Bitcoin’s dizzying gains in 2018 have attracted a new generation of investors to cryptocurrency.
That has generated a natural curiosity: Bitcoin’s biggest leaps might turn out to be in the past, but what about all those other acronyms on the exchange?
The options are copious, with everything from potentially transformative technologies to obvious in-jokes now available for purchase.
It’s important to sort the wheat from the chaff – but one thing to remember is that biggest doesn’t necessarily mean best when it comes to crypto.
Bitcoin is already too slow to send and too expensive to use to do many of the jobs its proponents once imagined.
“Faster and cheaper are two common themes that apply to pretty much everything on your list,” says Garrick Hileman, research analyst at Cambridge.
“Bitcoin is frankly no longer useful for the proverbial purchase of a cup of coffee.”
That means other currencies are potentially more useful in a lot of ways – which could mean more people want them in the future.
To explain why, and to examine the case for each of the alternatives, we turn to a team of experts.
Ethereum is more than just the “other” cryptocurrency. It has a lot of applications that Bitcoin lacks – including “smart contracts”.
“Imagine you’re a dog owner and you hire a dog walker,” says Hileman.
“The dog walker takes your dog for some walks, say 5km once a day.
You think the walker is generally trustworthy but you wonder whether the dog is going to full 5km – and you don’t want to have to get cash every day to pay the walker.
“So you attach a GPS to the dog, the GPS uploads that data via your wifi when the dog comes back, and that information goes to Ethereum.
“The smart contract does two things: it verifies that the dog has been walked, and it automatically sends payment to the dog walker’s Ethereum address.”
In the wider world, they could also be used for things like shipping containers and bonds.
Its variety of uses – and potential future uses – make Ethereum appealing. “I think Ethereum has the best long-term potential of any cryptocurrency due to flexibility and smart contracts,” says cryptocurrency investor Oliver Isaacs. It has spiked a lot alongside the Bitcoin boom, however – so the same bubble warnings apply.
Ripple’s goal is to become the default method for transferring value across borders. “What they’ve told the world that they’re doing is getting to be the next SWIFT,” says Hileman, referring to the current international bank communication platform.
“Many people have adopted the name ‘bankcoin’ for Ripple – ‘the bankers’ preferred blockchain’ – although that is highly debatable right now,” he adds.
“Ripple is one of the rare companies in the cryptocurrency sphere already bringing in revenue and working with real clients; not to forget the fact that they could potentially become the leaders in tackling a trillion dollar industry,” says Isaacs.
That’s hopeful – but remember that Ripple is intended to be useful, not scarce.
It has grown recently amid Bitcoin-driven interest, but spent several years stagnant before that.
It’s actually a derivative of Bitcoin – a version of the original that split off in July last year due to disagreements between traditionalists and those who wanted the network to be faster and cheaper.
Everyone who held Bitcoin when the split happened got an equivalent amount of Bitcoin Cash, making it immediately a widely held currency.
It’s “the cryptocurrency that most accurately mirrors the original vision of [Bitcoin founder] Satoshi Nakamoto”, according to Jimmy Nguyen, chief executive of blockchain R&D specialist nChain.
It’s got the branding already, and it’s available on many exchanges. But it’s the differences that make Nguyen optimistic.
“It’s set to take off further in the next 12 months as awareness of the benefits of a truly scalable (and decentralised, immutable) cryptocurrency become clearer in the eyes of business leaders.”
“In many ways, it’s a carbon copy of Bitcoin,” says Hileman.
“Features will often be added to Litecoin first before they’re added to Bitcoin, but it’s more similar than different.”
It’s also a lot cheaper per unit.
Litecoin boomed massively alongside Bitcoin’s boom, with some commentators speculating that its lower price was attracting entry level investors wrongly put off by Bitcoin’s £10,000+ per-unit price.
Whether that will happen again is debatable, but its fate seems linked to its big brother.
It employs zero-knowledge proofs, “which are basically ways to satisfy the network that you have transferred what you have transferred without revealing the amount or the address it has gone to,” according to Hileman.
That’s appealing to a lot of users for a lot of reasons.
Where now Zcash hit an all-time high last week – but some experts have concerns. The cryptography is “highly experimental” and “relatively weak” compared to some others, Bitcoin Core developer Peter Todd wrote in a critique.
That doesn’t mean it’s inherently going to fail, but it’s worth researching.
Monero’s main selling point is privacy, too. It deploys a technology called “ring signatures” to hide transactions.
“We can think of it like people standing around in a circle, and it’s not clear which person in the circle signed the transaction,” says Hileman.
Monero has been growing steadily for a few years, but its privacy attributes have their downsides too.
According to recent reports, North Korean hackers have been mining it remotely on other people’s computers.
That doesn’t mean owning it helps North Korea, but too much negative attention could have consequences down the road.
Dogecoin is literally a joke, started in tribute to a cute Shiba Inu dog that became an internet meme.
“The joke’s on people who didn’t buy it – there’s over $2bn worth of Dogecoin now,” says Hileman.
That might seem like a silly outcome, but it’s been around since 2013, making it a veteran – and it proves the power of branding in a crowded crypto market.
Don’t use it for shipping contracts, though.
Downside: there’s no limit on how many Dogecoin can be produced, so it’s fighting against the tide in the long term when it comes to big price rises. Upside: it’s a cute dog.
Price: £0.0100 (All prices in GBP from Coingecko as of 10/1/2018)