Bitcoin was not only a trendsetter, ushering in a wave of cryptocurrencies constructed using a decentralized peer-to-peer structure, but has also become the de facto standard for cryptocurrencies, leading to a slew of new ventures.
Cryptocurrencies are digital tokens or “coins” that exist on a distributed and decentralized ledger known as a blockchain.
Moreover, the cryptocurrency field has grown rapidly since Bitcoin was launched over a decade ago, and the next great digital token might appear as early as tomorrow.
By market capitalization, user base, and popularity, Bitcoin continues to lead the pack of cryptocurrencies.
Decentralized financial systems for those without access to conventional financial products are being created using cryptocurrencies such as Ethereum.
Alternate coins are getting endorsed because they offer better features than Bitcoin, such as the ability to handle more transactions per second or utilizing proof-of-stake consensus algorithms.
What Are Cryptocurrencies?
Let’s briefly examine what we mean when we talk about terms like cryptocurrency and altcoins before we take a closer look at some of these alternatives to Bitcoin. As a general principle, cryptocurrency is virtual or digital money in the form of tokens or “coins.” Some cryptocurrencies have entered the physical world through credit cards or other projects, but the great majority remain virtual and intangible.
Cryptocurrencies utilize complicated cryptography to create and process digital currencies, allowing them to be used across decentralized systems. Crypto currencies also share a commitment to decentralization in addition to the cryptographic features; cryptocurrencies are developed as code by teams who build in mechanisms for issuance (often through a process called “mining”) and other controls.
In almost all cases, cryptocurrencies are designed to be free of government manipulation and control, but as the industry has grown more popular, this fundamental aspect has become more controversial. Alternative cryptocurrencies to Bitcoin are collectively called altcoins, or even “stictions,” as they try to emulate Bitcoin by presenting themselves as modified or improved versions. Despite the fact that some of these currencies may have some impressive features that Bitcoin does not, altcoins have not been able to achieve the same level of security as Bitcoin’s networks.
We will examine some of the most important digital currencies besides Bitcoin below. First, though, a caveat: A list like this can never be completely comprehensive. There are more than 6,500 cryptocurrencies in existence as of September 2021, which may be a contributing factor. A few of these cryptos enjoy great popularity among dedicated communities of backers and investors, despite having little or no following or trading volume.
Moreover, the field of cryptocurrencies is always growing, and tomorrow you may find the next great digital token. In the world of cryptocurrencies, Bitcoin is seen as a pioneer, but analysts use a variety of approaches to evaluate tokens other than Bitcoin. Analysts, for example, often place a great deal of importance on ranking coins based on market capitalization. As part of our considerations, we have accounted for this, but there are other reasons why a digital token might make the cut as well.
1. Ethereum (ETH)
On our list of Bitcoin alternatives, Ethereum is the first decentralized software platform that enables smart contracts and decentralized applications (dapps) to be created and run without any interruption, theft, fraud, or involvement from a third party. A major goal of Ethereum is to allow everyone in the world to have free access to decentralized financial products, regardless of nationality, ethnicity, or religion. Those in some countries may find the implications more compelling, since those without state infrastructure and state identification can access bank accounts, loans, insurance, or a variety of other financial products.
ETH, a platform-specific cryptographic token, is used to run Ethereum applications. Developers and investors are seeking ether mainly to develop and run applications on the Ethereum platform, or for making purchases of other digital currencies. With a market capitalization of $5.6 billion, Ethereum ranks second in the world behind Bitcoin, but a significant distance behind the dominant cryptocurrency. Ether’s market capitalization is approximately half that of Bitcoin as of September 2021, trading at around $3,600 per ETH.
Ethereum launched its ether presale in 2014, which received a great deal of attention, helping to kickstart the ICO craze. In 2016, Ethereum was split into Ethereum (ETH) and Ethereum Classic (ETC) after an attack on the decentralized autonomous organization (DAO). According to its description, Ethereum can be used to “codify, decentralize, secure and trade just about anything.”
Proof-of-stake (PoS) became Ethereum’s consensus algorithm in 2021. With this change, Ethereum’s network will operate with far less energy and will be able to move transactions more quickly, as well as contribute to a more deflationary economic climate. Participants in the network can stake their ether to the network via proof-of-stake. In this way, the network is secured and transactions are processed more efficiently. In a similar way to an interest account, those who do this are rewarded. Mining rewards miners with more Bitcoins for processing transactions as an alternative to Bitcoin’s proof-of-work mechanism.
2. Litecoin (LTC)
Charlie Lee, an MIT graduate and former Google engineer who created Litecoin, was one of the first cryptocurrency developers to follow in the footsteps of Bitcoin.6 He created Litecoin in 2011 as the “silver to Bitcoin’s gold.”
Litecoin uses an open-source global payment network that is not controlled by a central authority and utilizes a proof-of-work algorithm called “Scrypt” that can be decoded using desktop or laptop computers. Although Litecoin is similar to Bitcoin in many ways, it offers a faster transaction confirmation time due to its faster block generation rate. Apart from developers, Litecoin is increasingly accepted by merchants. Litecoin, the sixteenth-largest cryptocurrency in the world, has a market capitalization of $4 billion and a per-token value of $190 as of September 2021.
3. Cardano (ADA)
Cardano is a proof-of-stake cryptocurrency designed with research-based approaches by mathematicians, engineers, and cryptography experts. Charles Hoskinson, one of the five original founders of Ethereum, co-founded the project. He later helped create Cardano after leaving Ethereum due to disagreements about its direction.
In order to create Cardano’s blockchain, the team conducted extensive experiments and peer-reviewed research. Over 90 papers have been written about blockchain technology by the researchers behind the project. Cardano is the result of this research.
Among proof-of-stake cryptocurrencies and large cryptocurrencies alike, Cardano seems to stand out due to this rigorous process. In addition to being dubbed ‘the Ethereum killer,’ Cardano’s blockchain is also said to provide more features than Ethereum. Yet Cardano remains in the developmental stages. The proof-of-stake consensus model beat Ethereum to the poll, but there is still a lot of ground to cover when it comes to decentralized financial applications.
Cardano aims to become the world’s financial operating system by providing services such as interoperability between chains, voting fraud detection, and the tracing of legal contracts, among others. A single ADA costs about $2.50 as of September 2021, making Cardano the third-largest cryptocurrency by market capitalization.
4. Polkadot (DOT)
The Polkadot cryptocurrency is a proof-of-stake cryptocurrency designed to provide interoperability between blockchain platforms. In a permissioned or permission less network, its protocol allows permissioned and permission less blockchains, and Oracles, to work together under one roof. The relay chain is Polkadot’s core component as it enables interoperability between several different networks. It also makes it possible to create parallel blockchains with their own native tokens for specialized use cases.
Polkadot differs from Ethereum in that developers are not limited to creating just decentralized applications, but can also create their own blockchain while using Polkadot’s existing security. The Ethereum platform allows developers to create new blockchains, but they must create their own security measures, which can leave smaller and new projects vulnerable, as the larger a blockchain, the more secure it is. Polkadot refers to this concept as shared security.
The project Polkadot was created by Gavin Wood, a member of the core Ethereum founders who disagreed on the project’s direction. One Polkadot is worth $35.25 and Polkadot’s market capitalization is $35 billion as of September 2021.
5. Bitcoin Cash (BCH)
As one of the earliest and most successful hard forks of the original Bitcoin, Bitcoin Cash (BCH) holds a special place in the history of altcoins. Forks occur as a result of debates and disagreements between developers and miners in the cryptocurrency world. In a decentralized currency, every change to the code underlying the coin or token at hand must be made by consensus; the process for doing so varies from one cryptocurrency to another.
Different factions sometimes disagree about the value of a digital currency, so the original chain remains true to its original code, whereas the new chain begins as a new version of the prior coin, complete with updated code.
It was one of these splits that led to BCH’s creation in August 2017. There was a debate that led to the creation of BCH regarding scaling; the Bitcoin network has a limit on block size: one megabyte (MB). In order for BCH to increase transaction speeds, it increases the block size from one MB to eight MBs. The idea is that larger blocks can hold more transactions, thus making transactions faster. As well as removing the Segregated Witness protocol, it also makes other changes that affect the block space. BCH was valued at $640 per token and has a market cap of $12 billion as of September 2021.
6. Stellar (XLM)
Stellar is a network of open blockchains designed to connect financial institutions in order to facilitate large transactions. Previously, large transactions between banks and investment firms would take several days, involved many intermediaries, and cost a considerable amount of money. Today, these transactions can be done almost instantly with no intermediaries and cost little to nothing for the parties involved.
Stellar is still an open platform that can be used by anyone, even though it is designed for enterprise use. Cross-border currency transactions are supported by the system. Lumens (XLM) is Stellar’s native currency. Users must own Lumens in order to transact on the network.
Founded by a Ripple Labs founder and a developer of the Ripple protocol, Stellar was founded by Jed McCaleb. Stellar Lumens have a market capitalization of $565 million and are valued at $0.33 as of September 2021.17 He eventually left Ripple and co-founded the Stellar Development Foundation.
7. Chainlink (LINK)
Decentralized Oracle network Chainlink connects data outside of Ethereum with smart contracts, such as those on Ethereum. It is impossible for blockchains to connect to external applications in a trusted manner. With Chainlink’s decentralized oracles, smart contracts can access data from outside Ethereum so that they can be executed according to data that Ethereum itself does not have access to.
Chainlink’s blog provides examples of how the system is used. There are many uses that are explained in the book, including monitoring water supplies for pollution or illegal siphoning going on in certain cities. A Chainlink oracle could store this data in an oracle and feed it directly into a smart contract. Sensors could monitor corporate consumption, water tables, and levels of local bodies of water. Data from the oracle could be used to specify actions such as issuing flood warnings, imposing fines, or billing companies that use too much water in a city.
The Chainlink protocol was created by Sergey Nazarov and Steve Ellis. Chainlink has a market capitalization of $13.5 billion and one LINK is valued at $30.50 at the end of September 2021.
8. Binance Coin (BNB)
As a payment method for Binance Exchange fees, Binance Coin serves as a utility cryptocurrency. Token holders can trade at a discount when paying with the token. Binance’s decentralized exchange also runs on the blockchain of Binance Coin. Based on trading volumes, Binance is one of the most popular exchanges in the world. It was founded by Changpeng Zhao.
Initially, Binance Coin operated on the Ethereum blockchain using an ERC-20 token. Eventually, Binance Coin launched a mainnet. This network is based on a proof-of-stake consensus model. Binance Coin has a market capitalization of $71 billion with one BNB being worth $426.21 as of September 2021
9. Tether (USDT)
A stablecoin is a cryptocurrency that aims to reduce volatility by pegging its market value to either another currency or another external reference point. Tether was among the first and most popular stablecoins. In an attempt to attract users who might otherwise be cautious, Tether and other stablecoins smooth out price fluctuations to keep users interested. The price of Tether is directly tied to the price of the U.S. dollar. In this way, users can easily transfer money from other cryptocurrencies to U.S. dollars without actually converting them into a fiat currency.
Designed to enable the use of fiat currencies in a digital fashion, Tether was launched in 2014 as a blockchain-based platform. This currency, when used in conjunction with blockchain networks and other related technologies, reduces volatility and complexity associated with digital currencies. In September 2021, Tether’s market capitalization was $68.3 billion and its per-token value was $1.23. It is the fifth-largest cryptocurrency by market capitalization.
10. Monero (XMR)
Monero is an untraceable, secure, and private cryptocurrency. Launched in April 2014, this open-source cryptocurrency soon gained popularity among cryptography enthusiasts and the cryptography community. Monero was developed entirely through community donations. Its creators are focused on decentralization and scalability, and it allows complete privacy through a technique called “ring signatures.”
This technique allows a group of cryptographic signatures to appear, including at least one real participant, but it cannot be determined who is the real one since the signatures all appear valid. Monero has developed an unsavory reputation due to its extraordinary security mechanisms, which has been associated with criminal activities around the world. This could be used for investigative purposes, but it can be used for the privacy of dissidents across oppressive regimes as well. According to Bloomberg, Monero has a $245 million market capitalization and a $265.27 token value as of September 2021.
Why are cryptocurrencies important?
Due to their decentralized nature, blockchain-based cryptocurrencies allow individuals to transact with each other or enter into contracts. Neither case needs the assistance of a trusted third party such as a bank, monetary authority, court, or judge. The current financial order will be disrupted, and finance will become more democratic. The cryptocurrency industry has grown exponentially over the past decade, with new innovations and a combined market cap of more than $2 trillion.
Why are there so many cryptocurrencies?
The majority of cryptocurrencies on the market today are derivatives of bitcoin, which is built on open-source software with a censorship-resistant architecture. The code can be copied and tweaked by anyone to create a new coin. Those who want to join the network or transact in it are also free to do so.
What are some other important cryptocurrencies?
The ten cryptocurrencies listed above are not the only ones that have gained importance or hold the promise of doing so. Tesla CEO Elon Musk has popularized a meme-based joke coin, Dogecoin, through social media promotion. Other important cryptocurrency coins include Ripple (XRP), Solana, USD Coin, and Tezos. Other bitcoin forks include Bitcoin Gold and Bitcoin SV.
Why is Bitcoin still the most important cryptocurrency?
There have been thousands of cryptocurrencies since Bitcoin was invented, but Bitcoin remains the dominant player when it comes to usage and economic value. Approximately $60,000 is the value of each coin as of October 2021. The market cap is nearly $1 trillion.