Bitcoin is indisputably the most famous cryptocurrency. It is, however, very far from being the only one. Here are five alternative forms of (relatively) new cryptocurrency to invest in.
Like Bitcoin, Ethereum is a blockchain-based cryptocurrency. It has recently started to gather a lot more visibility due to its association with non-fungible tokens (NFTs). Currently, it’s unclear how much of a future NFTs have. Ethereum, however, is also often used in “smart contracts”. These are contracts that fulfill themselves automatically when certain criteria are met.
Ethereum is also used to power U.S. Dollar Coin (USDC). This is literally meant to be the cryptocurrency version of the US$. It has a 1-to-1 exchange rate with the fiat currency and, in principle, can be used globally. In practice, this depends on how willing people are to accept U.S. Dollar Coin as opposed to both real US dollars and alternative cryptocurrencies.
Litecoin also operates in a very similar way to Bitcoin. The headline difference is that it’s much more streamlined, hence the name. This means that Litecoin can still be “mined” with relatively low-powered computers. Also, Litecoin’s block-generation rate is significantly faster than Bitcoin’s. This means that transactions can be confirmed much faster.
How much this speed matters depends on the type of transaction. For example, if you were using cryptocurrency to make a major purchase, then you might be prepared to wait a little extra time if it gave you extra security. For lower-price/higher-volume transactions, by contrast, speed matters a lot.
Litecoin also has more “business credentials” than Bitcoin. The identity of Bitcoin’s inventor has never been publicly confirmed. The name “Satoshi Nakamoto” is widely accepted to be a pseudonym. Litecoin, by contrast, was created by a former Google engineer named Charlie Lee.
Both Tether’s name and its reference hint strongly at its (so far) unique selling point. Tether is tethered to real-world currencies, including US$, GB£, and EU€. The idea behind this is that it stabilizes Tether’s value. This can make Tether appealing to newer investors who may be wary of market volatility. It is, however, worth noting that fiat currencies can be volatile too.
Cardano was created as a result of a disagreement between the five co-founders of Ethereum. One of them, Charles Hoskinson, left the group and went on to co-found Cardano. It’s therefore unsurprising that Cardano has a lot in common with Ethereum. This includes its key applications i.e. smart contracts and NFTs.
Unsurprisingly, there is something of a rivalry between Cardano and Ethereum. At the moment, Ethereum is clearly the dominant cryptocurrency. Going forward, however, Cardano could feasibly become an “Ethereum killer”.
Cardano beat Ethereum to the adoption of proof-of-stake validation. This not only speeds up transaction time but also reduces energy usage and hence Cardano’s carbon footprint. Ethereum is still well ahead on decentralized finance (DeFi) products. Cardano, however, is working hard to catch up.
Although cryptocurrency still has something of a “Wild West” image, Stellar was created with business users in mind. Specifically, its target audience is financial institutions looking for a secure, quick, and economical way to make large-scale financial transactions.