That’s a 25 times appreciation in value. Obviously, it caught the attention of anyone remotely interested in investing their money in any high return instrument. Soon, more people joined the bandwagon and began pouring more of their money into this cryptocurrency.
After years of spectacular growth each bitcoin is today valued at over $16,555, which is increasing rapidly. So, within just 6 years, during the period from January 2012 to December 2017, bitcoin’s price has jumped by over 2700 times.
The incredible success of bitcoin has spawned a whole army of cryptocurrencies from different developers. Bitcoin was created as recently as 2009. Today, there are already more than 1600 cryptocurrencies. They are all collectively known as altcoins, (Bitcoin Alternatives).
Each of these cryptocurrencies offers a range of benefits to their users. Some of them are nothing more than bitcoin copycats, albeit with a few minor modifications. For instance, Dogecoin is pretty much similar to bitcoin in most aspects, except that it has the face of a Shiba Inu as its mascot. That being said, some cryptocurrencies do offer useful benefits like anonymity.
Even though bitcoin transactions are fairly anonymized, they are not truly anonymous. However, Monera, an altcoin, offers an unprecedented level of anonymity to the transactions made on its platform. Likewise, other cryptocurrencies offer different benefits.
But, do any of these altcoins have the potential to become the next bitcoin?
Well, before we answer that question, we have to ask another question – why do we need to invest in another cryptocurrency, when we already have something like bitcoin?
The answer to that question is quite simple – bitcoin is highly volatile.
A Rapidly Growing Bubble?
Alarms are being raised about bitcoin’s volatility by everyone from central banks to financial analysts. Even Warren Buffet recently made an announcement that bitcoin is experiencing a massive bubble, which may soon burst. However, some cryptocurrency experts are also predicting that bitcoin will hit the $100,000 mark pretty soon.
The thing about these predictions is that none of them are based on solid facts. In the traditional financial markets, the various financial instruments such as shares, bonds, and so on, derive their value from something real that actually exists. In the case of equity markets, it is the valuation of the company issuing the equity stocks. In the case of the commodity markets, the values of the commodity shares are based on commodity prices, such as that of gold, oil, or other commodity.
Bitcoin’s value is not derived from any such thing. Its price is completely governed by speculation. If more people are buying it or using it, then its value increases, and vice versa. If more people feel that the bitcoin will appreciate in price, then they invest in it, which drives its price up.
Likewise, if they feel that its value is going down, then they sell the bitcoins, which brings its price down. This kind of speculative trading has created a bubble. There is no guarantee that the bitcoin’s price will not drop from today’s $16,500 to $1 tomorrow because of overnight change in public perception.
Experienced cryptocurrency users are well aware of this fact. That is why they are looking into other cryptocurrencies that might offer a greater degree of stability when compared to bitcoin. But, stability is not the only important criterion to be considered. A cryptocurrency should also provide an excellent return on investments.
Ethereum: The Stable Alternative to Bitcoin?
Ethereum is a relatively new kid on the block, having been launched as recently as July 2015. However, it has experienced a colossal amount of success in the short time of its existence. Its price was hovering around the $8 mark in October, 2016. By June, 2017, it had reached $387 – a 2876% gain in value. That’s an impressive performance for a new cryptocurrency.
Many experts have called Ethereum the next big cryptocurrency in the world. Their predictions are not without reasons. Here are some of them:
1. Ethereum is Replacing Neither the Conventional Money nor the Bitcoin
Ethereum is more than just a cryptocurrency. It is a distributed blockchain platform on which anyone can build apps. These apps run on blockchain and offer a fantastic variety of features that were impossible to realize until now. Ethereum offers the blockchain infrastructure on which the transactions are a lot more secure than that of bitcoin. But, that’s only the tip of the proverbial iceberg when it comes to Ethereum. It is a lot more versatile than bitcoin. This characteristic alone grants it far more real world applications.
The Ethereum platform can be used to create and execute automatic business contracts, which otherwise would require an army of lawyers, associated fees, complicated legal documents, and weeks or months of time. Now, two parties can create a contract on the Ethereum platform and upload the criteria for the execution of the various contract terms. These contracts would then enforce themselves without the need for any authorization or third party interference, and with no risk of contract going unfulfilled.
2. The Biggies Are Trusting It
The blockchain infrastructure that Ethereum offers is open for businesses and users. This has prompted everyone from tech startups to international banks to build apps that run on the Ethereum platform to execute transactions. Transactions like international payments, which would otherwise take days or even weeks, can now be executed in a fraction of that time. JPMorgan Chase, Microsoft, Intel, and many big players in the finance and tech world are putting their weight behind the Ethereum platform’s success.
This is unlike anything that is seen in the case of bitcoin, which continues to evoke earnest warnings from analysts about a bubble burst, just like the dot com burst of the ‘90s.
So, irrespective of whether the larger public embraces the Ethereum platform or not, it is going to be a blockbuster hit on account of increased support from the corporate sector alone. So, it appears to have the most stable future among all the cryptocurrencies out there.
While Ethereum continues to be the most promising candidate for the position of the next big cryptocurrency, it is not the only one. There are other cryptocurrencies that have the potential to take that spot. Here are the top contenders for the title.
Litecoin is one of the oldest cryptocurrencies in existence. It was launched about 6 years ago, soon after bitcoin started becoming an international sensation. Litecoin is designed to be a lot more stable, and transparent than bitcoin. It is actually created by an ex-Googler, Charlie Lee. Lee has been completely transparent about where he wants to take Litecoin. The presence of a clear strategy and path has limited the speculation in the case of Litecoin. Therefore, any appreciation in Litecoin’s value is based more on the actual acceptance and usage by the users, rather than speculative investments.
For much of the time of its existence, Litecoin’ price has registered a steady but low growth. However, over the last one year, its value has shot up uncharacteristically. This is attributable to the stellar performance of the bitcoin. Bitcoin’s popularity is also driving the prices of other cryptocurrencies, including that of Litecoin.
Investors looking for bitcoin alternative have been pouring money into any cryptocurrency they can find, and Litecoin is one of the better performing ones. Although this sudden growth may not last much longer, Litecoin is expected to be the more stable alternative to bitcoin in general.
2. Monero, Dash, and Zcash
Monero, Dash, and Zcash address an important issue that bitcoin couldn’t – anonymity of the transactions. To be sure, bitcoin transactions are anonymized to a certain extent. But, they are not completely anonymized as some people seem to think. The transactions that are made with Monero, Dash, and Zcash are completely anonymized.
This characteristic of these three cryptocurrencies has given them a huge following among the people and businesses that value privacy over everything. From the harmless citizens who just value their privacy to the people hiding their malicious activities from the law enforcement agencies, there is a whole spectrum of people who use these cryptocurrencies to make financial transactions. An increasing number of deep web marketplaces are also accepting Monero, Dash, and Zcash payments.
So, the popularity of these three cryptocurrencies is not going down anytime soon. However, it is to be seen which of these three cryptocurrencies will win the battle for anonymity. There’s not enough space for all of them. The logic being – why have three when one is enough, unless they all offer something unique and valuable that the others don’t! So, it might be a bit risky to put money into any one of them at the moment.
Ripple was launched by the eponymous startup in 2012. Ripple offers a digital payment network that runs on blockchain. Think PayPal, but on blockchain. The advantage? International financial transactions, irrespective of their size, would be executed in a matter of seconds. Naturally, it caught the attention of big, multinational banks like UBS, Bank of America, RBC, and many others. They have already started testing and using the Ripple platform. Many more are joining.
Ripple has a tremendous potential to be the next biggest cryptocurrency. The reason is that 61% of the Ripple coins are held by the startup that created it. So, that’s too much power in one hand. For this reason, investors and users have been wary of joining the Ripple platform. However, the startup has announced that they will be releasing much of these coins in a gradual manner so as to not cause huge fluctuations in its price. Once they fulfil their promise, the cryptocurrency users will flock to this platform in droves.