Alternatives to Bitcoin

Alternatives to Bitcoin

It’s been a while since Bitcoin is not the only cryptocurrency in the world. There are many more. FBS currently offers an opportunity to make money on Ethereum, DASH, and LiteCoin. Their price is currently lower than that of Bitcoin, while their ecosystems are strong. That, in turn, means that they have a promising potential. Let’s find out more about these assets. The background we provide will help you estimate the future prospects of these altcoins.

Have a look at contract specifications for cryptocurrencies offered by FBS!

Ethereum

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Ethereum is an open-source, public, blockchain-based distributed computing platform featuring smart contract functionality.

Ethereum was created by Vitalik Buterin, a Russian-born programmer from Toronto. Buterin tried to build applications on the Bitcoin blockchain but faced difficulties. He is also known as co-founder and contributor of Bitcoin Magazine. In 2013, Buterin released the Ethereum white paper and the year later the official announcement of Ethereum took place. Apart from Buterin, the members of the team included Mihai Alisie, Anthony Di Iorio, and Charles Hoskinson. They were also joined by developers Dr. Gavin Wood and Joseph Lubin. 

In July 2014, Buterin and other founders launched a crowdfunding campaign to gather money for the development of the project. They managed to raise more than $18 million by issuing Ether (the Ethereum tokens or ETH), which function as shares. These funds are managed by the Ethereum Foundation, a non-profit organization based in Switzerland. After the crowd sale, users became able to mine and trade ETH.   

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Vitalik Buterin, ex-teen prodigy programmer who co-founded Ethereum

Bitcoin and Ethereum have significant differences in purpose and capability. While the main use of the Bitcoin blockchain is to track ownership of digital currency (Bitcoins), the Ethereum blockchain can run the programming code of any decentralized application.

Ethereum supports so-called smart contracts. A smart contract is a computer code that can facilitate the exchange of money, content, property, shares, or anything of value. It is executed automatically when specific conditions are met. For example, an option contract is drawn up in the blockchain between some anonymous individuals, but the contract itself is in the public ledger. At the expiration date, this contract executes itself.

Ethereum actually allows developers to create whatever operations they want and thus can be used as a framework for lots of new applications. A developer doesn’t need to create a new blockchain for a new project – he/she can just use Ethereum. In other words, Ethereum offers more than Bitcoin which is basically limited to operating with peer-to-peer digital currencies.

The potential for application of projects built and deployed on the basis of Ethereum is great. Every centralized system can be decentralized using this technology. Ethereum can revolutionize areas like banking, voting systems, education, entertainment rights, insurance, supply chain management, etc. The list can go on and on. The Ethereum Enterprise Alliance, an initiative working to connect the world’s largest companies to the Ethereum network, is partnering up with dozens of the world’s most powerful and dynamic firms including Microsoft, Intel and BP.

ETH has the second biggest market capitalization after Bitcoin. At the moment of writing, it accounts for $97.6 billion. In 2017, ETH started 2017 at about $8 and touched $1,400 at the start of 2018.  

DASH

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DASH is another ambitious alternative to Bitcoin.

DASH (Digital Cash) was created by Evan Duffield at the beginning of 2014. Initially, the cryptocurrency was called XCoin (XCO) and then “Darkcoin.” It is designed to have a total supply of 18 million coins. The supply should reach this milestone in the year 2300 (weird, but it’s not a typo).

DASH presents itself as peer-to-peer decentralized electronic cash. It is based on Bitcoin’s core code but some new features are added. The aim of DASH is to make transactions fast, cheap and private. The size of reward for a new block declines by 7.1% each year. The average block is mined 4 times faster than that of Bitcoin.

A special feature of DASH is that it’s self-funding. When a new DASH is produced, 10% amount is set aside to fund different payment software projects. Whereas with Bitcoins it’s all about miners, DASH has a distinction of nodes (it’s called a two-tier network as opposed to Bitcoin’s single-tier network). There are “masternodes” who decide in what to invest. The masternodes also enable private transactions on DASH. To become one of them at the end of 2017, one had to buy at least 1,000 DASH coins. As you can see, in this case, some users accumulate the main power, and DASH gets criticism for that.

DASH is accepted directly as payment for goods in services in some places in the US, although not many. The cryptocurrency is traded mainly as an investment. The fee for transactions in DASH is negligible.

DASH managed to skyrocket by 8,000% in 2017. Its capitalization equals to $5.96 billion (12th place).

Litecoin

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Litecoin was created in October 2011 by a former Google employee Charlie Lee. The cryptocurrency was released via an open-source client on GitHub. Several days later the Litecoin Network went live. In essence, it’s a fork of the Bitcoin Core client.

The idea of the Litecoin creator was to make a “lighter Bitcoin”. The problem with Bitcoin mining is that it requires a lot of processing power and, consequently, energy. To address this issue, Litecoin uses another algorithm called “Scrypt”, which is less mathematically complex than Bitcoin’s SHA-256. Its aim is to make mining more accessible to people, so that not only big “industrial” pools of miners can succeed in finding a block, but normal people as well. 

One of Litecoin’s advantages is higher average block mining speed. Thus, using Litecoin merchants can get confirmation of a transaction in 2.5 mins, while one confirmation in Bitcoin will take minimum 10 minutes. In addition, a greater number of miners gets chance to mine blocks and earn mining rewards. 

However, faster block creation leads not only to advantages but to some problems. As miners compete to complete a new block, it sometimes happens that more than one block is formed at the same time. The network then decides which of these blocks to add to the blockchain. The discarded blocks become “orphan blocks” without any transactions in it. In Litecoin, there are more of such orphan blocks and the probability of mining such block is constantly increasing. As there’s an immense number of Litecoin transactions, Segwit was introduced to reduce the strain on the Litecoin blockchain.  

Litecoin occupies the 6th place by capitalization ($9.9 billion). The price of LTC has frequently displayed a strong correlation with that of BTC. Litecoin also had great success since the start of 2017, when it accounted for only about $4. In 2018 it was down approximately 50% from its all-time high of $375.29 set in December in line with the general correction at the cryptocurrency market.   

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