Bitcoin is the trendsetter in the world of cryptocurrencies. It has inspired countless followers and spinoffs, setting the standard for digital money. But Bitcoin isn’t the only game in town. There are other cryptocurrencies that have also made a name for themselves. Here are five important ones you should know about.
What Are Cryptocurrencies?
Before diving into the alternatives to Bitcoin (BTC), let’s quickly recap what cryptocurrencies and altcoins are all about:
A cryptocurrency is virtual or digital money that exists as “tokens” or “coins.” The term “altcoins” refers to all cryptocurrencies modeled after Bitcoin, which sometimes aim to improve upon Bitcoin’s design. The “crypto” in cryptocurrencies comes from cryptographic techniques that create and manage these digital currencies. Most cryptocurrencies aim to be decentralized, meaning they aren’t controlled by governments or central banks. As cryptocurrencies have become more popular, this goal of staying free from government control has faced some challenges.
1. Ethereum (ETH)
First up is Ethereum (ETH), the top Bitcoin alternative. Ethereum is a decentralized software platform that allows smart contracts and decentralized applications (dApps) to run without downtime, fraud, control, or interference from a third party. The goal is to create a decentralized suite of financial products accessible to anyone, regardless of their background.
This is especially powerful for people in countries without strong state infrastructure. They can access bank accounts, loans, insurance, and more.
Ethereum uses ether (ETH), its platform-specific cryptographic token. Ether is used to pay validators, as a payment method off-chain, and as an investment.
In September 2022, Ethereum transitioned to a proof-of-stake (PoS) validation method, making it more energy-efficient and scalable.
As of August 25, 2023, ETH was trading around $1,652 with a market cap of almost $199 billion, making it the second-largest digital currency after Bitcoin.
2. Tether (USDT)
Tether (USDT) is one of the first and most popular stablecoins. Stablecoins aim to peg their value to a currency or external reference to reduce volatility. Tether is pegged to the U.S. dollar, with its developers claiming to hold one U.S. dollar for every USDT in circulation. This makes it easier for users to convert back to U.S. dollars quickly.
Launched in 2014, Tether allows users to transact in traditional currencies while minimizing the volatility often associated with digital currencies.
As of July 22, 2023, Tether had a market cap of $83.8 billion and a per-token value of $1.00.
3. XRP
XRP is the native token for the XRP Ledger, created by Ripple in 2012 as a payment system. The XRP Ledger uses the XRP Ledger Consensus Protocol, which doesn’t rely on proof-of-work or proof-of-stake for validation. Instead, transactions are validated by a network of servers and validators.
As of July 22, 2023, XRP had a market cap of about $39.3 billion and traded around $0.74.
4. Binance Coin (BNB)
Binance Coin (BNB) is a utility cryptocurrency that operates as a payment method for trading fees on the Binance Exchange. It’s the third-largest cryptocurrency by market cap. Users get a discount on trades if they use BNB as a payment method.
Binance Coin’s blockchain also powers Binance’s decentralized exchange. Initially an ERC-20 token on the Ethereum blockchain, BNB later launched its mainnet and uses a PoS consensus model.
As of July 22, 2023, Binance Coin had a market cap of $37.3 billion, with each BNB valued around $242.55.
5. USD Coin (USDC)
USD Coin (USDC) is another stablecoin, pegged to the U.S. dollar through fiat-collateralized reserves. This means it holds an amount of fiat currency equal to the USD Coin in circulation.
Launched in 2018 by the Centre Consortium (which includes Circle and Coinbase), USDC is a regulated stablecoin due to Circle’s U.S. base and regulatory compliance.
As of July 22, 2023, USD Coin had a market cap of $30.8 billion and a price of $0.9999 per coin.
Final Thoughts
So, while Bitcoin is the most well-known cryptocurrency, these alternatives also play significant roles in the digital currency world. Whether you’re interested in decentralized platforms, stable value tokens, or utility coins, there’s a lot more to explore beyond Bitcoin.
Quinn Sparrow is a dynamic writer who brings a playful and energetic vibe to his articles. A sports and gaming enthusiast, Quinn loves spending his weekends on the basketball court or diving into the latest esports tournaments. When he’s not playing or watching games, you might find him exploring new investment opportunities, always on the lookout for the next big thing. With over 8 years of experience in writing investment strategies, Quinn combines his passion for sports and gaming with his financial expertise to create content that is both engaging and insightful.