Altcoin (the abbreviation for alternative coin) includes any coin created after Bitcoin. There are currently over 1,000 altcoins available, although many will prove short-lived and few can expect to compete with Bitcoin.
The following are the main current altcoins.
Although regarded as a major cryptocurrency in its own right, Ethereum is technically classified as an altcoin. Whilst Bitcoin primarily runs online peer to peer electronic cash system, the Ethereum platform supports any decentralised application. This means its potential uses expand far beyond digital currency, which is why so many multinationals are looking for ways of exploiting the potential of the Ethereum blockchain, particularly the concept of the “smart contract”, essentially a computer program that is executed when all its conditions have been met.
Instead of mining for Bitcoin, in the Ethereum blockchain miners work to earn Ether, a type of crypto token that underpins the network.
Ripple is both a digital currency and an open source payment network, which connects banks, payment providers, digital asset exchanges and corporate entities via RippleNet. The aim of Ripple is to build and expand on the decentralised digital currency approach adopted by Bitcoin. Its settlement infrastructure technology is used by companies like UPS and Santander, who perceive its advantages over Bitcoin and other cryptocurrencies to include price and security.
Similar to Ripple, Litecoin is an open source, decentralised global payment network. The peer-to-peer internet currency facilitates instant, almost nil-cost payments to anyone in the world. One advantage of Litecoin compared to Bitcoin is that its blockchain is capable of handling higher transaction volumes. This is because blocks are generated more frequently, allowing the network to support more transactions. The Litecoin network is scheduled to produce 84 million Lite coins, which is 4 times more than the number of Bitcoins which will be mined.
Dash is a digital currency that allows for instant transactions to be made in complete privacy. Whilst it is based on the Bitcoin software, it has a two-tier network which improves on it, allowing users to remain anonymous.
Bitcoin requires all transactions to be published to the blockchain, meaning it is possible to trace who has made them and to whom. Dash gets around this problem by uses software which anonymises the data. In addition, Dash transactions use the Masternode network to confirm transactions which occurs almost instantly. This is a big improvement on Bitcoin, where confirmations can take a long time because all the work is being done by miners.
NEM (New Economic Movement) was created by a group of enthusiasts who wanted to create a community-orientated cryptocurrency from scratch, with one of their avowed aims being to address wealth inequality. Unlike the vast majority of other cryptocurrencies, NEM has its own source code. NEM introduced the concept of “proof of importance” whereby a user’s wealth and number of transactions are used to timestamp transactions. The NEM blockchain software is used in Mijn, a commercial blockchain currently being tested by banks and financial institutions in Japan and elsewhere.
When a major theft of funds occurred, the Ethereum community fractured as to the best way to deal with it. A majority wanted to change the code to allow the funds to be recovered. However, a minority believed that it was against the spirit of the original project to change the code or allow third parties to interfere with it. This minority created the Classic version of Ethereum which continues to thrive.