Bitcoin was here first, but the open-source code meant copying it was easy. Litecoins are now established as being the silver to Bitcoins gold, but there are literally hundreds of other copycat “alt coins”. Not all crypto-currencies are equal though: here are 3 that I believe will have a future.
While you’re at it – read my guide on getting started with Litecoin mining, while you still can. If you don’t understand the concept of Bitcoin yet – and I wouldn’t fault you for that – then this video is the best explanation I’ve found yet:
We have a free eBook telling you all about BitCoin too.
Technically speaking, Doge is nothing unique. It’s a standard copy-paste and tweak of Litecoin with a greater number of coins and a joke comic sans font on the interface. It grew out of love for the doge meme, a Japanese Shiba dog who greeted the world with innocent eyes and typically appalling grammar, as is the case with animals on the Internet.
And yet, the community embraced the coin like no other. r/dogecoin is welcoming and relaxed: a far cry from both the hostile and noob-intolerant Bitcoin communities. The welcoming “just have a go” attitude meant some people were joining the revolution by mining a few coins a day on their mobiles. It doesn’t matter that the coin is basically worthless at the moment: it’s a way of getting into the crypocurrency revolution without feeling stupid. The coins are so easy to get and there’s so many of them that it feels good to have even a few hundred!
The rise of the doge “tipbot” quickly led to it being named the Internet tipping currency of choice; there are hopes that websites will adopt dogecoin as a micro transaction for thanking authors. There’s also the huge sense of charity: most recently, the dogecoin community raised $25,000 to help send the Jamaican bobbled team to the winter olympics in Sochi. Seriously.
by Reddit user wolfinsheeps
Perhaps it’s the low value of the coins that makes people so happy to part with them, but it’s clear that dogecoin has the potential to be the currency of choice for gifting – and that might just be exactly the currency that the Internet is looking for. To the moon, fellow shibes!
Currently sitting at 3rd place in terms of market-cap, Peercoin is named after it’s secondary peer-based mining system. Peercoin is unique in that graphics card or ASIC mining will gradually give way: the network will sustain itself through the clients that use it. This is important for long term sustainability: the power consumption of crytocurrencies in general is insane. It’s a concept called “proof of stake” (as opposed to “proof of work”, the traditional model use in Bitcoin).
The basic idea is that anyone who holds Peercoin will get an automatic return on those coins: hold them for longer, and get more – a bit like a savings account. Proof of Stake is programmed to give a 1% annual reward. This should ensure both the continuation of the network, and a guaranteed inflation – a mild inflationary rate generally considered to be good for an economy. The total number of Peercoins in circulation is infinite, but unlike other models the transaction fee (currently a fixed 0.1 PPC) is destroyed – it doesn’t go to miners. In essence: save the coins, and you get inflation; spend, and you get deflation; with inflation comes increased desire to spend – so equilibrium is reached. That said, I’m no economist.
The Proof of Stake system also helps to protect against the so-called “51% attack”. With Bitcoin, or most other crypto-currencies, once a single person controls 51% or more of the computational mining power, they are able to break the system by double spending or ignoring transactions – they would control the money supply, essentially. When the Proof of Stake system is fully in place, an attack would only be possible by owning 51% of all the Peercoins in circulation, which is highly improbable.
Created by Sunny King – who also made Peercoin – Primecoin is one of a few CPU-only coins. Bitcoin and its derivatives use SHA256 algorithm; there are now intensely powerful ASIC miners which make graphics card mining completely inefficient for that job. Litecoin and its derivatives use Scrypt – a more memory intensive algorithm, which restricts it to graphics cards and at of the time of writing, makes it ASIC-proof. Memory intensive is the crucial point here: memory costs a lot. An ASIC designed for Scrypt-based coins wouldn’t be much different to a graphics card, only more energy efficient. Unlike Bitcoin which was suddenly eclipsed by cheap USB ASICs, Scrypt derivatives will continue to be viable on GPUs for a long time after any theoretical ASIC is released. It would also be very easy to increase the memory requirements for Scrypt coins with a single code tweak, killing off any ASICs already made instantly.
Primecoin however uses a CPU to discovering special chains of prime number sequences, which are apparently of scientific importance. I won’t embarrass myself by pretending to understand exactly why, but it’s good to know that some scientific value can come from the coin, and miners aren’t simply wasting hashes for the sake of it.
The other defining factor is a more evenly spread difficulty increase, but its main attraction is being CPU-only: you can mine Primecoins at the same time as using your GPU for another coin, and everyone with a computer has a CPU.
You may think crypto currencies are a huge scam with no real value, but it doesn’t really matter: Value is determined by those who use it. The only reason you think your dollar note has a value is because everyone else does too. The more people that believe in a currency, the greater its value – and that’s why I believe in these.
Anyway – I’m waiting for a coin that helps cure cancer. How about you?