1. Ethereum (ETH)
The first Bitcoin alternative on our list, Etherium, is a decentralized software platform that enables intelligent contacts and decentralized applications (apps) to be built and run without any downtime, fraud, control, or interference from a third party. The goal behind Ethereum is to create a decentralized suite of financial products that anyone in the world can freely access, regardless of nationality, ethnicity, or faith. This aspect makes the implications for those in some countries more compelling, as those without state infrastructure and state identifications can access bank accounts, loans, insurance, or a variety of other financial products.
The applications on Ethereum are run on ether, its platform-specific cryptographic token. Ether is like a vehicle for moving around on the Ethereum platform and is sought mainly by developers looking to develop and run applications inside Ethereum, or now, by investors looking to make purchases of other digital currencies using ether. Ether, launched in 2015, is currently the second-largest digital currency by market capitalization after Bitcoin, although it lags behind the dominant cryptocurrency by a significant margin. As of January 2021, ether’s market cap is roughly 19% of Bitcoin’s size.
In 2014, Ethereum launched a presale for ether, which received an overwhelming response; this helped usher in the age of the initial coin offering(ICO). According to Ethereum, it can be used to “codify, decentralize, secure and trade just about anything.” Following the attack on the decentralized autonomous organization (DAO) in 2016, Ethereum was split into Ethereum (ETH) and Ethereum Classic (ETC). As of January 2021, Ethereum (ETH) has a market capitalization of $138.3 billion and a per token value of $1,218.59.In 2021, Ethereum plans to change its consensus algorithm from proof-of-work to proof-of-stake. This move will allow Ethereum’s network to run itself with far less energy and improved transaction speed. Proof-of-stake enables network participants to “stake” their ether to the network. This process helps to secure the network and process the transactions that occur. Those who do this are rewarded ether, similar to an exciting account. This is an alternative to Bitcoin’s proof-of-work mechanism, where miners are rewarded more Bitcoin for processing transactions.
2. Litecoin (LTC)
Litecoin, launched in 2011, was among the first cryptocurrencies to follow in the footsteps of Bitcoin and has often been referred to as “silver to Bitcoin’s gold.” It was created by Charlie Lee, an MIT graduate, and former Google engineer. Litecoin is based on an open-source global payment network that is not controlled by any central authority and uses “script” as proof of work, which can be decoded with the help of consumer-grade CPUs. Although Litecoin is like Bitcoin in many ways, it has a faster block generation rate and offers a faster transaction confirmation time. Other than developers, there are a growing number of merchants that accept Litecoin. As of January 2021, Litecoin has a market capitalization of $10.1 billion and a per token value of $153.88, making it the sixth-largest cryptocurrency in the world.
3. Cardano (ADA)
Cardano is an “Ouroboros proof-of-stake” cryptocurrency created with a research-based approach by engineers, mathematicians, and cryptography experts. The project was co-founded by Charles Hoskinson, one of the five initial founding members of Ethereum. After having some disagreements with the direction Ethereum was taking, he left and later helped create Cardano. The team behind Cardano created its blockchain through extensive experimentation and peer-reviewed research. The researchers behind the project have written over 90 papers on blockchain technology across a range of topics. This research is the backbone of Cardano.
Due to this rigorous process, Cardano seems to stand out among its proof-of-stake peers and other prominent cryptocurrencies. Cardano has also been dubbed the “Ethereum killer,” as its blockchain is said to be capable of more. That said, Cardano is still in its early stages. While it has beaten Ethereum to the proof-of-stake consensus model, it still has a long way to go in decentralized financial applications.
Cardano aims to be the world’s financial operating system by establishing decentralized financial products similar to Ethereum and providing solutions for chain interoperability, voter fraud, and legal contract tracing, among other things. As of January 2021, Cardano has a market capitalization of $9.8 billion, and one ADA trades for $0.31.
4. Polkadot (DOT)
Polkadot is a unique proof-of-stake cryptocurrency that is aimed at delivering interoperability among other blockchains. Its protocol is designed to connect permissioned and permission-less blockchains, as well as oracles, to allow systems to work together under one roof. Polkadot’s core component is its relay chain that enables the interoperability of varying networks. It also provides for “parachains,” or parallel blockchains with their native tokens for specific-use cases.
Polkadot differs from Ethereum because developers can create their blockchain while also using the security that Polkadot’s chain already has rather than creating just decentralized applications on Polkadot's chain. With Ethereum, developers can create new blockchains but need to create their security measures, leaving new and smaller projects open to attack, as the larger a blockchain, the more security it has. This concept in Polkadot is known as shared security.
Polkadot was created by Gavin Wood, another member of the core founders of the Ethereum project who had differing opinions on the project’s future. As of January 2021, Polkadot has a market capitalization of $11.2 billion, and one DOT trades for $12.54.
5. Bitcoin Cash (BCH)
Bitcoin Cash (BCH) holds an important place in the history of altcoins because it is one of the earliest and most successful hard forks of the original Bitcoin. In the cryptocurrency world, a fork takes place due to debates and arguments between developers and miners. Due to the decentralized nature of digital currencies, wholesale changes to the code underlying the token or coin at hand must be made due to consensus; the mechanism for this process varies according to the particular cryptocurrency.
When different factions can’t agree, the digital currency is sometimes split, with the original chain remaining true to its original code and the new chain beginning life as a new version of the initial coin, complete with changes to its code. BCH started its life in August 2017 as a result of one of these splits. The debate that led to the creation of BCH had to do with the issue of scalability; the Bitcoin network has a limit on the size of blocks: one megabyte (MB). BCH increases the block size from one MB to eight MBs, with the idea that larger blocks can hold more transactions within them, and the transaction speed would therefore be increased. It also makes other changes, including the removal of the Segregated Witness protocol that impacts block space. As of January 2021, BCH has a market capitalization of $8.9 billion and a value per token of $513.45.
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