Bitcoin has become the de facto standard for cryptocurrencies, inspiring an ever-growing legion of followers and spinoffs. Bitcoin was not only a trendsetter, ushering in a wave of cryptocurrencies built on a decentralized peer-to-peer network, but it has also become the de facto standard for cryptocurrencies, inspiring an ever-growing legion of followers and spinoffs.
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What Are Cryptocurrencies and How Do They Work?
Before we go into some of these Bitcoin alternatives, let’s take a step back and define what we mean by terminology like cryptocurrency and altcoin. A cryptocurrency, in its broadest sense, is a sort of virtual or digital money in the form of tokens or “coins.” While some cryptocurrencies have entered the physical world through credit cards or other schemes, the vast majority of cryptocurrencies remain completely intangible.
The term “crypto” refers to the complex encryption that enables the creation and processing of digital currency as well as their transactions across decentralized platforms. A common commitment to decentralization goes hand in hand with this crucial “crypto” element of these currencies; cryptocurrencies are often produced as code by teams who build in methods for issuance (often, but not always, through a process termed “mine”) and other regulations.
Cryptocurrencies are almost usually meant to be free of government manipulation and control, yet this fundamental component of the business has come under question as it has risen in popularity. Altcoins, and in some cases “shitcoins,” are currencies fashioned after Bitcoin that have frequently attempted to promote themselves as improved or modified versions of Bitcoin. While some of these currencies may have certain unique qualities that Bitcoin does not, no altcoin has yet to meet the level of security that Bitcoin’s networks achieve.
Other than Bitcoin, we’ll look at some of the most popular digital currencies below. But first, a disclaimer: a list like this can never be completely comprehensive. One reason for this is that, as of January 2021, there are over 4,000 cryptocurrencies in circulation. While many of these cryptocurrencies have little to no support or trading activity, several have devoted groups of backers and investors.
Aside from that, the world of cryptocurrencies is always evolving, and the next big digital coin may be introduced tomorrow. While Bitcoin is commonly regarded as the first cryptocurrency, analysts use a variety of methods to evaluate tokens other than BTC. Analysts, for example, frequently place a high value on ranking coins relative to one another in terms of market capitalization. This has been taken into account, but there are other reasons why a digital token can be added to the list.
1. Ethereum (ETH)
Ethereum, the first Bitcoin alternative on our list, is a decentralized software platform that allows smart contracts and decentralized applications (dapps) to be written and run without the need for third-party downtime, fraud, control, or intervention. Ethereum’s goal is to establish a decentralized suite of financial goods that anybody in the world, regardless of nationality, ethnicity, or beliefs, can freely access. This element heightens the ramifications for those in some countries, as those without access to governmental infrastructure and identity can obtain bank accounts, loans, insurance, and a number of other financial items.
Ethereum applications are powered by ether, the platform’s proprietary cryptographic token. Ether serves as a mode of transportation on the Ethereum network, and it is mostly sought by developers who want to build and run apps on the platform, as well as investors who want to buy other digital currencies with ether. Ether, which was founded in 2015, is the second-largest digital currency by market value behind Bitcoin, however it is still a long way behind the dominating cryptocurrency. Ether’s market valuation is around 19 percent of Bitcoin’s as of January 2021.
Ethereum offered a presale for ether in 2014, which garnered a massive reaction, ushering in the era of the initial coin offering (ICO). Ethereum can be used to “codify, decentralize, secure, and trade just about anything,” according to the company. After the 2016 attack on the decentralized autonomous organization (DAO), Ethereum was split into two parts: Ethereum (ETH) and Ethereum Classic (ETC). Ethereum (ETH) has a market capitalization of $138.3 billion and a per-token value of $1,218.59 as of January 2021.
Ethereum intends to switch from a proof-of-work to a proof-of-stake consensus method in 2021. This change will allow Ethereum’s network to run with significantly less energy and significantly faster transaction speeds. Proof-of-stake allows users to “stake” their ether on the network. This procedure aids in the security of the network as well as the processing of transactions. Those who do so are rewarded with ether, equivalent to interest on a savings account. This is an alternative to Bitcoin’s proof-of-work mechanism, which rewards miners for processing transactions with extra Bitcoin.
2. Litecoin (LTC)
Litecoin, which debuted in 2011, was one of the first cryptocurrencies to follow in Bitcoin’s footsteps, and has been dubbed the “silver to Bitcoin’s gold.” Charlie Lee, an MIT graduate and former Google developer, designed it.
Litecoin is based on an open-source worldwide payment network that is not controlled by any central body and employs the “scrypt” proof-of-work algorithm, which can be decoded using consumer-grade CPUs. Although Litecoin is similar to Bitcoin in many ways, it has a quicker block creation rate and thus a faster confirmation time for transactions. A growing number of retailers, in addition to developers, accept Litecoin. Litecoin is the world’s sixth-largest cryptocurrency, with a market capitalization of $10.1 billion and a per-token value of $153.88, as of January 2021.
3. Cardano (ADA)
Cardano is a “Ouroboros proof-of-stake” cryptocurrency developed by engineers, mathematicians, and cryptography professionals using a research-based approach. Charles Hoskinson, one of Ethereum’s five original founding members, was a cofounder of the project. After some differences with Ethereum’s direction, he quit and later assisted in the creation of Cardano.
Cardano’s blockchain was developed through considerable testing and peer-reviewed research by the Cardano team. The project’s researchers have authored over 90 papers on blockchain technology covering a wide range of issues. Cardano’s research is its foundation.
Cardano appears to stand out among its proof-of-stake peers as well as other significant cryptocurrencies due to this stringent approach. Cardano has also been branded the “Ethereum killer” because of its blockchain’s capabilities. Cardano, on the other hand, is still in its infancy. While it has beaten Ethereum to the consensus concept of proof-of-stake, it still has a long way to go in terms of decentralized financial applications.
Cardano aspires to be the world’s financial operating system by creating decentralized financial products akin to Ethereum and delivering solutions for chain interoperability, voter fraud, and legal contract tracing, among other things. Cardano has a market value of $9.8 billion as of January 2021, and one ADA is worth $0.31.
4. Polkadot (DOT)
Polkadot is a one-of-a-kind proof-of-stake coin that aims to provide interoperability between different blockchains. Its protocol connects permissioned and permissionless blockchains, as well as oracles, allowing systems to collaborate under one roof.
Polkadot’s essential component is its relay chain, which enables network interoperability. For specific use scenarios, it also allows for “parachains,” or alternative blockchains with their own native currency.
Polkadot differs from Ethereum in that instead of constructing just decentralized applications on the platform, developers can establish their own blockchain while still benefiting from the security provided by Polkadot’s chain. Developers can establish new blockchains with Ethereum, but they must implement their own security mechanisms, which could expose new and smaller projects to attack, as the larger a blockchain is, the more secure it is. Polkadot refers to this concept as “shared security.”
Gavin Wood, another of the Ethereum project’s main founders who had conflicting perspectives on the project’s future, launched Polkadot. Polkadot has a market capitalization of $11.2 billion as of January 2021, and one DOT is worth $12.54.
5. Bitcoin Cash (BCH)
Because it is one of the earliest and most successful hard forks of the original Bitcoin, Bitcoin Cash (BCH) occupies a significant place in the history of altcoins. A split occurs in the bitcoin sector as a result of disagreements and debates between developers and miners. Because of the decentralized nature of digital currencies, substantial changes to the code underpinning the token or coin in question require widespread consensus; the mechanism for this process varies every cryptocurrency.
When rival groups cannot agree, the digital currency is divided, with the original chain remaining true to its original code and the new chain starting as a new version of the previous coin, replete with code revisions.
As a result of one of these splits, BCH was born in August 2017. The discussion that led to the formation of BCH revolved over scalability; the Bitcoin network has a block size restriction of one megabyte (MB).
The block size in BCH is increased from one MB to eight MBs, with the concept that larger blocks can carry more transactions, resulting in faster transaction speeds. Other changes include the removal of the Segregated Witness protocol, which has an effect on block space. BCH has a $8.9 billion market capitalization and a $513.45 worth per token as of January 2021.
6. Stellar (XLM)
Stellar is an open blockchain network that connects financial institutions for the purpose of massive transactions to give enterprise solutions. Huge transactions between banks and investment firms, which used to take several days, involved a number of intermediaries, and cost a lot of money, may now be completed almost instantly with no intermediaries and for a fraction of the cost.
Despite its positioning as an enterprise blockchain for institutional transactions, Stellar is still an open blockchain that anybody can utilize. Cross-border transactions in any currency are possible with this system. Lumens are Stellar’s native currency (XLM). For users to be able to transact on the network, they must have Lumens.
Jed McCaleb, a founding member of Ripple Labs and the creator of the Ripple protocol, launched Stellar. He subsequently left Ripple and went on to form the Stellar Development Foundation with his partner. As of January 2021, Stellar Lumens have a market capitalization of $6.1 billion and are valued at $0.27.
7. Chainlink
Chainlink is a decentralized oracle network that connects smart contracts, such as those on Ethereum, to data outside of the platform. Blockchains don’t have the capacity to link to external apps in a secure way. Smart contracts can communicate with outside data using Chainlink’s decentralized oracles, allowing them to be executed based on data that Ethereum itself cannot access to.
A number of use cases for Chainlink’s system are detailed on the company’s blog. One of the many applications described is monitoring water supplies for pollution or illicit syphoning in certain towns. Sensors might be installed to track corporate consumption, water tables, and local water levels. This data might be tracked by a Chainlink oracle and fed straight into a smart contract. With the incoming data from the oracle, the smart contract might be set up to issue fines, issue flood warnings to cities, or invoice corporations using too much of a city’s water.
Sergey Nazarov and Steve Ellis collaborated on Chainlink. Chainlink has a market capitalization of $8.6 billion as of January 2021, and one LINK is worth $21.53.
8. Binance Coin (BNB)
Binance Coin is a utility cryptocurrency that may be used to pay for trading costs on the Binance Exchange. Those that use the token to pay for the exchange can trade at a reduced rate. Binance Coin’s blockchain also serves as the foundation for Binance’s decentralized exchange. Changpeng Zhao launched the Binance exchange, which is one of the most popular in the world in terms of trading volume.
Binance Coin was first released as an ERC-20 token on the Ethereum platform. It was subsequently given its own mainnet. A proof-of-stake consensus model is used by the network. Binance has a market valuation of $6.8 billion as of January 2021, with one BNB worth $44.26.
9. Tether (USDT)
Tether was one of the first and most popular of a class of cryptocurrencies known as stablecoins, which try to decrease volatility by pegging their market value to a currency or other external reference point. Tether and other stablecoins seek to smooth out price variations to attract consumers who might otherwise be wary of digital currencies, especially significant ones like Bitcoin, which have suffered repeated bouts of severe volatility. The price of Tether is directly linked to the price of the US dollar. The method enables users to make transfers from other cryptocurrencies to US dollars in a fraction of the time it takes to convert to regular currency.
Tether, which was founded in 2014, defines itself as a “blockchain-enabled platform meant to simplify the digital use of fiat currencies.” This coin effectively allows individuals to transact in traditional currencies using a blockchain network and related technologies while avoiding the volatility and complexity frequently associated with digital currencies. Tether is the third-largest cryptocurrency by market capitalization as of January 2021, with a total market cap of $24.4 billion and a $1 per-token value.
10. Monero (XMR)
Monero is a safe, anonymous, and untraceable cryptocurrency. This open-source cryptocurrency was first released in April 2014, and it quickly gained popularity among cryptography aficionados. The development of this coin is entirely funded by donations and driven by the community. Monero was created with a heavy focus on decentralization and scalability, and it uses a technology called “ring signatures” to provide perfect secrecy.
With this method, a group of cryptographic signatures appears, at least one of which is genuine, but the genuine one cannot be identified because they all appear to be authentic. Monero has gained a shady reputation as a result of its extraordinary security systems, and it has been tied to illicit enterprises all over the world. While Monero is a good candidate for anonymous illicit transactions, the secrecy it provides is also beneficial to dissidents in authoritarian countries around the world. Monero has a market capitalization of $2.8 billion and a per-token value of $158.37 as of January 2021.
11. Dogecoin (DOGE)
Dogecoin may have begun as a joke in 2013, but investors are laughing all the way to the bank. DOGE has grown to become one of the most popular cryptocurrencies ever, thanks in large part to the support of billionaire entrepreneur Elon Musk. The Tesla CEO is collaborating with Dogecoin developers to make the cryptocurrency more sustainable, making DOGE one of the cryptocurrencies to keep an eye on in 2021.
When you consider that DOGE has outperformed practically every other asset in the first five months of 2021, it’s evident that it’s one of the coins to keep an eye on. Indeed, so far in 2021, DOGE has been the finest cryptocurrency to invest in, with returns of more than 6,500 percent through May 21, outperforming both BTC and Ether.
Dogecoin, whose mascot is a Japanese Shiba Inu dog breed, has taken center stage, and its use cases are expanding, bolstering its importance. Here are some of Dogecoin’s most memorable moments:
- Elon Musk is thinking of adopting DOGE as a form of payment for Tesla vehicles.
- DOGE gifts to the American Cancer Society are tax deductible.
- The Dogecoin Foundation helped a Jamaican bobsled team gather more than USD 30K in DOGE to fund their trip to the 2014 Winter Olympics in Sochi.
- DOGE is a widely used tipping system.
- Dogecoin has one of the most robust communities of any cryptocurrency.
Because there is no limit to the quantity of supply that may be issued, DOGE has the potential to be an inflationary coin. This is in contrast to bitcoin’s inflation schedule, which has a limit of 21 million coins that can ever be mined.
Energy-efficient coins are all the rage now that energy consumption has become a sticking point in the bitcoin business. That is why CSPR and EWT, the next two cryptocurrencies on our list of the ten most important cryptocurrencies other than bitcoin, made the cut.
Conclusion
Clearly, there are numerous types of cryptocurrencies, each of which adds something unique to the greater crypto ecosystem. While the cryptocurrencies to keep an eye on are all subjective, any of these coins might easily make a top-10 cryptocurrency list. Just remember to do your own research (DYOR) before investing in cryptocurrencies, as they can be dangerous.
Disclosure:
Please note that we are not authorised to provide any investment advice. The information on this page should be construed for information purposes only.
