I’ve Heard of Bitcoin, But What Are These Other Cryptocurrencies?

The following is a guest blog post:

Bitcoin is on the verge of becoming a household name, but you’ll still have a hard time finding a man on the street who can explain exactly what it is. Basically, Bitcoin is a digital currency used by a new technology called a blockchain. The Bitcoin blockchain is a record of every time Bitcoins have been bought, sold, or spent. Each payment is verified using computer power from all around the world. The blockchain history remains open and public. In the short term, blockchains like Bitcoin hope to take much of the business of traditional banking.

As investor Brock Pierce, Mark Cuban, and others start to express strong opinions on the subject, Bitcoin is becoming more famous than ever. But so are other “cryptocurrencies”, like Ethereum, Neo, and Litecoin. What’s up with that?

A blockchain can be created by anyone with the technical knowhow. So can digital currencies and tokens. There are more than 800 of these tokens/currencies at the time of this writing. Some of them are competing directly with Bitcoin to be the world’s number one digital currency. But others are striving for something different.

Ethereum and Neo

Two popular coins, Ethereum and Neo, exist to bring to the world what are known as “Smart contracts”. Smart contracts are, essentially, programs or algorithms built into a blockchain. They can be games, money transfer programs, social networks, gambling sites, and many other options. Once created, they are essential self-operating, meaning they can subsist without enormous staffs, CEOs, or hedge fund investments.

Ethereumcryptocurrency, for example, is a digital currency just like Bitcoin, but it is also “Gas” for the Ethereum blockchain. It costs computational power to “Run” the blockchain, and all of its smart contracts, so users pay for each action in Ethereum. NEO has NEO Gas, a coin that is separate from the NEO currency, which functions just like Ethereum’s Gas.

Other Examples

There are countless other examples. “Monero” is a coin that is meant for transferring value, just like Bitcoin, but each transaction is untraceable because every Monero token is identical in every respect, thus making a record of transactions impossible .

Golem is a coin based around a developing global network of computers, which will (if successful) one day form a giant supercomputer that will provide computational power to private individuals. A savvy animator might be able to create Pixar-quality animations from the comfort of her home, for example.

Ardor is a coin based around a blockchain that is meant to support “Daughter chains”. When complete, the Ardor system wilmake it easy for anyone to build their own blockchain, for their own purposes, complete with its own currency/token.

The list could go on and on. Suffice to say, many people are working to solve problems with blockchain technology, and the combined global power of internet users and their computers. These coins are more than digital money. Even as you hear about people making money by buying them as an investment (and that is certainly true), they’re much more than that.

10 thoughts on “I’ve Heard of Bitcoin, But What Are These Other Cryptocurrencies?

      • Hi MATM,

        I believe there are about 1,000 different cryptocurrencies out there with more coming online via ICO (Initial Coin Offerings) all the time. My guess would be to stick with the larger, well known digital currencies instead of speculating on the newer issues.

    • Hi IH,

      Personally, I think it’s ridiculous seeing the number of new alt coins that are offered almost every week. I guess diversifying among the well known and established coins can serve you well but truth be told, I feel like many of the new alt coins are just pump and dump scams. Thanks for sharing news about NEO and Ripple.

    • Hi DP,

      Many are learning about this potential future store of value and what it can do for commerce and more down the road. I have a feeling we’ll be reading about more crypocurrency portfolios among our DGI peers in the coming months. Thank you for stopping by and commenting.

    • Hi desidividend,

      I think everyone is looking into cryptocurrencies these days. It’s called the Satoshi Cycle. Interest in Bitcoin raises prices, which raises interest. I too am looking to get my feet wet in the space. Thank you for commenting.

  1. I would think these digital currencies would have to be regulated before they can become a mainstream currency or replace paper money. Besides, the large amount of computational power needed to generate bitcoin seems counter productive.

    Currently, I’m not investing in any of these currencies as it seems there is too much uncertainty around these currencies. Maybe once they converge into one or two digital currencies and if there is some sort of regulation in place, then I can see them take off.

    Thanks for the article.
    Mr. ATM

    • Hi MATM,

      I agree, that some sort of regulation will rear its head one day but the main point of a cryptocurrency is to be free, open, distributed and unregulated. True market forces at work. Of course, that does leave the option open for manipulation by the few that really understand how these currencies work. As always, I appreciate your comment.

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