Cryptocurrencies are often seen as a challenge to the status quo. Citizens of Zimbabwe turned to bitcoin last year driven by fears that hyperinflation will wipe out the entire value of their savings after the nation’s army seized power. Venezuela launched an oil backed cryptocurrency called the ”Petro” hoping that it will circumvent US financial sanctions. Exchanges have been increasingly adding new coins to give traders and investors more options to add to their crypto portfolio. Even with much development in the crypto space, most cryptocurrencies took a beating last week. Fear and panic overwhelmed the market. However none of it caused Bitcoin and Ethereum to lose their No.1 and No.2 positions which have been unchallenged for a long period of time. Both these coins have attracted loads of money for the past year or so. So what other cryptocurrencies are there? Which cryptocurrency is designed to challenge the incumbent?
Litecoin was created by ex Google employee Charlie Lee. Litecoin is often said to be silver to Bitcoin’s gold.The purpose of Litecoin was to solve problems such as concentrated mining pools and transaction timings. Unlike Bitcoin, Litecoin uses an algorithm which uses large amounts of high speed RAMs rather than just raw processing power. This makes it difficult for co-operating miners to share block rewards. Litecoin’s block time is 2.5 minutes while Bitcoin takes 10 minutes to validate a transaction.
What started out as a side project, Litecoin eventually gained recognition among the general public when it was listed by Coinbase. Furthermore the team behind Litecoin has been trying to partner with card service providers such as VISA and Mastercard to create their own payment card called Litepay. However an email was sent to pre-registered participants that Litepay was postponed indefinitely causing price of Litecoin to fall.
XRP is a coin created by Ripple. Unlike many other coins which can be mined by third parties, all of 100B XRP(s) have been pre-mined by Ripple. Early this year, XRP briefly overtook Ethereum in the number 2 spot. However it was relegated to the 3rd position shortly after. Payments and settlements are the key focus of Ripple. Payments and settlements which normally takes 3-5 days can now be done within few seconds using XRP. Furthermore this enables banks to save up to 60% of their transaction costs. Ripple is currently working with more than 100 banks to conduct cross border transactions. More recently Western Union and Moneygram announced a tie up with Ripple to test the benefits of XRP in cross border remittances.
Monero was created on April 2014. The highlight of this coin is that it provides complete privacy by using a technique called “ring signature”. Ring signatures combine or ‘mix’ a user’s account keys with public keys obtained from Monero’s blockchain to create a ‘ring’ of possible signers, which prevents outside observers from linking a signature to a specific user. In 2016 Monero gained popularity and growth in transaction volume and market capitalization due to Alphabay, a darknet marketplace. However Alphabay was shut down on July 2017 which did not affect Monero’s popularity. Monero is still considered as one of the more reliable cryptocurrencies in the market right now.
IOTA was created to function as a backbone of the Internet of things and it is based on Tangle instead of blockchain.The difference between the two is that instead of having a group of miners dedicated to processing transactions, everyone sending a transaction is responsible for processing other transactions on Tangle. The IOTA foundation recently signed an MOU with the city of Taipei to work together on a project named Airbox which will use data sharing technology for palm sized sensors that can be fitted in homes or public buildings.
Eventhough there have been much developments for various cryptocurrencies, they are still at their infancy stage.How long will it take for any one these contenders to eventually take the top spot? Time will tell.