By Lumai Mubanga. [email protected]
The crypto space has seen an increase in alternative Cryptocurrencies besides the Bitcoin. Why was the phrase “Bitcoin bubble” coined? What are altcoins and what value do they bring to the ever widening crypto space?
In less than a month between 1st November and 30th November 2013, the price of Bitcoin rose just from under $200 to over $1000. In late 2013, the bitcoin bubble hit its peak of around $1,165 before suddenly bursting and entering a bearish run that lasted until the end of 2015. A fast growing bubble? Probably. What are the possible reasons that led to the occurrence of the bubble?
The first speculation is that the Chinese investors bought bitcoins as a speculative financial investment. Secondly, automated trading of the cryptocurrency in Mt. Gox – a bitcoin exchange website that was trading Bitcoin online, may have artificially driven the price up by continuously buying bitcoins.
Soon after the creation of Bitcoins, other Cryptocurrencies began to immerge. Each was or is tailored to achieve a specific purpose and specific audience.
The Cryptocurrencies that popped up after Bitcoin were Litecoin, ZCash, Stella, Ripple, Ethereum, Dogecoin, DASH, Monero, Tether and many more.
Dogecoin, DASH, Monero, and others are known as Altcoins, Alt from alternative. For example, the litecoin is regarded as the Silver to the Bitcoin Gold. The litecoin though is more progressive in its software updates and normally serves as a testing ground for most proposed Bitcoin software upgrades.
The ZCash altcoins on the other hand uses innovative zero knowledge proofs, which are in a way, a method to prove a fact without revealing information about the fact itself. The advantage of this is that it enhances cryptocurrency privacy further by allowing transactions to be validated without revealing information about the sender, recipient, and the actual value transferred.
As for Stella and Ripple, their advantage is in their slim design that pioneered new federated consensus algorithms, eliminating the need to waste electric power solving cryptographic hash puzzles.
The above are just a few examples of how different altcoins are endeavoring to solve their own problem apart from the Bitcoin.
With so much research being done, the Altcoins space will most like keep widening in the years to come, offering different solutions meant to accommodate different Users.