When people think of the crypto market, Bitcoin often comes to mind first, but the market has been growing as more competitors present their digital currency to challenge the pioneer. These are often referred to as alternatives to Bitcoin or altcoins.
Each of these offers a different set of promises, goals, and visions for the future of a unified global financial system, consequently requiring different kinds of wallets to hold them, too. For example, the privacy-focused Monero coin would need a compatible wallet, so anyone wanting to have XMR coins as part of their holdings should look for the best Monero wallet.
If you’re looking through the market for favorable alternatives to Bitcoin, check out some of these altcoins and what they offer against Bitcoin.
When it comes to alternatives to Bitcoin, Ethereum cannot be ignored. It is the second-biggest cryptocurrency on the market behind Bitcoin itself, and it is the largest altcoin by market capitalization. In a way, its promise is based mostly on its popularity, which suggests that widespread adoption and commercial usage will come sooner.
This popularity can largely be attributed to Ethereum being the first altcoin ever made, as well as its technical similarity to Bitcoin overall. In fact, its code is based on Bitcoin with an added feature called smart contracts which store pieces of extra code and data onto the blockchain. The feature has found its most prominent application in non-fungible token (NFT) exchanges.
Other than that, the feature also diminishes the need for a third party to verify exchanges since the little bit of code on the blockchain automates this, loosely speaking. This allows transactions on Ethereum to process much faster and more efficiently than Bitcoin. Despite this, the coin has been noticeably prone to hacks and theft quite frequently in the past few years.
What sets Monero apart is that it was crafted from the ground up, so unlike most altcoins, it is not based on Bitcoin’s codebase. In other words, it does not work like other cryptocurrencies on the market, and it has been made so for good reason. Monero is focused on privacy more than all the coins on the market, including Bitcoin.
Essentially, it utilizes a technology called ring signatures during transactions that obfuscate the real user involved in the exchange among several others. This renders all transactions virtually untraceable, and this is built right into the protocol of Monero rather than as a supplemental feature.
While value-wise it currently is not on a par with Bitcoin at the moment, its value is rising rapidly, keeping it among the top altcoins on the market. What current investors find most promising about Monero is the approach and precedent that it sets with regard to the future of finance. It is undeniably relevant in a world where privacy remains a pressing concern, even in the digital age.
Unlike other coins on the market, Cardano moves slightly away from the financial aspect of cryptocurrencies and addresses instead issues related to ethics and sustainability. As a digital currency, the altcoin does not actually do much that is any different from Bitcoin or even Ethereum, but its selling points arise in the back end, especially because the team behind it includes scientists, mathematicians, and engineers.
Why this matter lies in their research. For one, they’ve used their findings and tweaks in blockchain technology to help some jurisdictions digitally authenticate and secure the academic data of students.
The Cardano team also understands that crypto can be harmful to the environment. Because of this, they have somehow engineered their altcoin network to consume far less than one percent of Bitcoin’s power consumption in an entire year. The multi-purpose sustainability of Cardano is its greatest selling point, but because it is still new, its value remains at just a few dollars.
The case for Ripple is a bit strange as it dares to break one of the fundamental traits of any cryptocurrency—this being its lack of regulation or centralization under any institution. What makes Ripple so strange is its partnership with American Express, a prominent bank in the United States. This goes both ways as an investment versus the rest of the market.
On one hand, this altcoin uniquely illustrates what would happen if crypto was backed by an established financial institution. Although the coin is not controlled by the bank per se, this opens the coin for usage in more commonplace financial activities. However, many crypto investors have felt turned off by Ripple’s vulnerability to fold to other banks and institutions along the way.
This is why its value has remained starkly low compared to cryptocurrencies as big as Bitcoin, even if Ripple has kept up its sporadic highs and lows. Despite this, the altcoin at least promises close to the same back-end treatment that a bank provides to its end-users accounts.
These are only a few out of thousands of altcoins. Understandably, such a prospect could seed certain doubts about whether any of these could truly challenge Bitcoin, but this does not at all mean that they don’t have the potential to eventually reach the top.
Investors should instead see each altcoin for what they propose for the future of finance, as well as the direction they take in contrast to Bitcoin. Whether it’s privacy, efficiency, or sustainability, only these value propositions truly determine the potential for a coin to be adopted and developed over time.