Cryptocurrencies have become quite the household name in the world of finance and technology. Especially given the world’s awakening to the power wielded by their underlying technology- Blockchain- cryptocurrencies have remarkably secured a spot in the mind of tech enthusiasts.
Now, the fact that these cryptocurrencies have managed to create a major uproar in the global market within a few years of the first integration is remarkably enough to pique interests. Of course, the fact that the underlying technology embodies buckets of computing language and technical terminologies isn’t exactly an endearing factor for many interested in understanding how the crypto space works.
However, if you are able to get past these impeding technicalities, you’d agree that the crypto space is an interesting place to be. Now, a brief foray into the world of cryptocurrencies should get one acclimatized with the crowd’s favourite “Bitcoin”. However, you’d realise that despite its wide fan base, there are underdogs that seem to be threatening its reign.
Technological accomplishments over time seem to tell us that the world is determined not to be stationary or dependent on one particular source. Likewise, in the crypto space, despite the endearing peculiarities of Bitcoin, it hasn’t stopped developers from seeking alternatives to this cryptocurrency.
Well, the jury’s still on whether these altcoins could totally knock Bitcoin off its top seat or are basically just there to pull the world towards generally adopting cryptocurrencies. We’ve, however, decided to put them together to weigh their various potentials and pitfalls.
Of course, Bitcoin’s integration in 2009 marked a milestone in a world that seems to be veering towards a digital economy. Launched by Satoshi Nakamoto, Bitcoin was developed, with the prime purpose of creating an alternative source of transacting with a faster, secure and transparent medium.
Satoshi Nakamoto created a representation of a decentralised currency powered by a digital ledger with the ability to record and validate transactions sequentially and with a profound speed. Its existence simply meant that there was no need to store up money in the bank or move it around.
Its decentralised nature meant that there was no central governing authority regulating its development and move. Instead, a team of “miners” with highly-powered computers work together to verify these transactions.
You see, Blockchain, while offering a tamper-proof mode of transaction, requires a Proof-of-Work (PoW) from these miners before any verification is carried out. These PoW is basically a mathematical puzzle or more of an algorithm to be solved and provided by the miners before adding information to the block.
Notably, this worked well for a while and might still have, had the number of transactions to be processed remained constant. As the frenzy around Bitcoin increased, the faster transaction times took a bow which, of course, seemed to defeat one of the prime purposes of integration.
As such, the Nakamoto’s “electronic cash” became more of a “digital gold” for a longer term store of value instead of a day-to-day transaction means.
This, of course, was a big game-changer for the Bitcoin as top players such as e-commerce retailers seemed to forego its use as a mode of payment on their platforms. Instead, leaving it to institutional investors to carry on with its adoption.
The rise of the Altcoins
They are most generally referred to as cryptocurrencies though many fade out as fast as they are integrated with some not exactly falling under the description of a “currency”. Generally, altcoins are referred to as coins created as an alternative to Bitcoin.
Altcoins, in every sense of the word, could be seen as clones of Bitcoins albeit each exhibiting its own peculiarity and sporting enhanced algorithms and major improvements. Basically, one major impediment identified with Bitcoin transaction remained the scalability factor.
If you’ve been on the crypto scene in the last few months, you’d notice that the state of the market isn’t exactly stable. Admittedly, it had been noted that the state of the market is generally affected by the tiniest bit of information or movement.
Now, with the general price of cryptocurrencies moving with the tide every second and the transaction times of Bitcoin relatively slow, the use of Bitcoin as an everyday mode of payment became difficult.
Imagine trying to get your favourite dress at an online retail store at a value, then waiting about 5 hours to pay for it, only to be told that the price has been increased due to certain factors? Obviously, that is not exactly ideal.
As a result, altcoins began their reign with the first notable altcoin being Ethereum. Majority of these altcoins basically consists of variant (fork) of Bitcoin basically integrated using Bitcoin’s open-sourced protocol while effecting changes to the underlying algorithms.
As such, you get to hear of altcoins like Litecoin, Name coin professing to double or increase bitcoin’s block size. Well, this simply tells us that these are products of changes in codes.
Of course, there are other altcoins with the prime purpose of branching out completely on their own without depending on Bitcoin’s open source protocol. Instead, they opted for creating their own protocol as well as Blockchain. Examples are Ethereum, Ripple and Omni.
Could Bitcoin Keep its Crown?
Bitcoin’s major saving grace remains its network effects and insurmountable security. Bitcoin has, over time, proven its usage as a store of value.
Now, it is quite informative that most altcoins try to carve out their distinct features based on smaller usage cases such as anonymous trading or addition of a decentralized name server. Bitcoin has however, proven that it could hold its own against the sea of altcoins popping up.
Furthermore, Bitcoin is more accessible especially with many exchanges and moving merchants moving round to accommodate it. Bitcoin has remarkably had years of experience with a larger volume and a wider ecosystem.
While the integration of other altcoins seems to promote innovations as well as competition, Bitcoin seems more equipped to hold its salt. Basically, altcoins have a larger user base, dev team as well as a larger start-up ecosystem to deal with.
Naturally, it is safe to say that Bitcoin could keep its crown in the short run but given the mass rate of adoption and the solace crypto enthusiasts seem to have found in other altcoins, it would seem that the future is suddenly more interesting. Trading volumes are looking promising and Bitcoin could in the long run find itself fighting hard to keep its crown should the mass adoption of altcoins remain remarkably progressive.