The emergence of Bitcoin in 2008 opened a flood of innovation in crypto and virtual currencies. Because it’s open source, bitcoin inspired developers to come up with different models and possibilities of value tokens. Some of them out rightly bootstrapped the code minor tweaks, others borrowed some features and incorporated them while, others built new crypto platforms from scratch.
Here is a list of 5 altcoins.
1. Lite coin
LTC came out in 2011 to address some of bitcoin’s perceived shortcomings. For example;
- It implements a scrypt proof of work algorithm compared to bitcoins SHA-256 PoW.
- Its mode of mining is based on memory operation versus bitcoin’s process based
- Its network processes blocks every 2.5mins, and bitcoin does this in 10 minutes on average
Charlie Lee, an ex-Google employee and developer of this cryptocurrency, added specific features to stymie a potential mining arms race. By limiting mining to CPU and GPU miners, average PC owners could participate.
It is currently tradable on a number of exchanges – Bitfinex, OKcoin, Kraken, Yacuna – with a market cap of $ 52,504,661 and a supply capped at 84 million litecoins.
Ripple is a payment protocol and currency exchange built on a distributed consensus network. Unlike other crypto networks, it was designed for all types of tokenized assets and currencies such as fiat, gold, airline miles, loyalty points and IOUs. At its core is a public ledger that records all transactions users.
Ripple differs from Bitcoin in the following ways:
- Its native currency XRP is pre-mined versus bitcoin’s ongoing mining supply
- Its network reaches distributed consensus in 5 seconds compared to bitcoin’s 10min
- it is a proprietary network owned by Ripple Labs unlike bitcoin owned by no-one
XRP’s overall supply is capped at 100 billion units and is the 2nd largest crypto measured by market capitalization, after bitcoin. Jed McLeb was the earliest developer of the original Ripple system.
Pronounced as ‘dough-je coin’ – it is a cryptographic currency that grew popular out of an internet dog meme. In a short spell, after launching in 2013, it outstripped the number of transactions of bitcoin and other cryptos by more than 4X. Even more interesting was that, at one point, tweets on it spiked, making it the most mentioned alt coin on Twitter.
It is slightly different from Bitcoin because
- it is mined blocks are produced every 1 minute compared to Bitcoin’s 10 min
- it is inflationary as supply is unlimited versus bitcoin’s deflationary capped supply
- it uses a Scrypt mining algorithm while Bitcoin uses the SHA-256 algorithm for its mining process
DGC market capitalization stands at $ 9,746,945 and at number 7 on a complete list of cryptocurrencies. As of today, over 100 billion dogecoins are out in circulation; founder Jackson Palmer has no intention of capping supply.
NXT is a 2nd generation crypto currency and payment network. It was built from scratch and not based on Bitcoin’s open source code. Just like Bitcoin, its development is credited to an anonymous individual only known as BCNExt – a forum avatar.
NXT differs from Bitcoin in that:
- it uses a PoS (proof of stake) consensus scheme versus bitcoin’s PoW (proof of work)
- Unlike bitcoin, no mining is involved
- its design was intended as a more flexible platform for building applications compared to bitcoin
After launching in 2003, 1,000,000,000 coins were shared out amongst 73 stakeholders who initially committed funds to this project. Its money supply is static and current market capitalization at $ 8,835,124 ranks it 8th overall.
Ethereum is a second generation cryptocurrency platform that is not limited to monetary value tokens. It is described as a network for enabling platform-based contracts. It securely executes contracts implemented for almost anything – intellectual property, voting systems, asset exchanges, domain registries and more.
As a programmer, you can write applications on this platform using the language developed by the Ethereum team; after which, ‘apps’ appear as contracts on this platform. In short, it is a mining network, and operating system rolled into one.
Ether, the native currency, is used to reward decentralized miners for securing its network and for paying transactions fees. According to one of its founders, Vitalik Buterin, its supply has no cap, but instead, takes a linear inflation model. It is currently ranked 24th as per its market capitalization of $ 1,179,870.
There are plenty more cryptocurrencies besides bitcoin, each of them attempting to solve perceived gaps and offer people more choice. It will be interesting to observe how this space evolves in the coming years.