Do you know your Litecoin from your Dogecoin? As Bitcoin take a dive we look at the virtual currency rivals waiting in the wings

The doomsayers have been out for Bitcoin after the collapse of one of its biggest exchanges sent the price crashing.

On Monday 3 March the price stood at $590, a recovery from the near $400 it dived to last week, but a long way from the $1,000 mark it hit in November 2013.



The collapse led to questions over the safety and future of the cryptocurrency and the concept itself. But it's not just Bitcoin being touted as the digital future of money, there are a whole host of rival virtual currencies waiting in the wings.

Scroll down for video



Altcoins: Dogecoin, Litecoin and Peercoin are all based on Bitcoins

Bitcoins were launched in 2009, offering a currency free from government interference that could be shared instantly online.



It has grown from a suspicious currency favoured by drug dealers and criminals to a viable future form of payments, with interest being shown on Wall Street, by venture capitalists and regulators.



However, the collapse of one of the biggest exchanges, Mt.Gox, has shown how volatile the currency is and how little protection you have if your Bitcoins suddenly go missing.



Bitcoin supporters will tell you this is not the end. If you search online for crypotocurrencies you will find hundreds, but Bitcoin is by far the biggest by use and price with a market worth more than $7billion.



According to Bitcoin enthusiast Jez San, the internet entrepreneur behind poker site PKR.com, Bitcoin was the original cryptocurrency, while others are based on the same source code so could never really replace it.

He explains: ‘The source code of Bitcoin is available for any programmer to download, change its name and then release it.



‘The main contribution to virtual currency comes from the people using it. So it is simply a majority rules system and most people are already using Bitcoin.

'It is like taking the design of a Ford Focus but making a slight tweak. It is still a Ford.’



However, one area where virtual currencies are challenging Bitcoin is in how they are made.



Bitcoins are created through a complicated system of computer formulas using expensive software and systems known as data mining.

But alternative currencies, known as alt.coins, claim to be made faster and easier which saves money on equipment and energy use.

This makes these currencies a cheaper access point to get into the virtual currency world and eventually use whatever coins you have to buy some Bitcoins.



Andy Schmidt, research director at CEB TowerGroup, which advises business on the use of Bitcoins, explains: ‘Bitcoin is the Paypal of the virtual currency market.

‘There are socially responsible angles that others are taking with coins that take less energy to create.



‘If I had a 100 pennies I would put them in Bitcoins as it works, it has been proven.

‘I would still hedge and look at the smaller players that solve some of the problems like limited supply.’



Many of the virtual currency exchanges will accept different types of ‘cryptocoins' but if you ever really wanted to spend or invest in this area, you would have to eventually convert them to the more commonly used and universally accepted Bitcoins.



Marketcap: Bitcoin is by far the biggest virtual currency

What are the main alternatives to Bitcoin?

Litecoin: Easier to mine then Bitcoins

Litecoin – The easy access coin

Litecoin has a potentially wider circulation than Bitcoin which has a limit of 21m.

Litecoin has a maximum limit of 84m, meaning there is more available to mine and eventually will be more available to trade.



A Litecoin is currently worth around $14, and the virtual currency has a market capitalisation of $381million.

This coin is described by virtual currency website Coindesk as ‘the silver to Bitcoin’s gold.’



The website’s state of Bitcoin report says Litecoin mining is more accessible as it only requires a low-end graphics card









Dogecoin: More social than Bitcoin

Dogecoin – The social media coin

Dogecoin is characterised by a an image of a dog on a gold coin.



It has a market capitalisation of $67million and is among the cheapest virtual currencies at $0.0013

Its low valuation may be down to its high supply of 100billion with a further 5.2billion to be circulated per year.

Members of the Dogecoin community can also reward each other with coins for sharing interesting content on social media.

It has spawned several other animal-themed coins such as the PandaCoin, Cat C oin and Duck Duck Coin.





Peercoin: Nicer to the environment than Bitcoins

Peercoin- The environmentally friendly option

The formula behind Peercoin is quicker and easier to solve by computer geeks.



This means they will use less energy powering equipment, therefore helping the environment.

It has a market capitalisation of $72millon and can be snapped up for $3.41.

Coindesk describes Peercoin as more energy efficient than Bitcoin.



It says there is no limit on the amount that can be created.

The coin is designed to eventually have an inflation rate of 1 per cent.





Marscoin - The interplanetary alternative



This is a coin dedicated to designing a currency fit for use whenever the human race colonises Mars.

The Marscoin has a value of $0.013 and market capitalisation of $50,959. But as there is no guarantee of people living on Mars in our lifetime or at all, mining and investing in this is probably likely to be more of a hobby.



Mintchip

Mintchip is the brainchild of the Canadian Mint, which launched a competition in 2012 to find a viable virtual payment system.



The idea is that transactions would be done through a computer chip attached to devices such as a mobile phone and backed by the Bank of Canada.

The Brixton pound

This isn't technically a virtual currency but the Brixton pound serves a social and decentralised purposes by keeping money in the local Brixton area.

The idea is that people buy vouchers for the equivalent price in pounds, which can then be spent by participating retailers in Brixton.

You can also use the vouchers to pay by text, giving them a virtual element.



And, of course....gold

The one thing that any virtual currency gets compared to is gold. This would seem slightly unfair on the basis that gold has been a store and measure of wealth for thousands of years and so has proven itself to a somewhat higher level than Bitcoin.

However, gold's position as the world's favourite alternative to individual currencies means that it will always be brought into the conversation.



Gold had a tough year last year, as improving economic sentiment encouraged people into more risky assets.

However, the price has been pushed back up in recent weeks as the US Federal Reserve starts withdrawal of its economic stimulus and there have been continuing fears over China's economy and currency concerns in emerging markets.

Goldbugs say it can only look more attractive if investors flock to safety, seeing more volatile markets are ahead.

Gold: The gold price has rebounded despite positive economic sentiment