Here’s a small selection of alternatives to Bitcoin – each of which has its own advantages. All of them share Bitcoin’s fundamental strengths, however – minimal or zero transfer fees, and freedom from traditional banking restrictions.
Bitcoin is by far the most famous – and biggest – of the cryptocurrencies. But its use comes with a few downsides: it has been proven vulnerable to hacks and fraud, and has become the currency of choice for black-market transactions. Plus, its size, popularity and age all mean that mining new bitcoins is prohibitively expensive and time-consuming for all but the best-equipped.
Instead, however, there are a number of ‘altcoin’ currencies in existence. Here’s a small selection of alternatives to Bitcoin – each of which has its own advantages. All of them share Bitcoin’s fundamental strengths, however – minimal or zero transfer fees, and freedom from traditional banking restrictions.
Bitcoin Alternative #1: Litecoin
Based on the same protocol as Bitcoin, Litecoin is the second-most widely-known cryptocurrency after Bitcoin. It’s designed to be much easier to mine, thanks to its use of an algorithm designed for Linux backup systems – so you don’t need a supercomputer to get started. New ‘blocks’, or batches of coins, are mined at a rate of 25 per hour.
Market cap: $65.727,662
Bitcoin Alternative #2: Ripple
Ripple currently has the second highest market capitalization of any cryptocurrency, and it has been compared to Napster for its ubiquitous presence – it accepts any currency, but also other commodities like air miles. The entire concept is trust-based; exchanges are fundamentally a series of IOUs. In fact, Ripple isn’t really a currency itself, but a portal that converts anything into its own currency – XRP – and straight into whatever else it needs to be. Therefore it also accepts Bitcoin and other cryptocurrencies. One of its big advantages is instantaneous transfers (Bitcoin takes 40 minutes) across any currencies, and the ability to pay for anything, anywhere, without a local bank account, and without fees.
Market cap: $419,763,378
Bitcoin Alternative #3: Primecoin
Whereas Bitcoin generates new Bitcoins by proving the validity of previous transactions, Primecoin generates currency by finding long chains of prime numbers, known as Cunningham chains. This means that as well as creating money, you’re performing a scientific task. Unlike Bitcoin, there is no predetermined number of coins in existence. Primecoin’s difficulty increases linearly with each new coin mined, rather than every 2016 like Bitcoin (roughly every two weeks). Coin blocks are generated 10 times faster than Bitcoin, and payments processed equally quickly.
Market Cap: 309,786.33
Bitcoin Alternative #4: Namecoin
Created in 2011 to explore the record-keeping side of Bitcoin’s technology (Bitcoin’s entire viability depends on the public record of transactions), Namecoin generates .bit web addresses which are censorship free, and unregulated by ICANN, the governing body for domain names. It allows users to store secure data in very small amounts. Like Ripple, it’s not really a currency in itself, but the .bit DNS addresses change hands just like Bitcoin. It’s generally thought to be a better longer-term bet than many cryptocurrencies, all of which are notoriously volatile.
Market cap: $5,100,722
Bitcoin Alternative #5: Dogecoin
Created as a joke, following the ‘Doge’ meme, dogecoin quickly found genuine popularity and rose to a peak market cap of over $60m. It is uncapped, meaning a potentially infinite amount can be created, and blocks of coins are mined a lot faster than other currencies – approximately 1 per minute. Dogecoin has become notable for its association with fundraising, with users raising money for African water charities, NASCAR sponsorship and the Jamaican bobsleigh team. It’s traded much, much more than the other altcoin currencies on account of its low unit value and common use for tipping online.
Market cap: $13,774,752
If you prefer to stick to Bitcoin, be sure to read 10 tips for protecting your Bitcoin wallet.