The 500 Cryptos That Aren't Bitcoin: Intro to Altcoins
Currencies / Bitcoin May 29, 2014 - 01:49 PM GMTBy: Submissions
Mark Blair writes:
for those outside the crypto sphere, cryptos are pretty much just Bitcoin. However, I offer here a tour of the 'altcoin' universe: Bitcoin is by no means a done deal, readers, as any altcoiner knows.
For example, a year ago, Bitcoin held 95%-plus of the total market cap of all cryptos. There are over 500 cryptographic currencies at present, though at least 300 are rubbish, and will die. See com-http.us for the best list I know of.
And three weeks ago, before the last spike, Bitcoin held 95%-plus of cap. However, in the last quarter of 2013, when Bitcoin was heading towards its all-time peak, that percentage fell to about 75%. That is, one in four dollars held in crypto currencies was in a currency other than Bitcoin, and in just the last few days, Bitcoin's percentage of cap has slipped back to about 90%.
To get the hang of this, go to coinmarketcap.com. Bitcoin's market cap is at the top, and the total market cap is listed about half way down. If you are a crypto geek, you understand the rudimentaries of the relations between Bitcoin and the 'alts': when Bitcoin really begins hammering up, a good deal of money flows into the alts. And vice versa.
The first thing to understand is that cryptographic currencies, as a phenomenon, embody a range of protocols that are 'technology/currency' not just 'currency.' If you want to test the credentials of those writing 'Bloomberg-arena' articles, ask them for a paragraph on:
1. Ripple
2. Nxt
3. Mastercoin
4. Counterparty
5. CGB
Ripple was problematic for a long time. It's a technical issue around centralisation/'pre-mining' and the calculation of market cap.
However, Ripple has very recently been
http://www.coindesk.com/...
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adopted by a German bank and a Mexican exchange. Its long-term potential -- if it transpires to be half what it is supposed to be -- is enormous. It has its own 'internal' currency, the 'XRP.'
Nxt is a favourite of my outfit, IndiaMikeZulu. (Disclaimer: we hold NXT.) It was the very first crypto that was not a Bitcoin knock-off, and is also 'POS' -- 'Proof of Stake.' We'll cover this in a later article.
Nxt also suffered the acrimony of the altsphere on account of its nature: 'minting' is a form of centralisation, and centralisation is (rightly) anathema to libertarians. However, as with Ripple, if Nxt achieves half of its development programme, it will have a fine future. (It also pioneered 'decentralised exchange' -- we'll come back to this also.)
Next is Mastercoin. I love explaining MSC to those newly interested in alts! Again, it is primarily a technology. Super-simplistically, it 'piggybacks' on Bitcoin, serving as a venue for the trading of commodities on decentralised 'internal' exchanges. You can also create your own currency within it.
Counterparty is a coin that I need to get up to speed on, readers. (Any one in the crypto sphere who doesn't readily profess gross ignorance is pulling your leg. It's like being fired out of a cannon on a daily basis.) Counterparty is an encoded Wall Street world of trading with its own currency -- XCP -- built in. Similar to Ripple, but Ripple is perhaps more altruistic.
Now, the last 'coin' before I speak about 'dark' and 'X-11' is 'CGB' -- Cryptogenic Bullion. (Disclaimer: IndiaMikeZulu considers CGB to be a gem of the altcoin world. I hold CGB.) Readers, one of the realities of the crypto-currency phenomenon is volatility. It is a problem. Another is trade-volume. Any crypto-geek checks the trade-volumes of coins she is analysing: low volume = Stay away from this coin!!
Except CGB!! This 'coin' is in fact a 'crypto commodity' designed for low volume: it earns interest by sitting, unspent, in its crypto-wallet. It's a 'tiny-cap' crypto that has succeeded: small coin-communities tend to do very well or very poorly. It's rare, and 'POS' (next time).
Next, 'dark': you aren't getting balanced information from the Bloomberg-arena articles, which concentrate heavily on 'commercial' coins. Bitcoin's roots are crypto-punk -- it's agin the Government. There is a steadily growing current of 'dark' coins, specifically designed to facilitate trade beyond the ken of Government. Read my lips: if Osama bin Laden had had these instruments available to him, he'd be alive today. 'Anoncoin' was an early example, 'Tor-friendly.'
Finally, 'X-11': one of the Big Divides is between 'POW' coins -- like Bitcoin, which are based on 'mining' to maintain their existence -- and 'POS' coins, which use a completely different, much less energy-intensive system to maintain themselves. 'X-11' coins -- Dark Coin, Black Coin, Liberty Coin, X-11 Coin -- are all based on a newish 'hashing algorithm' which allows more efficient mining.
Still POW, but more efficient.
The difficulty is that each successive tweak on the Original Model is greeted as The Be All and End All . . . but it never turns out that way. It's the genius of altcoins.
Conclusion: in about a year, some one beyond the crypto sphere will figure out that they should fund a crypto geek to feed them information from within the sphere.
Should you buy Bitcoin? Yup! The Long Bull Run is in the offing.
Should you buy only Bitcoin? Nope. Bitcoin has immense first-to-market power, and an awesome community of supporters and developers; but it is, ultimately, a very ordinary coin. The altcoins are problematic and unstable, but they are The Future -- we didn't even get to the Etherium Project today. In a year of so, you'll see your first article on The Big New Alt.
Or you can come and visit me. I hang out at https://bitcointalk.org/index.php?topic=245086.2780
Mark Blair, Unicup, Western Australia
© 2014 Copyright Mark Blair - All Rights Reserved
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