens by increasing their level of liquidity and allowing them to have an automated market price. Bancor currently has a product that includes a wallet and smart token generation. The community also has features such as statistics, profiles and discussions. In short, the Bancor protocol enables embedded price discovery as well as smart contract token liquidity through an innovative backup mechanism. With a smart contract, you can instantly liquidate or buy any token held by Bancor. With Bancor, you can easily generate new cryptocoins. Now who wouldn’t want that?
Another competitor to Ethereum, EOS promises to solve Ethereum’s scaling problem by providing a set of tools that are more robust for running and building applications on the platform.
As an alternative to Ethereum, Tezos can be consensually updated without too much effort. This new blockchain is decentralized in the sense that it is self-governing by creating a true digital Commonwealth. It facilitates a mathematical technique called formal verification and has security-enhancing features for the most financially sound, sensitive smart contract. Definitely a big investment in the coming months.
It is incredibly difficult to predict which Bitcoin on 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 even if each cryptocurrency on the list has strong support from early adopters, some have yet to prove their staying power. However, these are the ones to invest in and watch out for in the coming months.