Altcoins - the 5 Most Important Cryptocurrencies Explained

What are the main competitors to Bitcoin, and why? You may be wondering that.

Previously, I’ve done my best to explain how Bitcoin worked. Then, I explained the technology behing it, the blockchain.

Today, I will examine how the cryptocurrency market is doing, more specifically – what are the other cryptocurrencies out in the market, how they got there, and what do they offer that’s so special?

I’m gonna give focus to the 5 most important currencies on the market right now. I’m gonna explain how they came to be, and what sets them apart, wiithout going too in-depth.

Let’s get started, shall we?

1. Ethereum

The first one on our lists is Ethereum, a cryptocurrency that takes the Blockchain technology into a whole different direction. Whereas Bitcoin was made to process bank transaction, Ethereum was made with another end in mine – building and deploying apps.

Lets take the Bitcoin situation and change the relevant names. Instead of mining bitcoins, the miners of this tech mine a new cryptocurrency – Ether. This currency is mined by the normal blockchain process – miners give up some processing power and time on their computers, or other hardware. But they’re not hashing transactions. They are helping to build software. Because Ethereum isn’t just a blockchain – it’s a programming language.

The purpose of this network is to create decentralized apps, without needing to have a whole blockchain devoted to these apps. Put short, it would allow the creation of platforms like Bitcoin – but inside Ethereum.

It also allows for the creation of smart contracts (I’ve mentioned these yesterday) – contracts that trigger when certain conditions are met, with no fraud, no downtime, no interference being possible, unlike today’s contracts.

2. Ripple

Now we handle Ripple. It’s mark in the cryptocurrency business an odd one – it’s not quite a cryptocurrency.

While it does indeed support a cryptocurrency that can be mined (called XRP, ripples) in this one, its’ true function is more along the lines of a transaction network. Banks can use this system with any currency – not just XRP.

It also has a different method of approving transactions – I won’t go into the finer details here, but it’s much faster that Bitcoin’s. It only takes mere seconds of time to do a transaction.

Banks all over the world have adopted this technology – and they’ve greatly profited from it. Ripples allows them to save up a lot of money in transaction fees. It’s definitely worth watching.

3. Litecoin

The third entry in our lists, Litecoin is not as revolutionary as the previous ones. It’s quite similar to Bitcoin in a lot of ways. Despite that, it has a main advantage – it’s much faster.

Due to technical differences, which I wont cover in depth here, Litecoin can mine coins much faster that Bitcoin – for every 10 minutes used to mine a new block in Bitcoin, a Litecoin one could’ve accomplished the same in 2.5 minutes.

These technical upgrades also mean that this system can make transactions much faster than the Bitcoin one.

As one fine Steemian, @earthtone pointed out, Bitcoin and Litecoin together, may fulfill in the future roles similar to gold and silver in the past – people will realize that they can spend them as currency anywhere in the world, and will likely store them up.

4. Dash

Dash (short for “Digital Cash”) is a newcomer in the market – but it’s already made it’s mark. It works very similarly to Bitcoin – but with some pretty cool advanced features.

For instance, it has an InstantSend feature – it can do transactions instantly, without wasting some of your time like Bitcoin would.

Another feature is making your transactions private. By scrambling many parts of the blockchain, it can make your transactions almost totally untraceable, if you wish.

It also takes the decentralization effort further by decentralizing it’s own organization – everyone has a voice on this system. As such, it labels itself as the first truly decentralized governance form existing in the world right now.

I wont go fully into the details of how this works here - I'll leave that to you dear reader.

5. NEM

The last one on our lists is NEM. Like some others, it differentiates itself from Bitcoin because it’s more than a cryptocurrency. It’s a platform that hanles more than payments, like messaging, asset making, and naming system.

Its’ calling card is that it takes less energy and computational power in order to mine its’ blocks (they call it “extracting” instead).

I have very little to say about this currency, mostly because I don’t really know much of it – it’s been the most difficult to find direct, unbiased information for. Still, as one of the highest rated cryptocurrencies at the moment, you’ do wrong to ignore it…

That wraps it up!

There are many more cryptocurrencies out there than the ones I’ve covered. I leave them to you as homework. This is a vibrant, very recent and exciting market… but it’s also a dangerous one.

I leave you with some words of caution – many experts, far more knowledgeable than me on these issues, are beginning to cry foul at the valuations of these currencies. Many believe they’re way overvalued, and that a crash might come soon.

I myself have little economic expertise, so I can’t tell you for sure what will happen. I leave that up to you dear reader.

Sounds off in the comments below! Feel free to tell me what you thought of this article, and give me suggestions so I can improve in the future! Tomorrow I’ll cap this off with a more practical idea on how you can get in on the Bitcoin technology…

Till then, friends! Steem on!