Bitcoin is printed on the basis of a mathematical algorithm, in order to gain bitcoin, you can either mine it yourself or purchase bitcoins that other people have already mined. Since it is open source, other users have used the same algorithm to improve it, creating other digital coins known as Altcoins.
The algorithm that gave life to the Bitcoin in 2009 has been reproduced and modified so many times that, to date, there are around 100 coins similar to Bitcoin. The most popular are Litecoin, Zcash and Peercoin which have more or less the same value as Bitcoin and are quickly becoming very popular.
3 Bitcoin alternatives
The world of the virtual coins is aiming to resemble the physical world, a clear example is Litecoin. While the Bitcoin wants to be the gold of all cryptocurrencis, Litecoin wants to be known as the silver. It is a fully decentralized currency that was created as an open source project inspired by Bitcoin, but has some key differences. One of the most notable is the speed in which transfers are performed. Each block for bitcoin takes 10 minutes to create, for Litecoin it only takes 2.5 minutes, this means that Litecoin generates transactions faster.
Another difference is that Bitcoin uses the HASH algorithm while Litecoin uses the SCRYPT algorithm, making mining much more accessible. It is also key to point out that Bitcoin has a limit of 21 million coins while Litecoin can have 84 million coins created. If you look at the numbers, it is clear to see that Litecoin is 4 times faster and 4 times more abundant than Bitcoin.
Ethereum was developed in 2014 and officially launched in 2015. It is divided into two parts: the first is as a cryptocurrency, similar to Bitcoin when it comes to the blockchain. The key difference here is that while Bitcoin has limited coin creation, the creation of Ethereum is unlimited. It is obvious that Bitcoin’s value lies in its scarcity, however, the problem is when that 21 million limit is reached. At this point a deflationary situation will arise.
Whereas Ethereum creates new coins (as long as there are people using the platform), creating an environment of controlled inflation. The other part of Ethereum that makes it very special is the smart contract’s creation. The Ethereum network generates new coins while also generating smart contracts; a smart contract is a digital agreement between one or more parties within Ethereum network.
These agreements are very useful in finance, for example for insurance companies, exchange of shares, royalties, etc. The contract network offers endless possibilities and resembles a financial system but without intermediaries. These contracts are supposed to be 100% safe and can´t be modified at any time. Presently these contracts have no legal validity, in fact, they are not legal or illegal.
Zcash was born in 2016 as a fully decentralized cryptocurrency, very similar to Bitcoin. Its composition is almost the same, only 21 million coins will be produced in the future and the system is also Blockchain.
What sets apart this virtual coin from Bitcoin is that it has been created by a company, therefore might build a little more trust between shareholders, investors, and holders of this currency. Despite having a similar open source, it is regulated and managed by a company.
The other strong point is the anonymity. Zcash automatically hides the senders and recipient’s identity and the amount of all transactions. Zcash knows that the strongest point of cryptocurrencies is the opacity and exploits it to the maximum.
Currently, there are more than 1300 cryptocurrencies trading on the market and all indications are that this will grow in the coming years.