Alternative Cryptocurrencies to Bitcoin

Updated on April 22, 2016
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The Crytocurrency Wars

Ever since Bitcoin started to make it big as an alternative currency a wide range of competitors have hit the market. Like Bitcoin, they are all 'crytocurrencies'. They are also sometimes known as 'alt coins', which is a bit less of a mouthful.

A crytpocurrency is a distributed digital currency which is not controlled by a central authority (like a central bank), but instead is maintained and run through peer to peer transactions. The name 'cryptocurrency' comes from the fact that users run software which generates cryptographic keys to enable them to securely store, send, and receive currency.

Bitcoin has rocketed in value over the last year or so, and is starting to become a popular method for people to pay for things online or send money to friends and family around the world. But Bitcoin is not the only game in town, and its success has inspired a wide range of new start ups who hope that they can offer something new and different enough to muscle in on this brand new market.

From an investment perspective, all cryptocurrencies are risky investments, but may have the potential to pay off massively. There are not many markets were there is a possibility for a small investment to appreciate by hundreds or even thousands of percent over a short period of time, and that makes this an exciting proposition for investors.

The fact that Bitcoin has already gained so much value means that many investors are now wary that it is already overpriced (over $1000 for 1Btc!) and has little room for continued growth. This makes looking towards innovative alternatives even more appealing.

But of course there is also a very good chance that most of these new alt coins will flounder, and won't be around at all in a few years time. Whilst the marketplace is full of new pretenders at the moment, it is likely that the next year or two will see a substantial consolidation, with many alt coins failing and those that succeed rising in price. Picking the winners is going to be tough, but I for one think that it could be very rewarding.

I do not recommend anyone to invest a large sum of money in cryptocurrencies, whether it be Bitcoin itself or any of the alternatives. But a small speculative play with money you can afford to lose has the possibility of making substantial returns - which I think makes it well worth a punt.

Many People Are Getting Excited About Digital Currency

How to Pick the Most Promising Alt Coins for Investment

Many of the new cryptocurrency projects are little more than a pyramid scheme. The way that these currencies usually work is that they can be 'mined' by anyone with a computer, basically exchanging your computing power for money. In the early days of Btc this could be done on a home computer, or the kind of dedicated machine that a geek could build in his bedroom. Today that is now longer profitable, as the difficulty has increased and the 'mining' business now requires a substantial investment in equipment and professional IT skills. Because of this many alternatives are setting out to appeal to these home-based miners; this has allowed them to build an initial user base and gain enough initial value to be traded on exchanges, but as the difficulty of mining rises (as it must, because of the limited number which can be mined) people will jump ship and they will be left with nothing - so I do not think these alt coins have any long term value.

In identifying the best alt coins for investment in 2014 I look for projects which bring something new to the table. They have to offer long term value, to regular users as well as to miners. They have to have a unique selling point which differentiates them from Bitcoin and from the rest of the competition. Ideally, they should also target a particular niche within which to build an sizable and loyal 'early adopter' user base who are interested in more than just mining and them dumping the currency. I have also looked for alt coins which are currently cheap to buy, which helps to maximise the potential profits and minimize risks of depreciation.

Not an Investor?

If you are not primarily looking to make an investment, but instead are looking to find a digital currency to buy and use, then please consider taking a look at this article that features a great section at the bottom on which digital currency is best?

But You Can't Just Buy Them All

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Ripple and XRP

Ripple is actually much more than just an alt coin - it is positioning itself as an international payment system and currency exchange platform. This system uses a cryptocurrency with the ticker symbol XRP.

Unlike Bitcoin, Ripple transactions are instant, and completely free from any fees.

The company behind Ripple is one of the most professional and well funded company involved in the alt coin business. They are also targeting one of the most exciting and profitably niches for digital currency - trading and currency exchange.

One of the most exciting aspects of Ripple is that owning XRP would make you part of a peer to peer banking, trading and currency exchange system. The idea is that rather than exchanging USD to GBP, for example, you would buy XRP with your USD and then sell your XRP for GBP. This would allow traders, or the general public, to trade and exchange currencies with much lower fees than they would usually incur, and with exchange rates set more directly by the market itself rather than through the profit-taking intermediaries of the traditional banking sector. Exchanges, called gateways, are able to issue IOUs into the system, which can then be traded and exchanged for IOUs from other gateways by Ripple users.

Ordinary users can also choose to provide liquidity to the system, by allowing funds to flow through their account via people who they 'trust'. There is even the potential to make money from the balances you hold in any currency in your Ripple wallet by charging transaction fees for this service.

Although Ripple does not use mining for currency creation, there is currently an initiative which gives you free XRP if you donate your computing power to science (you can even choose which scientific projects to support), which I think is really nice.

You can learn more here:

Anonymous Transactions

Bitcoin gained much of its early popularity amongst the hacker community, and with people who liked the idea of making anonymous currency transactions without banks and big business being able to track everything you do.

Bitcoin is not completely anonymous, however.You can create a wallet anonymously, or at least as anonymously as you can do anything on the internet, but once you do all of your transactions are completely open and public.

Various new coins have been developed to appeal to this privacy-centric market by creating a truly anonymous currency. Some of the most popular and promising examples of this include:

  1. Anoncoin
  2. Darkcoin
  3. XCurrency
  4. Cloakcoin


The developers behind these privacy centric-coins believe that Bitcoin's public transaction records leave a big market opportunity open for them to create an alt coin which specifically appeals to the hacker ethic and privacy conscious consumers by being fully anonymous.

Tapping into a large, motivated and technologically savvy user-base of earl-adopters could provide massive growth for Anoncoin. Its never going to be as big as Bitcoin or appeal to the general public, but it is targeting a good niche which is big enough to generate substantial growth.

Anonymous Uncensorable Internet

Some alt coin developers want to go much further than simply creating a currency which cannot be controlled or manipulated by government, and which can be used anonymously.

There are projects out there trying to use an alt coin to power an anonymous, decentralized and uncensorable internet.

I believe the first project to start using block chain technology for providing internet functions was Namecoin, which uses its block chain for decentralized DNS - which in layman's terms means that you can use it to create website addresses and store their location for other people to visit. These website would be uncensorable - a government could not order them to be blocked in the way they normally do this because their location would be stored in the distributed ledger held on many, many different machines.

A newer and more ambitious project is called Safecoin. The idea behind Safecoin is to create an entirely new web structure - not just decentralized website addresses, but decentralized storage and web hosting as well, all secure with state-of-the-art cryptography so as to be completely anonymous. In this way Safecoin and its SAFE network would not just be providing an alternative to Bitcoin, but also to dark web projects such as TOR. Instead of mining Safecoin, users could 'farm' it by providing storage space, bandwidth and processing power from their computer to the network.

The use of coins like this to provide services offers an extra support to the price and an extra driver of growth, as well as giving casual users something to do with their coins.

Decentralized Asset Exchanges

Another category of so-called 'Bitcoin 2.0' project - alt coins which provide function beyond just being a currency to store value and to buy things - are the decentralized asset exchanges.

These projects include an alt coin, but go far beyond this to provide function which allow people to trade and store a wide range of assets. Ripple comes under this category, but there are now quite a few others as well. These include:

  • NXT
  • CounterParty
  • And Coming Soon - Ethereum

Bitshares

Buying Bitshares gives you a stake in a professional and well funded team of developers who are dedicated to creating the next big cryptocurrency. They have already released one alt coin which has gained a moderate amount of success - Memory coin; and they have more planned for the future. Anyone owning Protoshares will automatically receive a founding stake in any new projects, and protoshares themselves can also be traded or held as an investment.

Learn more here:

Second Opinions

Questions & Answers

    Comments

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      • profile image

        fsmedia 5 months ago

        Ripple (XRP) is the next big thing. Its already doubling in value each week.

        It is easy to get Ripple for free too, by signing up to Toast Wallet for a Ripple Wallet.

        Then visit https://goo.gl/jE45zG and collect free Ripple every hour

        Once you have 20+ Ripple, withdraw it to Toast Wallet.

        Grab it now while the value is low enough to get lots of XRP each hour, because once it skyrockets in value, they giveaway far less an hour and what you grab early is worth far more in a few years.

        What I have grabbed in a 6 hours today, may be worth around $800 in 3 years time, so what would 6 hours a day, 7 days a week, for a year net me? It will be fun finding out.

        Grab it freeat https://goo.gl/jE45zG but remember to get a Ripple Wallet like Toast Wallet first.

      • jgshorebird profile image

        Jack Shorebird 2 years ago from Southeastern U.S.

        Good hub, but some of your information is outdated.

      • profile image

        TRYING TO LEARN 3 years ago

        I have been hearing about UTOKEN and reports its going to surpass the Bitcoin, can seem to verify its reserve bank, it real value accept that its reserves are based upon holdings of investors and influx of new customers, could this be how its maintaining its market price and flux upward and when this slows down, it SPLIT'S back down to a low share? Could somebody tell me about UTOKEN??

      • profile image

        Alex Torreno 3 years ago

        I'd point out the 2nd generation cryptocurrencies CounterParty, NodeMoney and Etereum as the most promising. But the market is changing too fast, no one knows what will happen tomorrow.

      • Ghaaz B profile image

        Ghaaz B 3 years ago from The internet

        Interesting stuff. I see you sort of missed out on the LiteCoin Craze!

        I just published my list for the top 10 cryptocurrencies of the future, and it's a golden one. Check it out!

      • electronician profile image
        Author

        Dean Walsh 3 years ago from Birmingham, England

        At the moment, Counterparty (not actually a currency, but has an alt coin), Bitshares and Ripple; apart from that I'm buying assets on places like the NXT AE.

      • profile image

        johnralphio 3 years ago

        which 5 crypto currencies are you currently investing the most money in to?

        If you don't mind me asking.. ;p

        Kind Regards

        J.Ralphio

      • electronician profile image
        Author

        Dean Walsh 3 years ago from Birmingham, England

        Yes, I think Bitcoin will rise in price again, and it is probably unlikely that another cryptocurrency will become as popular as btc purely as a currency, but some have other functions such as asset exchanges and more and others fill nice niches will I think will thrive but never get as popular as the big B. Thanks for your thoughtful comment MariLar!

      • Cruncher profile image

        Cruncher 3 years ago from UK

        Interesting article. Thanks.

        I can see investing in cryptocurrencies could be very profitable, but the key will be picking the right one! Network effects means that it is likely that at most one cryptocurrency will win out and dominate and others will fade away (like Google dominates internet search, or Amazon online shopping).

      • electronician profile image
        Author

        Dean Walsh 3 years ago from Birmingham, England

        Lol, I'm not a betting man thanks.

        Yes, I have updated the list a couple of times, and I suspect that no, it will never become completely worthless - even if Bitcoin become completely overtaken by other technologies or something, some people will want them for nostalgia and other such reasons.

      • profile image

        Sior 4 years ago

        Dogecoin is going great for me!

      • electronician profile image
        Author

        Dean Walsh 4 years ago from Birmingham, England

        I have been looking at Darkcoin, although it was my understanding that AnonCoin is just as anonymous (and has more plans in that direction with stuff like direct I2P integration) but Darkcoin is more secure. I'll take another look at it; thanks Chris.

      • profile image

        Chris 4 years ago

        I would say Darkcoin has huge potential, apparently Anoncoin isn't completely anonymous where Darkcoin is. Mazacoin also seems like it's getting a lot of attention right now.

      • profile image

        snater 4 years ago

        Coino is quite interesting, not a pump&dump coin like doge or several other altcoins, developers are also active and trying to make coino as an respectfull contender to top cryptocoins. Liking the community too.

      • electronician profile image
        Author

        Dean Walsh 4 years ago from Birmingham, England

        You're right of, of course, Andrew; thanks for bringing a new coin to my attention - I'll take a look.

      • profile image

        Andrew 4 years ago

        Awesome piece. However, 2014 is still fairly young and there are endless new coins being made on a daily basis. This said, one such is LiteBar. LiteBar is more a cryptogenic commodity than what it is a coin and, rare. Seem to be getting some good attention right now.

      • electronician profile image
        Author

        Dean Walsh 4 years ago from Birmingham, England

        You do have a point. The 'network effect' is a big part of what drives cryptocurrencies and I don't see the likes of Dogecoin going away soon, but I do think that kind of enthusiasm has a shelf life and won't be sustained over the long term.

      • johndnathan profile image

        John D Nathan 4 years ago from Dallas, Texas. USA

        You're right. It doesn't. However, what it does have is a fanatic fanbase, viral marketing, and a great mascot.

        And sometimes that's what you need to get more people excited.

      • electronician profile image
        Author

        Dean Walsh 4 years ago from Birmingham, England

        I was probably being a little bit harsh - I've certainly got nothing against it. It's just that it doesn't really have anything unique, innovative or different.

      • johndnathan profile image

        John D Nathan 4 years ago from Dallas, Texas. USA

        Dogecoin went public on December 8, 2013. In the two months it's been active it's gathered a very large following, acquired many vendors who accept dogecoins, and even created several successful dogecoin-based charities. The r/Dogecoin community on reddit maintains a friendly and welcoming environment, which is now half the size of the r/bitcoin community and rapidly growing. Dogecoin's welcoming attitude has helped new adopters get interested in cryptocurrency, and it's the dogecoin community that will help it stay viable for years to come.

        So why do you feel Dogecoin is just a flash in the pan?

      • electronician profile image
        Author

        Dean Walsh 4 years ago from Birmingham, England

        Lol, that's great John, but if you want to keep your newfound riches then my advice would be to sell Dogecoin while its still valued highly and buy something with more long-term potential.

      • johndnathan profile image

        John D Nathan 4 years ago from Dallas, Texas. USA

        At the moment I'm putting some investment in Dogecoin, which sounds a bit silly and it is. I started doing it with an attitude of "Oh what the heck; it sounds like fun". But the funny thing is the coin started jumping in popularity like crazy and it's now the most popular altcoin under Bitcoin. So I'm planning on going to the moon! WOW!

      • Sue Adams profile image

        Juliette Kando FI Chor 4 years ago from Andalusia

        Quite.

      • electronician profile image
        Author

        Dean Walsh 4 years ago from Birmingham, England

        Very admirable Sue, but its not so easy for us city folk. My own feeling is that although I may be speculating a bit, by doing so I am supporting things which I do feel have a real chance to make a positive change in the world - if I profit from doing that I won't feel as bad as if I got paid by a big business with no concern for morality.

      • Sue Adams profile image

        Juliette Kando FI Chor 4 years ago from Andalusia

        Money, any type of money is a commodity for exchanging goods and services. As soon as money is used for speculative purposes it becomes like a dragon eating its own tail. So although I sympathize with alternative currencies which aim to bypass our present corrupt financial system, if these electronic currencies still thrive on the greed factor and gambling, we are not really moving forward, are we? For the time being therefore, I try have as little as possible to do with money. I live in a rural community where we exchange things like home grown veg for organic eggs, and exchange skills without any money being used at all. I like it.

      • electronician profile image
        Author

        Dean Walsh 4 years ago from Birmingham, England

        Nice explanation of the Ripple system. vozpc, thanks

      • vozpc profile image

        Brendan Skousen 4 years ago from Chandler, Arizona

        View this article from hubpages to see if there is value in Ripple.

        https://hubpages.com/money/Is-There-Future-Value-i...

      • electronician profile image
        Author

        Dean Walsh 4 years ago from Birmingham, England

        Thanks Flourish, I'm glad I inspired you to read up more about this subject, I find it very interesting myself.

      • FlourishAnyway profile image

        FlourishAnyway 4 years ago from USA

        This intrigues me. You always have the most interesting topics. I'm going to read up on that 51% problem to find out more about what it is all about and how Peercoin potentially addresses it. I'm a complete novice at all this but I know that you're very savvy, and now you've got me curious.

      • electronician profile image
        Author

        Dean Walsh 4 years ago from Birmingham, England

        Thanks Alex, Bitcoin does seem to have a high value at the moment and it could turn out to be a bubble, but then again it could shoot up again this year - nobody really has a clue and that's the exciting thing about it!

      • AlexK2009 profile image

        AlexK2009 4 years ago from Edinburgh, Scotland

        I agree a small amount in each of these, regularly and monitoring progress is a good idea. I will keep an eye on Bitcoin as well but at the moment it is, in my opinion, on the verge of bubble levels.

      • electronician profile image
        Author

        Dean Walsh 4 years ago from Birmingham, England

        Its got most people confused - but if you take the time to un-confuse yourself there's definitely the potential to make some serious profit. Thanks for your visit and the vote David!

      • David Trujillo profile image

        David Trujillo Uribe 4 years ago from Medellin, Colombia

        Voted up. I got to say this new world of digital currencies has me very confused

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