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| (5) Logos from just a small sample of the many different cryptocurrencies. |
Bitcoin has become a household name because it was the first cryptocurrency--created in 2009--and is currently the largest cryptocurrency. However, few people have heard of the more than 1,000 other cryptocurrencies that exist today (1).
Litecoin was the next major cryptocurrency to be released after Bitcoin, and it attempted to create an improved copy of Bitcoin. While Bitcoin blocks are processed every ten minutes, Litecoin improved upon this with blocks being process every two and a half minutes (2). The major difference between these two is that Litecoin was created with the Scrypt algorithm. This algorithm uses more high-speed RAM from individual miners than Bitcoin does, allowing its blocks to be processed quicker (2). This gives Litecoin many competitive advantages compared to Bitcoin, but Litecoin remains behind the popularity that the Bitcoin name carries.
Another of the many cryptocurrencies, Dogecoin, can hardly be called a competitor to Bitcoin. Dogecoin was created as a joke currency in 2013 based off of the internet meme, Doge (3). Dogecoin used the Scrypt algorithm found in Litecoin, and its biggest difference is that there are over 100 billion Dogecoins in existence while Bitcoin has a maximum number of 21 million (3). Although created as a joke currency, Dogecoin’s value has risen to a current market value of over $117 million (4). Dogecoin goes to show the variety in the cryptocurrency world and that not all of the cryptocurrencies were created to challenge Bitcoin’s dominance.
Bitcoin is, of course, the largest cryptocurrency with a market value of $100 billion. However, Ethereum, which is the second largest with a market value of $30 billion, gives Bitcoin serious competition (4). Ethereum is relatively new in the market, created in 2015, but it has unique features that have propelled it to the top tier of cryptocurrencies. It got off the ground with an initial sale of 60 million ether tokens for $18.5 million (6). Just as Litecoin reduced the amount of time it takes for a block to be processed, Ethereum blocks are processed in about 12 seconds, making it stand out far above its competitors (6). Ethereum uses what is known as the GHOST protocol, a system coded into the algorithm that accounts for when multiple miners solve a block at the same time (which is more common when blocks are being solved every 12 seconds rather than 10 minutes) (7). Another difference in Ethereum’s code is that it is Turing complete. This means that with sufficient time and power, anything can be calculated (8). This feature allows for extensive variability in how users can code programs within Ethereum. Bitcoin, on the other hand, is not Turing complete, which gives Ethereum a big leg up.
Ethereum, though, is more than just a cryptocurrency; it is a platform for various activities. Its most prominent feature is that Ethereum allows for smart contracts. The main advantage that Ethereum has over Bitcoin is that it allows users to write their own programs or apps, smart contracts being an example (9). Smart contracts have many uses such as requiring a certain number of people to agree before the contract goes into effect, reinforcing verbal contracts, storing information and records, fundraising through feeless crowdsourcing, getting public input on projects and supporting other contracts (9). Most of all, these smart projects ensure decentralized confirmation and security for transactions and agreements.
Ethereum provides unique features that challenge Bitcoin’s dominance, but the name recognition, the size of the Bitcoin blockchain, and its track record of security keep Bitcoin seated on top of the cryptocurrency throne. And while the power is concentrated at the top, there are over 1,000 cryptocurrencies with a total market value of over $195 billion (4). These provide a multitude of features, availability for speculation, and variations in code. Bitcoin is not alone.
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