If you’ve done your research on Bitcoin, most likely you’ve heard of other crypto-currencies which are most popularly referred to as “Altcoins”. Altcoins (abbreviated for alternative coins) describe crypto-currencies other than bitcoin. Most altcoins take one or a few attributes from Bitcoin and develop the crypto-currency to make them unique, to cater to the masses, to certain niche markets or even to companies. You’ve probably heard of some of the more famous altcoins like #Dogecoin, #Litecoin, #Blackcoin and so on but how do crypto-currencies differ to Bitcoin and what purpose do they serve? Let’s take a look at what has been trending recently.
Bitcoin has raised the question of privacy within the crypto-currency community and numerous altcoins have been developed to cater to this exact purpose – to more intensely protect user privacy. With privacy being a demand of crypto-currency supporters, altcoins have been created to offer true anonymity as opposed to Bitcoin’s pseudo-anonymity that has proven to be insufficient to some. Most noted are rising stars like #Darkcoin, #Cloakcoin and #XCurrency where one of the features these coins share is a means to ‘mix’ transactions together so it becomes impossible to determine the source of the funds on the Blockchain. Privacy focused altcoin’s don’t just stop there and build even more defining features where for example XCurrency recently announced their plans to offer a messaging service that leverages their Blockchain for true decentralized and trustless communications for their users.
Other altcoins have been created as a way to store information by utilising the altcoins corresponding Blockchain. #Namecoin uses this idea for several matters such as ‘making the web more resistant to censorship’ by providing the means for users to store their information anonymously and securely on their Blockchain. An example is that users can store their domain name and register a .bit domain outside the approvals of a centralised entity like ICANN. Another is that you can host and store information on Namecoin’s Blockchain such as identity information, and will soon be implementing features which altcoin #BitsharesX already provides; an ability to allow users to use host bonds/stocks,/shares and notary services on their respective Blockchains.
Altcoins offere ways to gain exposure to different segmeants of the crypto-universe - Max Keiser on Altcoins (Source: Coindesk)
Altcoins have also been developed to solve inefficiencies in several areas. For example, as Bitcoin has matured, naturally the mining difficulty has increased and it is harder for small scale miners to see profitable returns with existing hardware as electricity becomes a larger factor mining operations. To solve this, #Peercoin utilises a ‘Proof of Stake’ mechanism to distribute the altcoin, rather than Bitcoins’ ‘Proof of Work’. Fixing inefficiencies in a number of areas is a goal the altcoin community is focused on. Take #Uro, an altcoin where the value of one Uro is pegged to one metric ton of a commodity called Urea (a chemical used in fertilisers) and works in proving an easy means to transact agricultural commodities over the internet with no middlemen ensuring farmers always get the best and most accurate price.
(Altcoins: Helping Farmers Since 2013)
In this digital age, up and coming companies have also used altcoins to personalise their services. Storj, a data cloud storage service which is inspired by Bitcoin Blockchain and peer-to-peer technology, has created a secure and private cloud which makes use of idle storage in computers connected to their network to store user data more efficiently and securely than centralised data centers. Storj recently released #Storjcoin X to be used as a “token” for their users to trade for data space on the Storjcoin X Blockchain and as a means to by-pass metadata restrictions that Bitcoin had to “send data to an address” by storj. In the same measure, Maidsafe which shares a similar concept to Storj has developed #Safecoin for similar reasons - privacy and decentralisation from centralised authorities whereby we see two projects who have leveraged altcoins to support and innovate solutions to solve consumer needs.
So there you have it folks, although altcoins don't have a large market cap like Bitcoin there are still many innovative features being devised by developers everyday to solve real issues. The pace of innovation has been fast and never before seen solutions have been created in the altcoin scene. While there has been competition as to which altcoin will become the ‘silver’ to bitcoins’ gold and dominate them all, it is quickly becoming apparent that uniquely each coin serves its own purpose at several stages. It’s great to see the enthusiasm which crypto-currency believers have shown in recent times and be sure to contribute as to which crypto you’d like to see on the Bitspark Exchange!