Bitcoin might be the most recognizable cryptocurrency in existence, but that doesn’t mean it’s the best. Indeed, it’s easy to argue that many newer coins offer improvements over Satoshi Nakamoto’s creation.
Here are five cryptocurrencies that aren’t just copycats and instead attempt to build on Bitcoin’s foundations.
Ethereum isn’t trying to be a “better” Bitcoin—it has a different purpose and goal entirely.
Remember, Bitcoin was created as a digital currency. Sure, it was never designed to be a store of value, an investment vehicle, or a tool for financial speculation, but its core purpose was still a financial one.
Ethereum is much more than a digital currency. It builds on the realization that blockchain technology has many real-world applications beyond supporting financial transactions.
Therefore, the Ethereum blockchain allows smart contracts (a self-executing contract without the need for middlemen) and decentralized applications (DApps). Ether (the token itself) is primarily a way to run applications and monetize work. The tradable currency aspects, though popular, are secondary.
Ripple is fungible with everything. It means you can transfer assets that don’t typically have an exchange rate (for example, airline miles into gas) and can save money when trading assets in inefficient corridors (such as Indian rupees into euros). Essentially, Ripple aims to replace the US dollar as the world’s primary mediator.
However, despite its benefits, Ripple is a contentious token. Some experts have argued that it’s not even a cryptocurrency—it doesn’t use a blockchain, no token mining takes place, and no new tokens are created.
Instead, Ripple is built on the patented Ripple Protocol Consensus Algorithm (RPCA). It uses proof-of-correctness rather than proof-of-work to validate transactions.
Furthermore, 80 percent of all Ripple tokens are still owned by the creator, Ripple Labs. That flies in the face of crypto’s decentralized ideals.
Nonetheless, Ripple is now comfortably a top five coin by market cap; it spent most of 2018 in second place.
Bitcoin is often touted as being completely anonymous, yet that’s not entirely true. Bitcoin transactions can be traced in a number of ways.
Firstly, address reuse is widespread. It means that if one transaction can be linked to you, all transactions from an address (all of which are publicly available) can also be linked to you.
Secondly, it’s easier than you might think to link a person to a transaction. Blockchain analytics are quickly becoming big business, while web trackers and cookies constantly leak information about your actions to companies like Google and Facebook.
Researchers at Princeton University analyzed 130 major companies that accepted Bitcoin payments. They found 53 of them leaked information to more than 40 third parties. Most of the data was used for ads, but some also leaked transaction details. The issue is especially acute when the leak includes the amount and time of the purchase.
“We found that many merchant websites have far more serious (and likely unintentional) information leaks that directly reveal the exact transaction on the blockchain to dozens of trackers. We found that unique linkage is possible in over 60% of cases”
Monero uses stealth addresses and ring signatures; it thus negates all the privacy issues Bitcoin faces. Even if someone knows your public Monero address, they cannot see how much Monero you own or any transaction history.
We explained how Monero works in more detail in our coin study.
NEO is a direct competitor to Ethereum. They are both designed to host smart contracts and DApps.
Though it’s not as popular as Vitalik Buterin’s creation (NEO is a top 20 coin, Ether is a top three coin), many people believe it is a better alternative with greater long-term potential.
The key difference is transaction speed. NEO can handle 10,000 transactions per second, whereas Ethereum can only manage 15 transactions per second. For comparison, Bitcoin is limited to seven transactions per second.
Some people also think NEO is more future-proof. The creators claim to have developed an anti-quantum cryptography mechanism called NeoQS. In contrast, quantum computers could eventually pose a threat to the security of other cryptocurrencies’ blockchains.
On the downside, NEO is backed by the Chinese government. That will immediately ring alarm bells in the minds of skeptics, not to mention it means there’s a dearth of official English-language information.
One of the biggest criticisms of Bitcoin (and cryptocurrencies in general) is their price volatility. It’s hard to claim they are the future of money when the last two years have seen prices go from $3,000 to $20,000 and back again.
That’s given rise to a new type of cryptocurrencies called stablecoins. They are pegged to an existing currency or commodity in a bid minimize the volatility.
The largest stablecoin by market cap is Tether. It is pegged to the US dollar. The coin was created as a way to allow users to quickly exchange money between the crypto world and fiat currencies.
Tether is not without its controversies; the company has repeatedly claimed all its Tether tokens are backed by dollars, but it is yet to provide evidence for its assertions, despite repeatedly saying it would do so.
The company also appears to have unhealthily close ties with the Bitfinex exchange. Indeed, several experts have accused Bitfinex of creating Tethers “out of thin air.”
Nonetheless, stablecoins are here to stay. If Tether sounds too dodgy for your tastes, you should also check out TrueUSD, Gemini Dollar, and DAI.
Tell Us Your Favorite Bitcoin Alternatives
Whether it’s less volatility, improved privacy, or a greater number of real-world applications, the five coins we have discussed in this piece are all better than Bitcoin in at least one way.
But there are dozens of other coins out there that also want to steal Bitcoin’s crown. If you’ve got a favorite altcoin, share it in the comments and explain why you think its potential is so great.
And if you’d like to learn more, check out our quick introduction to Bitcoin.