Beyond Bitcoin: A Guide to the Most Promising CryptocurrenciesSubmitted by MMJ Ministry on Fri, 11/29/2013 - 22:16
Just as the success of Facebook helped spawn endless clones, Bitcoin’s arrival on the big stage comes with an assortment of digital currencies, known as “altcoins,” riding on Satoshi’s coattails. As the saying goes, a rising tide raises all ships. With Bitcoin up over 5000 percent since the beginning of the year, the altcoin market is booming. The price of Litecoin, what some consider silver to bitcoin’s gold, has traded as high as $20, up nearly 1000 percent in the last six months.
Successful competitors found a way to relevantly differentiate themselves. LinkedIn was for work. Twitter focused on short status updates you could broadcast publicly. Eventually, once Facebook matured, other entrants incrementally improved the social network’s fundamental features. Instagram filtered the photo while Snapchat perfected the selfie. Given bitcoin’s dominance, what will it take for an altcoin to succeed?
Litecoin: the little brother
Price at time of writing: $28.35
Market Cap: $503,102,328
Consistent with its name, Litecoin is essentially Bitcoin-lite and is the second most valuable altcoin. It shares nearly all the same features except it has a shorter block rate (every 2.5 minutes versus 10) and a different proof-of-work (scrypt versus SHA2). Shorter block rates mean (4x) faster transaction times, which is advantageous, but it’s not a huge change.
Namecoin: More than money
Market Cap: $51,210,571
As the fourth most popular crytocurrency, Namecoin is the first prominent iteration of the Bitcoin model that provides functionality beyond payments. While Namecoin can also be used as a currency, its purpose is to manage information access rather than money. In its current iteration, it utilizes all of the same Bitcoin principles to serve as a distributed Domain Name System (DNS) for the top level .bit domain. In other words, it’s a peer-to-peer version of ICANN.
Domain names are registered for a fee of 0.01 namecoins and recorded and maintained on the blockchain. New transactions occur when users transfer their domain name rights. Everything else works just like Bitcoin. The benefits of this DNS system versus a centralized one, like ICANN, is that it prevents internet censorship and theoretically reduces downtimes. But since domains are cheap and cannot be seized, cybersquatting is rampant by early adopters.
Namecoin is compelling because it proves just how versatile the decentralized Bitcoin model is. Beyond DNS, a similar system could be employed to manage logins, torrent trackers, or even decentralized email—all while maintaining the functionality of a currency. As such, it’s one of the only clones that may survive even if Bitcoin fails. Moreover, expect to see further variations of the system. As it turns out, Bitcoin is about more than just money.
(I no longer recommended NMC and prefer Bitshares DNS)
Primecoin: For science!
Market Cap: 17,511,483
As mentioned earlier, one of the primary drawbacks of Bitcoin is that the mining system is a complete and utter waste of energy (although more efficient than banks). And as Bitcoin expands, so does the waste, which is obviously a net loss for the environment.
in Primecoin, we have the first execution of the Bitcoin model where mining actually contributes to society by implementing scientific proof-of-work. Rather than solving an arbitrary hash, Primecoin miners search for chains of prime numbers, which happens to be a rich and historic mathematics tradition for a variety of reasons covered by the University of Tennessee at Martin. The Electronic Frontier Foundation even offers $550,000 worth of prizes for anyone who discovers a prime number more than 1 million, 10 million, 100 million and 1 billion digits long, of which the first two have already been claimed.
After comparing BTC vs. LTC vs. PPC vs. XRP vs. NMC, the natural instinct is to wonder about the rest of the most capitalized cryptocurrencies. Here's a pros and cons comparison of each, in order of projected future value (by capitalization, not price).
1. Protoshares - Buying a Future Piece of the Invictus-Innovation's Pie
Capitalization: $26 Million, Price: $25.31, Number of Coins: 1M (as of 12/4/13)
Protoshares are a confusing alt coin (any cryptocurrency that isn't Bitcoin). They're not just another cryptocurrency, though they are mined and can be traded like conventional crypto. Beyond that, they also represent shares in future Invictus-Innovation's cryptocurrencies and digital creations. Better than perhaps anyone, Invictus Innovations Incorporated has a strong grasp of just what cryptocurrency is and can do. While delving into their philosophy and thought is beyond the scope of this article, it suffices to say that they have a strong understanding of cryptocurrency as a platform, rather than just a speculative asset, or money transaction system. These all portend on the quality of the Protoshares as owning them means you own a piece of Invictus' future.
• Invictus classifies cryptocurrency as being part of a larger concept called DACs, or Distributed Autonomous Corporations. ProtoShares represent a share in future Invictus-Innovations DACs of a variety of types.
• Protoshares represent value in the future of Invictus via their primary DAC, BitShares, and are therefore not trying to be what Bitcoin is directly. This makes them unique.
• III has a variety of interesting ideas (to which Protoshares buy you a piece of) that include BitShares, a trading platform that will "interface with a growing number of government-regulated exchanges." • Invictus aims to make BitShares, the DAC that ProtoShares purchase part of, a meta-platform, essentially a platform for future cryptocurrencies and other types of investment vehicles saying, "Invictus will be making the open source tools we develop to launch BitShares available to our partners and competitors. Who knows what new DACs everyone will come up with?"
• Only 2 million are available meaning ProtoShares are relatively scarce.
• Keyhotee, another Invictus project one can own a part of with ProtoShares, is focused on letting users use one digital identity for everything, including moving any cryptocurrency.
• As this explanation shows, Invictus' project isn't exactly simple to even understand, achieving it will be extremely time-consuming. This means that ProtoShares may be riskier than they seem....
In Bitcoin’s Orbit: Rival Virtual Currencies Vie for Acceptance
Bitcoin has been criticized for the anonymity of its transactions, which have made it attractive for buying drugs and guns online. But many altcoin fans are more bothered by how easily governments can follow bitcoin, because the transactions are all recorded on a public ledger. This was the motivation for the creators of anoncoin, which has been rising in value.
Darkcoin, which was launched at the beginning of this year, has been on a bull run recently jumping from US$1.65 last Thursday to US$2.86 at the time of writing. Its market capitalization has also ballooned from US$7 million to almost US$12 million today.
Coin, cloak and dagger
The idea behind Darkcoin is, first and foremost, privacy. This cloak-and-dagger approach might sound like a redundant feature to some as many believe that Bitcoin provides users with complete anonymity, but this is not technically true.
A user that buys drugs on a site like Silk Road with the same wallet that he uses to buy an item on overstock.com can be traced albeit it requires much more effort when compared to credit cards. But, in fact, it takes a lot of work for Bitcoin users to achieve a desirable level of privacy using such arduous methods as having to juggle multiple wallets, cold storage, and numerous keys.
The brainchild behind Darkcoin, Evan Duffield, explained his motivation for creating this privacy-oriented crypto-currency:
“I believe the central problem with Bitcoin is that the public ledger, although a remarkable accomplishment, also allows a gross invasion of personal privacy by permanently listing all transactions the users have ever done publicly.”
Indeed, some users may find tremendous appeal in Darkcoin. It essentially makes transactions invisible in the public blockchain. And with 4 million darkcoins already in circulation and growing, the currency is expected to find its target users who prefer a higher level of anonymity.
Forbes: The Top 30 Crypto-Currency Market Capitalizations In One Place
Virtual currencies like Litecoin, Peercoin, Namecoin and others are part of a group of alternative virtual currencies that have become popular, mostly because of the rising value of the bitcoin currency. The biggest gainer is Litecoin, which is trading at $28.31 (as of writing) with a market cap of more then half a billion dollars.
Bitcoin 2.0 Explained: Colored Coins Vs Mastercoin Vs Open Transactions Vs Protoshares
2014 Will Show the True Power of the Blockchain
Much like Mastercoin, Protoshares is an altcoin that actually gets people excited because it offers something different than a simple clone of the Bitcoin blockchain. The idea behind Protoshares is that anyone who owns Protoshares will also get a stake in the decentralized autonomous corporations that are created by Invictus Innovations. Their first project, Bitshares, is basically their way of going after the problem of creating a decentralized exchange. Their solution is similar to the contracts for differences idea that Mastercoin is also implementing. Basically, various assets, such as BitUSD and BitGold will derive their value from two parties who own Bitshares and place long and short positions on that particular asset. You can find an explanation as to where BitAssets will get their value from bytemaster on the bitcointalk forum. Bytemaster, aka Daniel Larimer, is the CEO of Invictus Innovations. After BitShares is ready, Invictus will then begin to work on DomainShares and a number of other decentralized autonomous corporations that can replace some of the centralized online services that we use today.
Decentralized Autonomous Corporations
You may have noticed the term "decentralized autonomous corporation" being thrown around a few times in the section on Protoshares. What exactly is a decentralized autonomous corporation or DAC? A DAC is basically a way to use the blockchain technology behind Bitcoin to created a decentralized service.
We will soon see many different DACs come about that will offer decentralized alternatives to services such as Facebook, Twitter, Gmail, online sportsbooks, voting booths, SSL, cloud storage, and much more.
Crypto-Currency Market Capitalizations