It would be logical to conclude that Bitcoin is the only cryptocurrency feasible. Sure, it’s the only one I’ve considered so far. In fact, there are many more cryptocurrencies, many that have forked from the initial open-source Bitcoin code and there are entirely a few alternative blockchains. We call these altcoins and alt-chains, respectively. There are roughly 900 cryptocurrencies in distribution.
Yes, 900. These incorporate names such as Dash, Blackcoin, Gridcoin, Peercoin, Lightcoin, Zcash, and Ripple. Bitcoin is by considerably the comprehensive, and Ethereum, Ripple, and Lightcoin follows this. Because Bitcoin is open source, anyone can produce an altcoin including you and I. Why are people and institutions formulating their cryptocurrencies? Apart from the undeniable allure of occurring someone who has provided a new currency, there are four core impulses for the originator.
Number one, their altcoin can have a different monetary policy. Two, it can have a distinctive proof of work or consensus mechanism. Three, it can have particular features or center areas such as NXT, which is for maintaining and formulating financial services applications. And four, for using to issue an initial coin offering or ICO marketing agency. Let’s look more deeply at that last one, an initial coin offering, an ICO.
An ICO is a fundraising device in which typically a startup can trade their underlying cryptocurrency in replacement for Bitcoin. It’s kind of related to an initial public offering or IPO, in which investors can buy shares of an organization. There are few restrictions on who can buy into an ICO. Since the startup is taking money from a global audience of investors the amount raised can be significant. A risk with ICOs is that they are raising money pre-product.
It makes the investment highly speculative. There is significant debate on whether and how ICOs should be regulated. The US bonds and exchange commission, the SCC, who is accountable for such actions, are captivated in the topic, especially to circumscribe whether the tokens proposed in an ICO are estimated security. Until there are symmetrical rulings, ICOs will continue in the legal gaps that exist. Recently, China and South Korea have made ICO launch illegal.
This will be an essential space to watch in the months and years ahead. Recent ICOs and upcoming ICOs can be found at coinschedule.com, among other places. Bitcoin uses the blockchain to achieve distributed consensus on who owns what coins. The blockchain was designed mainly for the Bitcoin scheme, but a distributed ledger can be implemented anywhere a distributed agreement needs to be authenticated.
As a result, alternative blockchains or alt-chains have emerged. At a basic level, alt-chains support altcoins, so we can consider them hand in hand. However, various altcoins do use the Bitcoin blockchain. Alt-chains do produce us with some possibilities. Number one, they are excellent for experimentation. This supports knowledge and testing. Two, alt-chains can be tuned for particular uses.
For example, a liquid is a sidechain, an alt-chain that is pegged to the Bitcoin blockchain and it’s designed to facilitate rapid transfers among a small number of Bitcoin exchanges and brokers. It avoids latencies of conducting transactions on the core Bitcoin blockchain. Three, an alt-chain may be used to exercise greater control over Bitcoin transactions. It could, for example, require proof that a verified institution owns a wallet before allowing it to receive funds.
And finally, four, an alt-chain can be used to provide privacy that goes above and beyond those inherent to Bitcoin. For example, transactions could be disappeared from public representation to prevent discovery of trade confidences. The investigation of altcoins, altchains, sidechains, and ICOs additional increases upon the emerging universe of distributed ledger technology. It’s moving swiftly and in some reverences unpredictably. Not uncommon for developing the technology.
Altchain, altcoins, for example, is being observed by many as a failing enterprise with the expectation that the rigor and trust of Bitcoin and Ethereum will likely dominate. Additionally, ICOs, which have shown so much commitment for fundraising may not withstand planned regulation, or at best, might be necessitated in their optimal potential. It won’t be long before there are even more beginnings that we’ll need to recognize, but we’ll know soon enough.