There is more to cryptocurrency than Bitcoin. e27 brings you a guide to four most popular alternatives, and how they stack up to each other





With the advent of Bitcoin, people have seen the potential of cryptography to revolutionise the world of money. Put simply, a cryptocurrency is a decentralised digital exchange medium which relies on cryptography to verify transactions, and also to issue new units of currency or coins.

Bitcoin, though, is not without its flaws. These past few months, Bitcoin has undergone a veritable rollercoaster of price changes, and many investors and users alike have been burned by its volatility. From a stable low of US$200 per coin back in November 2013, it grew to a high of almost US$1200 early in December, before plunging back down to US$500 in mid-December. Since then, its price has rebounded and is dropping slowly, being around US$600 currently. The chart below shows a better illustration of Bitcoin’s wild price swings since November.

Read Also: Bitcoin: Beyond the fear and media hype



Bitcoin Price Chart More

BTC/USD chart from Bitcoincharts

Licensed under a Creative Commons Attribution-ShareAlike 3.0 Unported License.

Luckily for cryptocurrency fans and users, the success of Bitcoin has inspired many competitors. These alternatives are all unique in their own way — be it total supply, cryptographic algorithm, or even the difficulty to “mine” new units of the currency. Here we, at e27, brings you the top four alternative cryptocurrencies in terms of market capitalisation according to CryptoCoin Charts, which measures the total value of the currency in circulation and hence, a reasonable gauge of popularity.

Litecoin (LTC)

Touted as the silver to Bitcoin’s gold, Litecoin is the second largest cryptocurrency by market capitalisation. Founded in 2011 by former Google employee Charles Lee, there are approximately US$410 million worth of Litecoins circulating around the world. Since November 2013, the volatility of Litecoin has mirrored that of Bitcoin, causing much worry among investors as its value climbed from US$5 to US$40 and dropped back to US$15.

The situation is better for people who want to generate or mine Litecoin via verifying transactions through solving cryptographic puzzles called hashes, though. Litecoin uses the scrypt cryptographic algorithm as opposed to Bitcoin’s SHA-256, which means that there are less specialised machines optimised for mining than Bitcoin, and so a greater amount can be mined with just a computer graphics card.

Litecoin can be traded at many Bitcoin exchanges, the largest of which is BTC-e. There are also quite a few online shops that accept LTC, which include online games merchant LitecoinGames and food store Jay’s Jerky and Goodies. More can be found in the listing here.

Peercoin (PPC)

With a market capitalisation of US$87 million, Peercoin is the third largest cryptocurrency. Developed by software developer Sunny King and launched in August 2012, Peercoin differentiates itself from its competitors through an innovative hybrid of proof-of-work and proof-of-stake algorithms to verify transactions and generate new coins.

Simply put, proof-of-work means that new coins are generated only when correct answers are gotten from solving hashes. As hashes are intrinsically hard to solve, only users that have put in the required computing power can have access to new coins, reducing the possibility of fraud. Bitcoin and Litecoin, for instance, encode transaction histories in hashes so that as miners are gaining new coins, they are also verifying transactions, contributing to the security of the network.

Proof-of-stake, on the other hand, distributes the task of verifying transactions randomly to holders of the cryptocurrency. This means that users who hold a greater amount of currency get greater responsibility for verification, with the reward being a greater chance of gaining extra coins generated through transaction fees. It works a bit like interest on bank deposits. Peercoin merges these two systems, with new coins generated both, through solving hashes and transaction fees, set at 0.01 PPC per transaction.

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