Both Sides of the “Bit” Coin: a Cryptocurrency Overview
Digital currency is a new concept for many people. Ecommerce sites remain loyal to credit or debit cards, and even halfway houses like PayPal have struggled for traction amid endless phishing scams. Britain has historically been a nation of cash carriers, and we’re innately sceptical of virtual finance. It took Barclaycard six years to turn a profit, and early online banking platforms like Egg ended up as costly failures.
Bitcoin’s volatile history has deterred many people from investing, with warnings of fraudulent wallet providers and high-profile thefts – like last year’s $72 million Bitfinex hack – damaging consumer confidence. Yet any industry pioneer experiences growing pains, allowing imitators to learn from its mistakes.
Could the growing roster of bitcoin alternatives represent a safer alternative to the pound in your pocket?
- Bitcoin cash. If you’re familiar with Linux distros, you’ll appreciate the oddity that is bitcoin cash, or Bcash. It was created on August 1st following a fundamental disagreement about the currency’s future direction. Yet Bcash has arguably been rendered moot, after bitcoin loyalists accepted the upgrade responsible for this fork in the first place.
Cash’s presence is likely to cause confusion among the general public, not least because of its name. However, this is unlikely to be the first derivative from its parent. Because it’s so new, bitcoin cash is not presently accepted as payment on any conventional ecommerce or retail platform. Indeed, its only activity involves stock market investors and blockchain miners.
- Ethereum. This is the biggest bitcoin alternative currently in existence, using the standard blockchain technology of recording transactions in an online ledger. Like other cryptocurrencies, computer users can earn Ethereum by processing transactions – known as mining. Ether is also used to pay for contracts and services on the Ethereum network, beloved by programmers and developers.
Despite having far greater scope than bitcoin’s focus on peer-to-peer digital currency, Ethereum’s value is equally volatile. Its value passed $400 in mid-June, before plummeting to just $137 within a month. Even among the gambling sites who have embraced digital currency so effectively, it’s unusual to see Ethereum supported. Its future probably lies in programming and app development, as a niche payment method for IT professionals rather than a replacement for debit cards and PayPal.
- Dash. This ingeniously-named digital cash system has been designed to handle subscription payments, enabling direct transactions between retailers and customers. Launched five years after the market leader, Dash promises a more effective system of voting and management than rival platforms. Nonetheless, Dash has already had two name changes: a failed initial distribution and a marked lack of retailer uptake. According to Dash’s own data, only a handful of UK companies accept this bitcoin alternative, including an arts and crafts shop and a handmade clothing firm.
- Litecoin. This is another bitcoin alternative that draws heavily on the original cryptocurrency model. Litecoin features a number of technical improvements that enable it to operate more quickly, and with greater efficiency in its blockchain ledger. While the value of a Litecoin is less than a hundredth of bitcoin, four times as many currency units will be created in total. This remains a little-known fringe platform, with sound design principles but little evidence of adoption or consumer demand.
- Ripple. Unlike some of its competitors, Ripple’s customers include blue chip clients like Bank of America and UBS. By attempting to set the standard for financial services digital payments (specialising in currency transfers), Ripple arguably has the greatest chance of becoming established. Its value briefly spiked in May, but it fell back to just 20 cents per Ripple at the time of writing. Many people regard this centralised platform as a complement to bitcoin, rather than a direct competitor.