The blockchain based currencies looking to transform digital finance
Bitcoin, the digital currency based on blockchain technology, has become seriously popular, seriously quickly. So much so, in fact, that Coinbase is struggling to process the number of transactions that users are trying to make. Unsurprisingly, Bitcoin currently has the highest market capitalisation of all the cryptocurrencies. However, Bitcoin is to blockchain what email is to the Internet – it’s just one application. New options are cropping up regularly, especially now that companies are beginning to invest in their own digital ledgers. As hype intensifies, the number of competing cryptocurrencies can be confusing. Even so, there are some clear challengers on the rise. Here are five of the most successful blockchain based alternatives, starting of course with Ethereum.
If you’ve heard of any other cryptocurrency that isn’t Bitcoin, chances are it’s Ethereum. Ethereum is a public blockchain network that provides developers with the tools to make decentralised applications, for example a smart contract. Instead of focusing on tracking transactions, it runs the programming code for these applications. The value of the network lies in ether, which is used to codify and securely trade assets. Ethereum was first discussed in a 2013 paper written by Russian programmer and founder Vitalik Buterin. Ethereum went public in 2015 and is the second largest cryptocurrency with a market cap of $34 billion.
Released in 2012, Ripple is an international, real time payment system that prides itself on transparency. It uses a consensus ledger to validate transactions which doesn’t require mining. Taking out this stage in the process makes it cheaper and quicker than other more complex alternatives. At the moment, around 60 financial businesses use Ripple and it has the third largest portion of market capitalisation. The cryptocurrency’s ultimate goals are to enhance banking, and allow assets to flow instantly between mobiles, public blockchains and banks.
Litecoin is something of a cryptocurrency veteran, launched in 2011 by MIT graduate and former Google engineer Charlie Lee. It is a decentralised, global exchange with a faster transaction rate than competitors. In order to prove transactions, Litecoin uses ‘scrypt’ which can be mined using consumer grade hardware. Despite being described as silver to Bitcoin’s gold, Litecoin has remained an influential player in the cryptocurrency game. In May, Litecoin reached a market cap of $1 billion, only to double its worth earlier this month. That’s a formidable turnaround.
NEM (Newmont Mining Corporation) is a combined private and public blockchain platform launched in 2015. NEM’s currency, XEM, has a market cap of $1.7 billion. The service features multiuser contracts, messages and mosaics, which are assets with customisable properties. NEM was created by Japanese developer and entrepreneur Makoto Takemiya, who also worked on the Hyperledger Project. The software is currently under testing in Japan for a commercial blockchain service called Mijin, and is encouraging blockchain adoption in Asia.
Initially released in early 2014 as ‘Darkcoin’ and then rebranded in 2015, Dash is a decentralised, open source, peer to peer network. As its original name suggests, it is virtually untraceable. Dash was created by developer Evan Duffield, with the aim of improving cryptocurrency software and using it to facilitate accessibility and honesty. The cryptocurrency can be used online and even in store for anonymous, instant exchanges. Last month, Dash exceeded the $1 billion benchmark, joining eight other platforms.
The digital currencies in this list are just a small handful of blockchain based, online payment networks that offer a similar service to Bitcoin. The amount of alternative options steadily gaining traction is proving that the cryptocurrency scene is far from a one horse race. Even so, Bitcoin’s closest competitor, Ethereum, has a market capital worth that is $8.5 billion less than the current leader. Ironically, though, Bitcoin’s popularity is problematic. For example, recent Coinbase crashes could encourage users to turn to lesser known cryptocurrencies in hope of improved service. This includes much smaller mediums of exchange like those at Kik and Omise. But regardless of which are most successful, their gradual adoption signals mass disruption in digital finance.