Hoover, Tannoy, Jacuzzi and Onesie. Some brand names become so popular that they become household names beyond their own product. Now, we can add Bitcoin to that list. The coin’s rise from $1,000 to $20,000 in value during a crazy 2017 has catapulted it into the public eye.
While it’s understandable that Bitcoin attracted major headlines in the past year, it would be wrong to ignore the potential of other cryptocurrencies – especially since Bitcoin has dropped in value since its 2017 peak.
Whether you are a beginner just learning how to trade forex, or a veteran investor with in-depth knowledge of the bond market, the last year might well have sparked your interest in cryptocurrencies as a potential investment.
This begs the question: who are the Bitcoin rivals that are making a name for themselves, and what do you need to know about them?
If Bitcoin is the king of the cryptocurrency jungle, Ethereum is definitely second in the pecking order. Launched in 2015, Ether is, on the surface, very similar to Bitcoin – especially in the way the currency is mined, bought and sold.
Ethereum, however, has a broader scope than Bitcoin. It offers a platform through which Ether tokens can be used, as well as an entire open source, decentralized platform for the creation of smart contracts – a form of automated transaction instruction – and distributed applications.
At the beginning of 2017, Ether was worth less than $10; by the end, it was $1,400 – demonstrating a rate of growth that would ordinarily have attracted more headlines were it not for Bitcoin.
Ripple is a cryptocurrency focused on speed, offering near-instant financial transactions at a rate of 1,500 transactions per second. By comparison, Bitcoin handles 3-6 and Ethereum 15.
Its protocol (XRP) does not need to be mined, which helps avoids the negativity surrounding energy uses for Bitcoin. Ripple doesn’t operate on blockchain, relying instead on a network of independently validating servers and a persistent data structure called a hash tree.
Like Ripple, speed is a big selling point for Litecoin. While Litecoin is based on a similar technology, it generates blocks about four times faster than Bitcoin. There can be a maximum of 84 million Litecoin (LTC) created. By comparison, Bitcoin’s upper limit is 21 million.
In 2017, Litecoin’s market value shot from a little under $4 to more than $250. While this has dropped at the start of 2018 – in line with all cryptocurrencies – Litecoin still offers major potential for investors who feel they missed out with Bitcoin. This has led it to be labelled as “the silver to Bitcoin’s gold.”
Dash, originally known as Darkcoin, offers even more anonymity than Bitcoin, with a decentralized mastercode network that makes its transactions almost impossible to trace.
A 2015 rebrand as Dash (a portmanteau of digital cash) didn’t detract from the features that first attracted fans when it was created and developed by Evan Duffield. Mined by CPU or GPU, Dash jumped from under $12 at the start of 2017 to almost $1,500.
Zcash is a relative newcomer – launching at the end of 2016 – with a bold claim: “If Bitcoin is like http for money, Zcash is https.” The claim centers on the added level of privacy and security it purports to offer, with “shielded” transactions to allow content to be encrypted. For example, details such as the sender, recipient and amount can remain private when transactions are recorded and published on a blockchain.
The key takeaway
It’s worth it for investors to keep an eye on these alternative cryptocurrencies. However, we must also note that this is a market defined by drastic change. New currencies are often emerging, and prices can vary wildly from day to day – let alone over the course of several years.
The important takeaway is that Bitcoin isn’t the only show in town. Look beyond it and there are plenty of other opportunities for investing in cryptocurrency.
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