Cryptocurrencies have made major strides in the past few years; from being accepted in many retail outlets to being recognized as a legal form of currency in countries like Japan. While Bitcoin may have been the first to go global, other crypto-coins have now been introduced into the market for various reasons and with varying success.
What Are Altcoins
Alternative coins (altcoins) are other cryptocurrencies other than Bitcoin that offer the same benefits and in most cases, offer even better value to their users. These altcoins have increased in popularity and value over the past few years, spurred on by the many extra benefits that they offer over Bitcoin. While Bitcoin remains the most dominant digital currency, these alternative currencies are gaining value each day as users seek the best coin in the market.
Bitcoin as a cryptocurrency is not perfect. There are a number of problems with the bitcoin and blockchain protocol that the altcoins try to solve in differing ways:
In the world of cryptocurrencies, privacy is key. In Bitcoin, all transactions and users are pseudonymous (not anonymous!). That means that the blockchain publicly exposes all transactions since the very beginning along with the IDs used in the transaction (eg 1BvBMSEYstWetqTFn5Au4m4GFg7xJaNVN2). If it were possible to map an ID to a real user, that user's balance and transaction history could be exposed.
This has made altcoins that offer more privacy some of the most sought after. The most private altcoins include Monero, Zcash, Verge and Dash. Their demand is ever rising as the need for privacy takes centre stage.
Confirming Bitcoin transactions can take hours or days. One of the greatest impediments that digital currencies have solved is the speed of financial transactions. Bitcoin was at first thought of as very fast but other altcoins have since improved greatly on its speed and can now complete a cross-border transfer that used to take three days in a few seconds. The fastest altcoins include NEO, Litecoin and Ripple.
This is one of the most revolutionary technologies that altcoins offer. A smart contract is a digital contract that's enabled by the blockchain technology which facilitates the transfer of assets after certain conditions are met. This contract is immutable and thus can't be interfered with or manipulated. It has revolutionized many areas including supply chain management, insurance, shipping, banking and retail. Whilst Bitcoin can be used for smart contracts, other coins are more focused on this area such as Ethereum, NEO and Cardano.
While the blockchain technology used by Bitcoin is reasonably secure, there are potential attacks which could be employed to create fraudulent transactions. Cardano was created with security in mind and is based on the blockchain. It has several additional defence mechanisms over bitcoin to prevent fraudulent transactions. Its also built in Haskell - a language created to provide mathematical certainty through formal verification.
Cost of Transactions
Bitcoin was once the cheapest option in the financial market but altcoins have driven the cost even lower. While at first the cost was just a fraction lower than Bitcoin's, advancements in technology have driven it much lower. For some altcoins, the cost of transactions is zero! This is made possible by a system where the users themselves verify transactions as opposed to miners who charge a commission. They include EOS and IOTA.
What's the future for altcoins?
Altcoins have continued gaining market value, with some like Cardano increasing in value by 2400% in the last 30 days alone. As more users realize the great value offered by these altcoins, they will continue to invest in them which will drive the demand to great heights and this will in turn drive their prices and market values through the roof.
Which Altcoin is your favourite? Comment below, people.