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Bitcoin is the king of digital currencies, at least for the time being. There are several competing digital currencies, however, that could one day rival bitcoin.
Many of these currencies claim to offer certain technical advantages over bitcoin. Other currencies are taking a whole new angle on digital currencies, trying not just to offer an alternative to cash, but also to offer software development opportunities, social media platforms, and other services powered by the blockchain.
For now, bitcoin enjoys a huge lead over the competition, at least in
terms of market cap. With a market cap of $10 billion dollars as of
writing this article, bitcoin is about ten times as large as the closest
competition. Still, one day Ethereum, Steem, Litecoin, or another
contenders could steal the crown. That’s why we’re going to take a
moment to go over bitcoin’s chief competitors.
The Challenger: Ethereum (& Ethereum Classic)
Ethereum has been gaining a lot of attention as of late. This public blockchain software aims to support a lot more than “just” a digital currency. Developers can actually code software, and then power that software through the public blockchain.
Individuals can then sell their processing power and be paid with “ether” -a digital currency somewhat akin to bitcoin- in exchange. Currently, etherium is the world’s second largest cryptocurrency by market capitalization.
Following a hack back in July, Ethereum split into two competing currencies. The “new” Ethereum (just called Ethereum) undid the hack. “Classic” Ethereum maintained the hack. Now, the two Ethereums are competing against each other.
Ethereum itself has a market cap north of $1 billion dollars, and is the second largest digital currency, trailing only bitcoin. Ethereum classic has a market cap of just over $141 million, making it the fourth largest digital currency.
Ripple emerged in 2012 and is now a very popular online payment processing platform and digital currency. Perhaps the most important aspect of ripple is the fact that it allows for instant conversion into different currencies. You can even convert bitcoin to ripple, and vice-versa.
Ripple sees itself not as a competitor to bitcoin, but instead a compliment. By making currency conversions easy, ripple can give bitcoin users and others easy access to traditional currencies. OpenCoin, the company behind ripple, plans to distribute 100 billion ripples, although only half will be put into circulation.
With a market cap of $220 million dollars, Ripple is the world’s third largest digital currency.
Litecoin is one of the older alternative digital currencies out there, having emerged in 2011. Like bitcoin, there is no central authority, new coins are created through solving algorithms, and over time these algorithms are becoming more difficult to solve.
There are many important differences, however. Litecoin’s overall cap limit is set at 84 million, compared to bitcoin’s 21 million. The algorithms themselves are much easier to solve and can still be solved without special mining equipment. Further, litecoin blocks are created every 2.5 minutes, compared to bitcoin’s 10 minutes, making it possible to support far more transactions.
Currently, Litecoin is the world’s fourth largest digital currency, by market cap, weighing in at about $175 million.
Right behind Litecoin with a market cap of about $170 million is steem. Steemit is among the more interesting platforms out there. People can get paid, with steem, to write and curate articles. You can also rate and comment on articles, also getting steem.
The front page of Steemit, which looks somewhat like Reddit, is filled with a huge range of stories. Instead of mining bitcoins, or buying them, if you want to earn Steem, then you have to contribute to the community. Steem was launched just this year (2016) and yet has already secured a huge market cap. Don’t be surprised if this platform gains even more ground in the future.
Dash is based closely on bitcoin software. Basically, developers wanted to address some of the problems inherent in bitcoin, such as slow transaction processing times, and thus decided to create a new currency, simply entitled “dash”.
Like bitcoin, dash features advanced privacy features. Some would even say that dash offers improved privacy. Dash also offers instant transactions, whereas bitcoin transactions can take several minutes. Further, dash uses what it calls “Masternodes” to double check the blockchain and to ensure that it is not being unduly manipulated.
Fees are low, the system is global, and like bitcoin, dash is still P2P with no centralized authority. Given the technical advantages of this currency, it’s certainly worth a close watch.
Dogecoin is the smallest digital currency on this list, with a market cap of only $25 million. Still, what dogecoin lacks in size, it makes up for with its relatively loyal fan base. Dogecoin gets its name and branding from the “doge” Internet meme, which featured a Shiba Inu dog. This clever branding has helped make dogecoin one of the more well-known bitcoin alternatives.
Dogecoin miners can process transactions in only about a minute. Further, unlike bitcoin and many other crypto-currencies, there is no limit to the number of dogecoins that can be mined. This lack of an upper limit, and ease of mining, however, means that individual dogecoins are not worth too much, with a hundred of them being worth only a few pennies.
Bitcoin isn’t going away anytime soon, and through the near future, it will most likely remain the premier global digital currency. Still, competitors like ethereum and steem are offering very unique twists on digital currencies. Others, like Dash and Ethereum, may be more technically sound. As a result, these competing currencies may some day catch up to, or even surpass, bitcoin.
Besides the currencies mentioned in this article, there are several other worthy competitors. NEM, MaidSafeCoin, and NXT are just a few competing currencies that come to mind. In the future, the the digital currency environment is sure to evolve, so make sure you keep your eye on it.