While Bitcoin tends to get a tremendous amount of press these days, it is certainly not the only type of cryptocurrency in existence. There is actually a variety of cryptocurrencies that have exploded onto the scene recently.
As of early February 2014, there were more than 80 different types of cryptocurrencies in circulation on the market. It is believed that there could be hundreds or even thousands more cryptocurrencies operating within private circles. With new cryptocurrencies being created practically every day, it is entirely possible that we could be on the verge of an alternative currency explosion. Below you will find a review of the most popular and rapidly expanding cryptocurrencies.
According to Forbes, if you had invested $100 in Litcoin one year ago, you could potentially have a $30,000 investment today. i That is how quickly the cryptocurrency is growing. Created just two years ago, Litecoin is easily one of the most serious of the many cryptocurrencies currently in circulation. The currency has a market cap of $600 million, although its infrastructure is not as complex as that of Bitcoin. For instance, there are fewer sites, exchangers, and processors involved. There are actually few institutional entities where you can purchase Litcoin. One of the few is a Bulgaria-based exchange known as BTC-e.
Created by Charlie Lee, a former Google employee, Litcoin is scheduled to result in the production of more coins than its big brother, Bitcoin. Even more interesting is the fact that Litecoin also embraces a much faster production schedule. While transactions in the mining schedule for Bitcoin occur at a rate of every ten minutes, with Litecoin, they occur every 2.5 minutes. Lee also made a few other tweaks to the mining process by using a scrypt-based process instead of a hash-based mining process. It is hoped that as a result, Litecoin will not fall into the same hardware arms race that has overtaken the Bitcoin industry. From the beginning, Litcoin was also distributed in a far wider manner than Bitcoin.
According to Forbes, Peercoin comes in third-place behind Bitcoin and Litecoin as the most rapidly growing cryptocurrency. Also sometimes referred to as peer-to-peer coin or P3P coin, this cryptocurrency utilizes a unique proof-of-work and proof-of-stake system. The whitepaper behind the creation of Peercoin was published in August 2012. Inspired by Bitcoin, Peercoin actually utilizes a significant portion of the same source code.
With a market cap of $100 million, Peercoin does not actually have a restriction regarding the number of potential coins that can be produced. The cryptocurrency is designed to gain a yearly inflation rate of one percent, a feature that is intended to provide for enhanced long-term scalability.
Currently, Peercoins are traded for Bitcoins, fiat currencies, and other types of cryptocurrencies. Most such transactions take place on online exchanges.
First introduced in December 2013, Dogecoin is a Litecoin-based cryptocurrency. Created by a programmer from Portland, Billy Markus, the initial idea behind Dogecoin was to create a cryptocurrency that was both fun and capable of reaching a much broader demographic that other cryptocurrencies had done in the past, including Bitcoin.
What sets Dogecoin apart from other types of cryptocurrency is that it has a fairly rapid production schedule. Approximately 100 billion Dogecoins are planned to be in circulation by the end of this year. Another 5.2 billion coins will be produced for each following year. By the end of March, more than 65 billion of the coins had already been mined. Unlike Bitcoin, there are currently few commercial methods for using Dogecoin. With that said, the currency is rapidly gaining in popularity as a type of online tipping system. Through that system, social media users are able to grant tips using the currency to others for providing content that is noteworthy or interesting. Reddit is one of those sites.
According to a report published by Al Jazeera, the cryptocurrency Dogecoin was responsible for helping an Indian Olympic lunger fund his trip to the 2014 Winter Olympics recently held in Sochi, Russia. ii Users on the website Reddit managed to pull together the necessary funds using Dodgecoin. Reddit also assisted the bobsled team from Jamaica in raising the funds they needed to attend the Sochi Olympics within a 24-hour period.
Auroracoin is one of the latest cryptocurrencies to hit the market. Unlike other types of alternative currencies, the goal behind Auroracoin is not to simply create a new type of digital currency. Instead, Auroracoin is aimed at becoming a new national currency. iii The country in question is Iceland. Half of the entire amount of coins that will ever be created have been established in reserve for the people of Iceland. The remaining amount of Auroacoins will be mined as with any other type of cryptocurrency. Auroroacoin's team began distributing the coins free of charge to each citizen of Iceland through a unique airdrop on March 25, 2014. On that date, each citizen of Iceland became eligible to claim 31.8 Auroracoins at no charge. According to the Auroracoin website, there are currently 894184.2 airdrop coins currently in circulation, representing 8.52% of the total 10,500,000 airdrop coins.
The creation of Auroracoin was inspired by the imposition of capital controls by the government of Iceland five years ago following the collapse of the country's financial system. Through that financial system, the citizens of Iceland had been issued more kronas than the country was able to back up through the economy. Although the initial capital controls were reported to be temporary in nature, they are still in place. As a result of those capital controls, Icelandic citizens have been required to turn over all foreign currency to the Central Bank of Iceland, thus preventing them from engaging in international trade or investing in foreign businesses.
Auroracoin is actually based on Litecoin, which resulted from the same protocol as Bitcoin. Through the Icelandic airdrop, it is hoped that the conditions will be implemented that will allow Icelanders to begin using the cryptocurrency. Following the airdrop, the only way to acquire the cryptocurrency will be through traditional mining and transacting procedures. In regards to the near and medium future, Auroracoin is designed to reflect Bitcoin's development.
Over a period of one year, the entire population of Iceland, consisting of approximately 330,000 citizens, will be able to claim their share of Auroracoins.
Admittedly taking its name from the American hip hop artist, the cryptocurrency known as Coinye West arrived on the scene in January 2014. The primary difference that sets this digital currency apart from its counterparts is the fact that it is likely the first such currency to be named for a celebrity. According to the currency's developers, Kanye West was chosen due to his originality and trendsetting nature. To date, the developers have declined to identify themselves, claiming the decentralized and collaborative nature of the cryptocurrency.
For his part, Kanye West was not involved in any level of the currency's development. In fact, West only received notification of the currency's existence through Twitter, according to PC World.
Officially launched on January 11, 2014, the currency has a fairly down to earth goal of making cryptocurrencies more accessible to audiences that are less technically minded. Unlike Auroracoin, Coinye West is not a descendent of Bitcoin and uses an entirely different algorithm. As a result of that algorithm, it will be possible for individuals to make use of their computers to acquire the coins rather than purchasing expensive hardware for mining the coins. According to Forbes, Coinye West is similar to Bitcoin in that it can be exchanged through a secure peer-to-peer network with users benefitting from completely anonymous transactions. Only the user's ID number will be shown in the currency's public transaction log.
Known as Gold Digger, the mining software even takes its name from a song made popular by Kanye West. In keeping with the currency's modeling after the singer, Coinye West is also designed to support e-commerce transactions related to the hip-hop industry. According to the currency's founders, several online merchants have already requested information about how they can begin to accept Coinye West.
Just a few days after the currency's release, NY Daily News reported that West was less than amused by the homage and had filed a suit against several entities associated with the cryptocurrency. iv
Where are Cryptocurrencies Headed?
Exactly what the future holds for cryptocurrencies is difficult to determine. With so many moving pieces on the board and with new cryptocurrencies demonstrating a willingness to break free from the mold previously established by Bitcoin, right now, it is anyone's game. One thing that does appear to be certain is that cryptocurrencies are certainly not a temporary fad that will be going away anytime soon. As more and more people become introduced to the idea of cryptocurrencies, the chance that alternative digital currencies will soon become more mainstream appears to be more likely.
i) Forbes. A $100 Worth Of Litecoin A Year Ago Is Worth $30,000 Today.
ii) Al Jazeera. The rise of cryptocurrencies
iii) Auroracoin. Why Iceland?
iv) NY Daily News. Kanye West sues COINYE, themed digital currency, over trademark infringement.