Despite the growing number of cryptocurrencies (more than 100+) shaping the way for the future cashless world, bitcoin-mania has shown no diminishing effects even though its competitors are gaining considerable attention in the market. They have been trying and developing strategies that Bitcoin cannot fulfill. Bitcoin is considered as the leader or “The Godfather” of all cryptocurrencies and will continue to maintain its unique standing in these roles.
But as advancement and growth in technology can never be controlled nor predicted the stability of bitcoin may be affected when the competitors develop methods to overcome the specific niche operational roles of digital currency. For example, Ethereum looks at smart contracts, Zcash looks at anonymity etc.
The following are the major rivals of bitcoin that are rapidly on the rise:
Ripple is a real-time global settlement network that offers international payments instantly with end-to-end transparency as well as with low-cost. It is considered to be bitcoin’s logical successor by certain industry experts. It was released by the former bitcoin developers in 2012. Unlike Bitcoin, Ripple is not just a currency but a system through with any currency can be traded or transferred at lower costs. Also, mining is not required for Ripple, unlike bitcoin. Because of this, it gains an advantage of reducing network latency and the usage of computing power.
Ripple believes that ‘distributing value is a powerful way to incentivize certain behaviors’ and thus currently plans to distribute XRP primarily “through business development deals, incentives to liquidity providers who offer tighter spreads for payments, and selling XRP to institutional buyers interested in investing in XRP.”
Ethereum was launched in 2015 and is a decentralized software platform that enables Smart Contracts and Distributed Applications (DApps). These are allowed to be built and run in a secure way such that it works without any downtime, fraud, control or interference from a third party. Ethereum initially launched a pre-sale for ether and received an amazing response during 2014. Ethereum is a platform-specific cryptographic token, which is used for running the applications of Ethereum. It is like a vehicle for moving around on the Ethereum platform and is mostly required by the developers who try and look forward in developing and run applications inside Ethereum.
According to Ethereum, it can be used to “codify, decentralize, secure and trade just about anything.” Following the attack on the DAO in 2016, Ethereum was split into Ethereum (ETH) and Ethereum Classic (ETC). Ethereum (ETH) has a market capitalization of $41.4 billion, second after Bitcoin among all cryptocurrencies. (Related reading: The First-Ever Ethereum IRA is a Game-Changer).
Litecoin, was introduced into the market in the year 2011, was among the initial cryptocurrencies following bitcoin. It was often referred to as ‘silver to Bitcoin’s gold.’ Charlie Lee, an MIT graduate, and former Google engineer was the creator of litecoin. Litecoin is based on an open source global payment network and uses “script” as a proof of work, the decoding can be done by as simple methods as with the help of CPUs of consumer grade. The open source global payment is not controlled by any central authority.
Although Litecoin is like Bitcoin in many ways, it has a faster block generation rate and hence offers a faster transaction confirmation. Other than developers, there are a growing number of merchants who accept Litecoin to process a large volume of small transactions.
Zcash is another decentralized and open-source cryptocurrency released towards the end of 2016. It came up with the concept of anonymity amongst all the emerging cryptocurrencies. With the saying, “If Bitcoin is like HTTP for money, Zcash is https” they offer privacy and selective transparency of transactions. Hence like https, Zcash claims to have extra security with all the transactions being recorded and published on a blockchain. Certain details such as the sender, recipient and amount remain anonymous.
Zcash offers its users the choice of ‘shielded’ transactions, which allow for content to be encrypted using an advanced cryptographic technique or zero-knowledge proof construction called a zk-SNARK developed by its team.
IOTA is another newest contender in the cryptocurrency field, founded in 2015. It is an open-source distributed cryptocurrency focused on providing payments and communications between machines on the Internet of Things securely. Unlike the commonly used technology of blockchain, IOTA uses a directed acyclic graph (DAG) called Tangle, partnered with Microsoft, Fujitsu and several other companies. Considering itself as the first marketplace powered by the Internet of Things, IOTA provides transaction free regardless of the size of the transaction. The number of transactions handled by the system can be unlimited as well as with faster confirmation times.