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If you’re new to the world of cryptocurrency, there are a few that you might know already, with Bitcoin being the biggest name of them all, with its famous boom in 2017. However, Bitcoin is far from the only coin on the market.
For many years, the focus within the cryptocurrency community was largely on Bitcoin, with the main competitors to the dominant coin mostly coming as a result of forks, when new currencies split off from the original. However, from the early 2010s, a lot more attention was being directed at the new altcoins entering the market. This wasn’t when they first arrived on the scene however, with Namecoin, the first true altcoin, being created only two years after Bitcoin.
Altcoins gained even more attention after the unprecedented boom of Bitcoin in 2017, and the hard crash that came the year after. To many people, altcoins represented another opportunity to, with a little luck, replicate that boom. Since then altcoins have become an investment market all unto themselves.
A lot of altcoins are, to put it simply, not doing much to deviate from the Bitcoin model. They have the same practicality as Bitcoin and they have tended to follow the same market trends, rising when Bitcoin rises and falling when Bitcoin falls. However, there are some top altcoins that have found themselves a distinct niche, doing something that the creators believe Bitcoin may not be doing itself.
The niches that these coins on the altcoins list find can range greatly, with differing distribution methods, transactional accounting methods, trading speeds, and much more. Whilst many of the coins have tried to find a space in the market, there are few that have prevailed. There are some, with Ethereum being the most notable, that have stood the test of time.
Whilst many altcoins will largely follow the trends of Bitcoin in terms of investment value, there have been times when the two markets have moved oppositional to one another. Altcoins do not exist in a single market of course, so this doesn’t apply across the board. However, the beginning of 2020 has shown a renewed interest and increase in the value of the altcoin space in general, with Ethereum being one of the prime beneficiaries of this latest rise. Like all markets, the altcoin markets are prone to bull-runs and bear-runs, and this latest trend in the rising value of some of the top altcoins may be little more than just another example of this in action.
Many are working to study the trends that have led to the most recent rise, which may include the upcoming major update for Ethereum, known as the Ethereum 2.0 launch,
as well as the expansion of Coinbase outside of the US, offering its ability to store digital coins on a world-wide basis. While these factors may have contributed to the currency ascendancy of altcoin, the pendulum could soon swing to the other side. With Bitcoin undergoing its routine “halvening”, which slows the production of Bitcoins, the increasing rarity of new coins, by comparison, may lead to a rise in Bitcoin value.
As mentioned, there is no single altcoin market. It may be the case that several coins within the market are affected by widespread trends, but there are also major differences between them, in terms of function and purpose, to be accounted for too.
For instance, they can be broken down into several key types. Mining-based coins, like Ethereum, are most similar to Bitcoin in that they rely on the “mining” or solving complex computational problems to create new coins. Stablecoins are designed to be a more stable option, done by tying their value to actual currencies. Security Tokens are altcoins tied to a business, much like stocks, and often pay a dividend. Utility tokens are tied to a service instead. Here, we will look at some of the most notable altcoins on the market right now, and what sets them apart from not only Bitcoin, but also from each other.
XRP is a cryptocurrency token that uses the Ripple network, which is designed specifically for it to be used as a currency, rather than a token with a distinct investment value of its own. Clearing systems in the Ripple network typically use US dollars as a base currency, meaning its value is somewhat tied to the dollar. It’s one of the three biggest cryptocurrencies on the market, alongside Ethereum and Bitcoin. However, unlike those two, XRP cannot be mined. There’s a finite amount of 100 billion tokens and their distribution is controlled by Ripple Labs.
A mining-based coin, Ethereum is considered by many to be the most direct competition currently facing Bitcoin. Like Bitcoin, it’s also based on a decentralized system of blockchain verification and record-keeping, outside the control of any central governing body. Bitcoin is primarily used as a currency, however, Ethereum’s blockchain technology is widely used as a ledger technology for the construction of new programs, as well.
The Chainlink network is another decentralized system that supports LINK tokens, which have been outperforming a lot of other tokens on the altcoins list at the moment. The Chainlink network serves as a blockchain middleware that allows smart contracts to connect to off-chain resources through a series of oracles. These oracles are third-party information sources that provide data to the blockchain, allowing them to fulfill a wide range of uses that traditional cryptocurrencies can not.
There are two different tokens on the Vechain platform at the moment, Vechain Token and VechainThor Energy. The former drives the transactional value of coins on the Vechain network, but the second has founds it niche as being used particularly for energy or gas to power transactions. Founded in 2016, the Vechain network has been adopted by multiple companies including Jiangsu Electronics and Renault as a technology partner to help with manufacturing and development projects in both.
Like Ethereum and Chainlink, Cardano is a cryptocurrency that works with smart contracts, meaning that its blockchain technology can also be used for external applications beyond investment. As such, it’s considered more of a competitor to Ethereum than to Bitcoin. Cardano is being marketed as a “third-generation” cryptocurrency, attempting to address many of the issues that users have found with existing coins. However, after an initial boom with the release of Cardano, it has dropped in value significantly and remained steady following that.