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We take a look at the top ten alt coins and the future of bitcoin. Could any of these cryptocurrencies overtake the market leader?
Though bitcoin remains the biggest cryptocurrency in terms of market capitalisation and coin value, rival coins are beginning to gain ground due to technological advancements and increasing demand. Below are some of the alt coins that could overtake bitcoin in the years ahead:
Like bitcoin, ethereum is a public blockchain network. But while bitcoin is an electronic cash system, – and therefore one specific application of blockchain technology – ethereum is a platform that allows developers to build and deploy programming code for any decentralised blockchain application.
Bitcoin users work to ‘mine’ the currency, while ethereum users work to earn ether, a crypto token. Ethereum blocks, the record of transactions, can be created much more quickly than bitcoin – making it more useful for transactions, instead of just for storing value. Ethereum allows a variety of programmes to run on its network, and this perhaps broadens its value beyond that of bitcoin.
When it launched in 2011, litecoin proclaimed that it will be silver to bitcoin’s gold. Like bitcoin, it is also generated by mining. Litecoin’s main difference is that it can confirm transactions at a faster rate than bitcoin, meaning it can handle a higher volume thanks to faster block generation. During bitcoin’s massive rally in 2017, litecoin also saw its value rise: from around $4 in March to over $60 in August.
Zcash (ZEC), originally called Zerocoin, is the result of the trend toward anonymous transactions. The main difference between bitcoin and Zcash is that while the bitcoin blockchain keeps a record of the participants of transactions, as well as the amount they exchange, the Zcash blockchain only shows that a transaction took place – not who or how much was involved.
Zcash reached highs of $799 in the first week of 2018, but as investors raced to take profits, the price was driven back down to $710.
Former bitcoin developers launched software company Ripple in 2012. The ripple network is designed to enable the transfer of any form of currency, regardless of whether it is the traditional sort, such as dollars or euros, or the new types such as bitcoin. Its digital currency, ripple XRP, positions itself as complimentary to bitcoin, rather than a rival – and has been called the logical successor to bitcoin. Ripple’s XRP unit is, like bitcoin, a form of currency based on formulae, with a limited number of units that can be mined.
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Below are some of the emerging alt coins that, although still much smaller than bitcoin and its challengers, have the potential to be the next big thing:
OmiseGo, a relative latecomer, uses public ethereum-based technology, with the goal of allowing people to use it via traditional digital wallets. It is marketed to those people in Asia that have previously had little access to banking services, and aims to become the payment gateway for Asia – already firms such as McDonalds in Thailand have begun accepting the currency. The price reached a high of nearly $12 in late August 2017, before falling back towards $10.
The golem network is being dubbed the ‘Airbnb of computing’ – it is a supercomputer that breaks down a task, and distributes it to computers all over the world so that less computing power is required by a single PC. The system is available for users to rent using Golem Network Tokens (GNT). The golem network is based on an ethereum smart contract, so users’ transactions are recorded onto the ethereum blockchain.
Monero (XMR) is a privacy coin that was launched in 2014. Like Zcash, it is designed to avoid tracking – it does so by mixing the coins used in every transaction. In the last two months of 2017, Monero quadrupled in value to $349, making it one of the fastest-rising digital currencies – even faster than bitcoin, which only doubled in the same period. Going forward, Monero’s price is likely to see increasing price volatility that could make it an interesting choice for traders.
Originally released as Xcoin in 2014, and rebranded as dash in 2015, the open source peer-to-peer cryptocurrency can be used to make payments online and in-store, straight from a digital wallet. Like bitcoin, dash is popularly held as an investment but it attempts make up for bitcoin’s shortcomings in transaction speed and decision making. Dash can confirm transactions in as little as four seconds and has a voting system in place to allow for the smooth implementation of changes – unlike bitcoin, which remains ungoverned.
NEO – often referred to as China’s response to ethereum – is a blockchain and coin system that transfers currency between users. Though it uses many of the same features and technologies as ethereum, NEO’s vision is to establish a new smart economy by converting all physical asset transfers (such as rent and bills) to NEO digital smart contracts.
Stellar was founded in 2014 by Jeb McCaleb, who also founded ripple – and like ripple, stellar aims to provide a method of no-fuss international transactions. Stellar has more than 16 billion tokens, called Lumen. The Stellar team promises to cut down the transaction time of bitcoin, and provide the same service at just a fraction of the cost.
Most investors buy bitcoin and hold it, hoping the coins increase in value. However, increasingly we are seeing bitcoin being accepted as a form of payment – by retailers such as Microsoft and Tesla, and even charities. Though it is too early to tell whether bitcoin will be used widely as a currency, it is definitely being increasingly incorporated into the mainstream.
Despite mass speculation about the bitcoin bubble popping, it is unlikely that a crash be the end of cryptocurrencies entirely. With the amount of publicity and investment all cryptocurrencies – not just bitcoin – have received, it seems that the demand will continue. What we are seeing now could just be the beginning of cryptocurrencies and their potential.
When you spread bet or trade CFDs on a cryptocurrency, you are speculating on price movements in the underlying market, without buying the token itself. As there is no need to deal with an exchange, or create a digital wallet, you can be set up and ready to trade much faster.
IG offers you the opportunity to trade on the price movements of seven popular cryptocurrencies:
Find out more about the differences between buying and trading cryptocurrencies.
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This information has been prepared by IG, a trading name of IG Markets Limited and IG Markets South Africa Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. International accounts are offered by IG Markets Limited in the UK (FCA Number 195355), a juristic representative of IG Markets South Africa Limited (FSP No 41393). South African residents are required to obtain the necessary tax clearance certificates in line with their foreign investment allowance and may not use credit or debit cards to fund their international account.