The history of cryptocurrency began with Bitcoin – a decentralized permission-less form of money. Bitcoin was born in 2009 and was used only by techies as a cryptographically secure payment system.
In those far-off days, it cost a fraction of a cent, but as the awareness of Bitcoin increased and the network of users expanded, the coin’s price went up. Since then Bitcoin has grown to the most expensive digital asset and triggered the demand for more cryptocurrencies. As of today, the price of Bitcoin is fluctuating around $3,900, and its market capitalization is valued at $69.7 billion.
Although Bitcoin is still an undisputed leader in the market, there are many alternatives (altcoins) that offer the same functionality (or even broader) but can be bought at a more favourable price. Let’s look into three of them.
Ethereum: more than a currency
Price –$147 Market Capitalization – $15.4 billion
History.The concept of a blockchain platform that is not limited to financial use cases was conceived by Vitalik Buterin in late 2013. Bitcoin is arguably a breakthrough innovation, but it doesn’t use the underlying technology to the full. Focusing on it, Ethereum’s founder created a platform capable of hosting various industry-specific applications powered by smart contracts. Ethereum, as we know it, went live in 2015. With its advent, the industry entered a totally new era – the era of multi-purpose cryptocurrencies.
Functionality. The killer feature of Ethereum is that it automates any blockchain transaction by implementing smart contracts. These programs are written in such a way that they can execute immediately once the predefined terms on the transaction are met. This eliminates the need for intermediaries and makes Ethereum completely trustless. Another groundbreaking feature of smart contracts is that they allow users to create various decentralized solutions on top of the blockchain – tokens, on-chain systems, digital assets, and just about anything.
The Ethereum platform itself is powered by Ether, its native token, which can be mined like Bitcoin and used as a payment for developers’ contribution. Although Ether has had a bumpy ride recently, it is expected to grow in years ahead due to the forthcoming upgrades to the Ethereum blockchain and wider range of use cases it will enjoy.
Dash: the improved Bitcoin
Price– $86. Market Capitalization– $750 million
History. Like most cryptocurrencies in the market, Dash originated from the Bitcoin code. The aim of the project was to achieve Bitcoin’s ambition of becoming a commonly used electronic cash. While in the case of Bitcoin this goal is still hardly attainable due to the low transaction speed and high costs, Dash stands a good chance to become a go-to digital cash as it covers all bases. Dash is anonymous, four times faster than Bitcoin, and much cheaper as well.
Functionality.The primary feature that makes Dash different from Bitcoin is complete anonymity. The transactions on the Dash network can be made in a few modes – publicly (like those of Bitcoin, but faster), instantly (aka InstantSend), and privately (aka PrivateSend). Once the user opts for PrivateSend, no one on the blockchain can see the transaction details, its history, or source of funding. This becomes possible due to the mixing service and fungibility of the Dash tokens. Using InstantSend, the transactions are executed in a matter of seconds, which is an obvious advantage over Bitcoin with its 10-minute block time. How is this functionality enabled?
Dash is maintained not only by miners but also by so-called Masternodes, making the network two-tier. Masternodes take part in network governance and provide services like Private- and InstantSend. To host a masternode, the user needs to own at least 1,000 DASH. Like miners, masternode owners receive rewards for their contribution to platform development.
XRP: the future of interbank transactions
Price– $0.32. Market Capitalization– $13.5 billion
History. Like Ether for Ethereum, XRP is a native token for Ripple, the open-source payment protocol that makes cross-border transactions fast and cheap. Ripple was released in 2012 by Ripple Labs. While Bitcoin was primarily created to overthrow the existing banking system, Ripple, on the other hand, works in close cooperation with financial institutions. As of today, there are dozens of banks using the Ripple technology for international payments, including Santander and UniCredit.
Functionality. Another difference from Bitcoin is that XRP cannot be mined. The maximum supply of XRP is set at 100 billion units and there are over 40 billion of them circulating in the market so far. The rest is kept in escrow and will be released when the team behind Ripple thinks proper.
In fact, Ripple supports both fiat and cryptocurrency payments. How is this possible? The Ripple network consists of gateways or trusted parties like banks and financial institutions. To settle fiat transactions between these gateways, XRP is used. Simply put, Ripple’s native token acts as an intermediary currency between fiat or digital assets transferred within the network.
One more selling point of Ripple is that it’s extremely fast. The system is capable of handling around 1,500 transactions per second, and has a fair chance to overcome Visa or SWIFT in terms of a throughput.
As you can see, there are many attractive coins in the cryptocurrency market. Clearly, the above-mentioned altcoins are worthy of attention due to their advanced functionality, but your choice should not be limited to them only. Spare neither time nor effort to learn about the crypto projects existing in the industry today, and you will certainly find more options to invest in.
Written by Mary Ann Callahan, an expert on Bitcoin-related topics, and journalist at Cex.io – cryptocurrency exchange. She has been working on articles related to blockchain security, bitcoin purchase guides and bitcoin regulations in different countries.