Bitcoin Alternatives: The Top Five Mineable Altcoins by Market Capitalization

Overview

In the introductory posts on alternative cryptocurrencies to Bitcoin, we looked at the landscape of cryptocurrencies and evolving next generation of blockchain platforms that have grown since the arrival of litecoins and Ripple in 2011.

In this article we look at the top five minable altcoins that rule the cryptocurrency marketplace today. The infographic is a comparative summary of the top five mineable altcoins based on market ranking on March 10, 2016.

Bitcoin has a 80% market share and the largest network and value. Three other types of altcoins rule the top 100. The wave of altcoins are decentralized, and for purpose of this series,classified into two forms. The first two category consists of mineable cryptocurrencies which are covered in this article. The second form are crypto asset platforms using crypto tokens, many of which are fully mined or substantially premined. These can be used for applications within or built on top of the blockchain for purposes varying from financial settlements, resource management, gaming and so on.  

Ripple, MaidSafeCoin, Factom, NXT and Stellar are examples of fully mined cryptocurrencies.

The first generation of altcoins began as individual ventures and grew like Bitcoin with a community of users. Altcoins make use of the Bitcoin ecosystem with leading Bitcoin wallets, exchanges and payment services supporting leading altcoins. Some of the new wave of crypto asset platforms and centralized networks are building their own ecosystem. 

Poloniex, CCEX and CryptoCompare are popular exchanges for trading in a wide range of altcoins and currency pairs. 

Comparison Data

A quick explanation of the terms on the infographic

• Ticker: Trading ticker used in the marketplace.
• Currency Unit: A majority of cryptocoins use the same name as the currency, but the newer generation of crypto asset platforms denote the currency token by different names (ether). This is done probably to differentiate the token purpose (as not restrictive to being used as currency only). Crypto asset platforms such as Omni have multiple crypto-tokens such as MaidSafeCoin and Synereo). Other examples include NXT and Counterparty.
• Subdivisible: Bitcoin is divisible up to 8 decimal places the smallest unit called satoshi. Most altcoins are divisible to the same length the most subdivisible being ether where 1 wei equals one quintillionth of an ether or a divisibility up to 18 decimal places.
• Launch: The year the currencies began mining on production blockchain.
• Price: Altcoins trade the world over in different fiat currencies. The most popular being USD, Chinese Yen (CNY), Euro (EUR) and GBP. Major exchanges track prices on these currencies as well pegging them against BTC or bitcoin equivalent. Prices change frequently even in the course of the day and the ones listed in the infographic are from the week of March 7, 2016.
• Market cap: The coin price multiplied by the coins available in circulation. 
• Supply: Like Bitcoin, mineable coins are generated through block rewards and will eventually reach a designed cap. Block rewards themselves vary, mostly decreasing over time like Bitcoin’s halving. Coins already mined are those available for transactions while the mining limit denotes the total number of coins that will be generated after which mining rewards will consist of transaction fees only. Not all coins are available for transactions such as the genesis block or the first block in a blockchain, coins lost through invalid addresses and so on. 
• Block Time: The time for transaction confirmation, the time to build a block and receive confirmation by network consensus. Most altcoins compete on lower block confirmation times, although higher the confirmation time, lower the risk of double spending. 
• Block Reward: The number of coins generated as reward for successful creation of a block. Block reward generally decreases as blockchain grows in size. 
• Mining Proof: The method used to ensure effort was spent in creating a new block and it came from honest mode (covered in the post on altcoins differences).
• Application: The most common use of the cryptocurrency. The first generation of coins like Bitcoin are decentralized currencies. Newer cryptocurrencies are designed for applications such as crypto assets and smart contracts. 

The Top Five Minable Altcoins having Market Capitalization above $10 million

A short overview of the top five cryptocurrencies follows. Note that some of these platforms will be featured in depth later in this series, as we track the progress of blockchain applications and progress of cryptocurrency markets. This article has a brief coverage on the history and differentiating features of the top five altcoins and their performance in the cryptocurrency markets.

A comparison of the market performance of the five altcoins featured in this article, from their time of launch till March 2016. Source: coinmarketcap.com.

Ethereum: The Smart Contracts Platform

Just seven months old, Ethereum is the second largest cryptocurrency after Bitcoin, having overtaken the oldest altcoin Litecoin in market capitalization. Ethereum was proposed by Vitalik Buterin in 2013 and the Ethereum blockchain went live in 2015. Ethereum development was crowdfunded with an initial presale of 60 million ether in exchange for bitcoins.

Ethereum is designed to support smart contracts. Ethereum allows creation of smart contracts through its built in Turing complete language. Ethereum’s unit is ether which is used as crypto fuel to execute transactions through applications built on the Ethereum blockchain. Ethereum is an example of a cryptocurrency 2.0 platform. 

Later articles in this series will have an in-depth feature on Ethereum and other crypto asset platforms.

Litecoins: Silver to Bitcoin’s Gold

Litecoin was created in 2011 by Charles Lee, a former Google employee and brother of BTC China founder Bobby Lee. Litecoin was the first to use Scrypt as a proof of work, at the time intended to be a GPU mining resistant algorithm. Litecoin has 4X coin cap compared to bitcoin and block confirmations in 2.5 minutes, a fourth of of bitcoin's 10 minute block confirmations. 

Litecoin trades on all major exchanges and peaked soon after launch 2013. Litecoins have declined through 2014 and 2015, now trading in $3 range. Litecoins use the same ecosystem as bitcoins and are tradeable on almost all crypto exchanges. Charles Lee, the creator of Litecoins, who is now working for Coinbase, emphasized on improving the liquidity of litecoins by encouraging adoption by users and merchants over development of new features. With technical similarities to bitcoin, litecoin remains bearish though stable in the crowded market of altcoins.

Dash: Private Digital Currency

Dash stands for Digital Cash. Dash was introduced by British Developer Evan Duffield in 2014. DashCoin is e-cash, like Bitcoin, but was designed to improve on Bitcoin’s pseudonymous nature, transaction traceability and transaction times, trying to replicate the exact nature of physical world cash transactions.

Dashcoin was launched as XCoin, renamed to DarkCoin a month later and eventually rebranded as Dash in March 2015. 

Dash uses X-11 a chained hashing algorithm that Evan Duffield created, which utilizes a sequence of eleven scientific hashing algorithms for the proof-of-work, a feature that allows ASIC resistant mining while consuming lesser resources (than Bitcoin). Successive releases of Dash have improved on enabling complete transaction privacy (or anonymity) through a feature known as Darksend protocol which mixes user coins through a Masternodes a peer to peer coin mixing and anonymizing network for Dash, in addition to mining nodes. Masternodes are also used to provide near instant transaction confirmations through its InstantX service. 

Dash quickly appreciated very soon after launch rising to $10-$11 and number three after litecoin in market cap. It is priced higher than Litecoins in 2016 although having a lower market cap, due to lesser coins mined. 

Online casinos and drug marketplaces were early adopters of Dash, a path which Evan Duffield points out, was taken by Bitcoin. Dash’s value has increased, with its rebranding from Darkcoin and acceptance by mainstream merchants such as Overstock. 

Dash’s creator and community remain open and committed to the currency as they continue to develop new features, improvements and innovations making it likely to remain a strong altcoin/bitcoin competitor in the future. 

Dogecoin: Internet Tipping Currency

Dogecoin trades at a sub sub fraction of a dollar, yet it owes its market cap to the sheer volume of dogecoins, over 100 billion, that are available in the marketplace. Started as a light hearted cryptocurrency with an inspired Shibu Inu canine cuteness factor on coin logo, based on the famous Internet doge meme, Dogecoin has found a niche as an Internet tipping currency, where online users reward content contributors using dogecoins.

Dogecoin was created and launched by developer Billy Markus and Jackson Palmer in 2013. 

A notable feature of dogecoins is that the currency is inflationary, that is, there is no cap on coins. After the initial production of 100 billion dogecoins, the supply of coins will increase annually by 5.26 billion coins.

Monero: Secure, Private and Untraceable

Similar to Dash philosophy, Monero is a privacy centric currency, based on CryptoNote technology, an open source cryptocurrency protocol that is separate from Bitcoin’s code. Monero uses CryptoNote protocol for generating ring signatures and creating opacity on the blockchain. CryptoNote obfuscates the blockchain making transactions untraceable.  

Monero was created in April 2014. At the time of writing, Monero is trading almost at par with the US dollar.

The cryptocurrency market especially that of altcoins is in very early stages of development. Emerging altcoins and crypto asset platforms that under development, attract speculators who do not want to miss out on the next potential Bitcoin. Miners also benefit from trading easily minable coins in the premine stage, selling them as penny stocks.

As the next wave of blockchain applications take off, coin creators and investors can stand to gain major payoffs from the future valuation of start-ups and applications in the cryptocurrency landscape. Despite volatility driven by fast moving events in this emerging field, "pump and dump" scams that trigger underlying fear, uncertainty and doubt (FUD) alternating with increasing euphoria around the blockchain, the outlook for the multi-billion dollar altcoins market looks promising enough.