Do you even need an alternative to Bitcoin?
Many Bitcoin advocates would do so with a resounding NO! respond. Bitcoin is not only the largest cryptocurrency, it is also probably the safest with the greatest chance of long-term success. Nevertheless, there are reasons to also consider other cryptocurrencies, especially if you are looking for the following properties:
- Ability for more smart contract functionality (programmable money)
- higher transaction speed
- lower fees
- higher scalability
- more privacy
- greater investment potential (riskier)
Below we will present some alternatives that meet one or more of these properties.
Bitcoin Alternative: Ethereum
In terms of market capitalization (currently 437.78 billion euros. Source: coinmarketcap.com ), Ethereum is the largest cryptocurrency next to Bitcoin that currently exists on the market. Ethereum was developed in 2015 and is a blockchain platform on which smart contracts (transactions that are linked to conditions) can be executed. The cryptocurrency that Ethereum uses is ether. The best year for Ether so far was 2017. With a price increase of more than 3,000%, the Ether profits were even higher than Bitcoin.
But what makes Ethereum so interesting? It enables you to develop your own apps, which then run on a blockchain. These apps cannot be switched off and execution is guaranteed. In 2017 in particular, a number of “Initial Coin Offerings” (ICO) took place on Ethereum.
For the simple user who does not want to launch their own blockchain project, Ethereum has an advantage: transactions in this crypto currency are carried out much faster than is the case with Bitcoin. In addition, the transaction costs are significantly lower. Ethereum is supported by almost all exchanges that also support Bitcoin.
Conclusion: Ethererum or Ether is a good Bitcoin alternative. Ethereum can boast a huge ecosystem and a large developer community, so the future for ETH currently looks positive. In particular, “decentralized finance” or DeFi seems to be a promising candidate for a meaningful class of applications. The main problem is the not yet resolved question of scaling and the associated upgrade to ETH 2.0.
Bitcoin alternative: Litecoin
Another alternative to Bitcoin is Litecoin. This cryptocurrency was developed by Charlie Lee (a former Google employee) in 2011. Two years later Litecoin already reached a market capitalization of one billion dollars (currently it is around 11.35 billion in position 17 according to market capitalization.). Technically speaking, Litecoin differs only slightly from Bitcoin: In the Litecoin blockchain, new blocks are not created every ten minutes, but every two and a half minutes. As a result, transactions are theoretically confirmed up to five times faster than with BTC. In practice, however, providers wait a few blocks longer to classify a transaction as really confirmed. The transaction fees are also very low with Litecoin.
Conclusion: Litecoin is a boring Bitcoin alternative. It is supported by many exchanges and has low transaction fees. Otherwise, Litecoin does not bring any innovations to the table.
Bitcoin alternative: DASH
The Bitcoin alternative DASH (short for “Digital Cash”) was traded in its early days (2014/15) with the names Darkcoin or Xcoin. Like Litecoin, it has some functionalities that are comparable to those of Bitcoin. But there are also differences here: the transaction fees are significantly lower and the transaction speed is significantly higher. In addition, the DASH organization attaches more importance to privacy. In this way, transactions can be mixed up and concealed in this way if desired. A portion of the fees go to the organization to help advance DASH development.
Conclusion: In terms of market capitalization, DASH currently ranks 77th (1.77 billion euros). As far as the acceptance of Dash is concerned, it has to be said that the spread (“digital cash”) still falls short of one’s own expectations.
Bitcoin alternative: Monero
Monero is an interesting alternative to Bitcoin. With a market capitalization of $ 4.28 billion, the Bitcoin alternative is currently in 41st place.
The special thing about Monero is that transactions are made absolutely anonymously. In the case of transactions, in contrast to Bitcoin, neither the addressee, recipient nor amount are publicly visible.
In addition, Monero is set up in a similarly decentralized manner as Bitcoin so that it is censorship-resistant and cannot be switched off.
Conclusion: Monero is a Bitcoin alternative that is particularly interesting for users who value anonymity.
Bitcoin alternative: IOTA
Another crypto currency that is often called the Bitcoin alternative in Germany is IOTA. IOTA is attractive in that it takes a completely different route than Bitcoin. Behind IOTA is a company that has committed itself to establishing IOTA as the standard for value transfer in the Internet of Things. This requires a high level of scaling and no transaction costs, which so far have been at the expense of decentralization. IOTA’s market capitalization is currently around 3.28 billion dollars, which means 52nd place. On the one hand, this makes this currency relatively risky (the technology has yet to prove itself). On the other hand, the growth potential for this Bitcoin alternative is correspondingly high.
Conclusion: IOTA is a crypto currency for which there are basically only two scenarios. Either in a few years IOTA will have failed completely or it will establish itself in its niche. For investors who are not afraid of the risk, IOTA can therefore represent an interesting Bitcon alternative.
Bitcoin alternative: Bitcoin Cash
Last but not least, we should also go into Bitcoin Cash: The currency was created by splitting off Bitcoin (“fork”), which brought Bitcoin owners the same amount of coins in Bitcoin Cash. The name of this Bitcoin alternative suggests that it is a variant of Bitcoin, but it is a stand-alone development. One of the main differences is the block size. This was initially set at a limit of 8 MB for Bitcoin Cash (compared to Bitcoin: 1MB), and later it increased further. It follows that scaling problems, as we are currently experiencing with Bitcoin (slow transactions, high fees), are unlikely with this Bitcoin alternative.
Of course, this sounds convincing and has also meant that Bitcoin Cash has increased in value in the meantime. Nevertheless, one can be skeptical about this Bitcoin alternative when it comes to long-term success.
The information contained herein is for informational purposes only. Nothing herein shall be construed to be financial, legal, or tax advice. The content of this article is solely the opinions of the writer who is not a licensed financial advisor or registered investment advisor. Trading cryptocurrencies/commodities/foreign exchange/equity market poses a considerable risk of loss. The speaker does not guarantee any particular outcome.