Bitcoin – you can’t open a news app or tech blog without hearing about the world’s favourite digital currency – but what else is going on in the cryptocurrency world?
Well, quite a lot it actually – and while no other currency has seen the explosion in value that Bitcoin has during the last 18 months, that’s not to say Bitcoin is the only player to keep an eye on.
If you’re considering dipping into less familiar cryptocurrency waters, it pays to do you research – check out some write ups on potential brokers – like this review of the best cryptocurrency exchanges in 2018 – before you buy – and in the meantime, we’ll tell you a little about 5 ‘altcoin’ currencies that are showing significant promise and could represent the next big thing…
Even those who aren’t familiar with the nuances of cryptocurrency are increasingly likely to have heard about Ethereum – especially owing to how hard marketers have hit the social media channels trying to push their ether related services.
‘Ether’ – the name of Ethereum’s currency – is the second biggest digital currency behind Bitcoin and it’s fairly new on the scene, having launched in 2015. Ether is a little different to Bitcoin, in that it operates on an ‘if this, then that’ contractual basis. Let’s line it up next to Bitcoin to explain how that works:
You’re buying an ebook with Bitcoin, you send the private key to the person’s wallet and they send you the product.
You buy the same book with Ethereum and a contract could be generated, stipulating that when the funds are sent, the ebook is released – or alternatively, when the ebook is received the funds are released.
Although Bitcoin operates without ‘trust’ needed in the actual transaction, as soon as human’s become involved with any process beyond the actual money transfer, trust is again required. With a smart contract system, trust is removed.
- Ether started 2017 at around £6/$8 and looks set to finish the year around £350/$470.
Another newcomer to the crypro game, Zcash didn’t launch until late-2016 but is looking like a very promising contender going forward.
The currency focuses on security and privacy when compared to Bitcoin. Where Bitcoin operates on a public blockchain with every transaction that’s been made visible to anyone who looks, Zcash’s offers what they refer to ‘shielded’ transactions, where sender, recipient and the amount of the transfer are protected from view.
If increased security and anonymity are your thing – Zcash is worth a look…
- Zcash started 2017 at around £37/$50 and looks set to end 2017 around £225/$300
Ripple was launched in 2012 with the primary aim for allowing banks to facilitate and settle cross-boarder payments in real-time with “end-to-end” transparency.
The big difference when compared to Bitcoin and most other blockchain based cryptocurrencies comes when the currency is produced. Most cryptos rely on ‘mining’ – a sophisticated process of solving the mathematical problems that occur throughout the blockchain when transaction are taking place. With Bitcoin’s blockchain, miners are rewarded for this action with more Bitcoins – but Ripple is different.
Essentially, Ripple facilitates the transfer of other currencies and commodities with gateways – and through those gateways money is sent – or rather, not sent. The money doesn’t actually leave the gateway that it’s deposited into, but is still released by the recipient’s gateway. It’s an IOU system that works because each gateway trusts one another not to break the relationship.
Ripple is extremely flexible – because, as long as gateways trust one another, anything can be transmitted without it actually moving – in fact, it doesn’t even have to be the same currency that goes it as comes out. Money in, car out – etc. Ripple’s algorithms work to find trust between two sources and execute the transaction through that trusted channel.
- Ripple started 2017 at just a tiny fraction of a dollar ($0.006) – and although the price vs. USD is still low – it’s significantly higher than it was at around $0.25 toward the end of 2017.
We’ve all been caught out with an internet or media fact that turns out to be nonsense – but there’s one about cryptocurrency that just won’t go away:
“Bitcoin is anonymous”
Well, it’s not – some understanding of the blockchain lets you know quite how false this actually is. However, there are calls for true financial anonymity – and Dash seems to be answering those calls. At it’s heart, Dash operates on a near identical blockchain to Bitcoin – but has the addition of quick transactions and transaction privacy.
Dash has been around since early 2014 – and was initially called ‘Darkcoin’. Its developers had big ideas for how Bitcoin could offer increased anonymity and speedier transfer times – but rather than approach Bitcoin, Dash’s founders decided to go it alone – as a result, they’re now one of the biggest altcoins out there…
- At the start of 2017 Dash tipped the scales at £9/$12 – whereas in the closing months of 2017 it was sitting around £512/$690
Litecoin wasn’t far behind the launch of Bitcoin – coming to the market in 2011. In a lot of ways, Litecoin has always been seen as the smaller sibling of Bitcoin, operating with a very similar blockchain system but always at a much-reduced buy-in cost.
Like Bitcoin, Litecoin has a decentralised ledger system that’s the brainchild of an ex-Google engineer and uses a ‘mining’ proof-of-work system that doesn’t require the huge processing power and energy consumption of Bitcoin.
As a result of this less intensive ‘mining’ process, blocks in the chain are generated much more quickly vs. Bitcoin and therefore Litecoin’s transaction confirmation times are greatly reduced. Litecoin is an increasing favourite with merchants and online developers owing to this quick turn-around…
- Litecoin was worth around £3/$4 at the beginning of 2017 – and is now at an impressive £60/$80 toward the end of 2017
There are a lot of cryptos out there that look great – but, as with any investment, the prior performance of cryptocurrencies doesn’t reflect their future performance – so don’t invest money you can’t afford to lose – and seek as much professional information about your chosen currency before you go empty your wallet of traditional cash…