The popularity of Bitcoin and the power of its underlying blockchain technology have given rise to many imitators, alternative cryptocurrencies that seek to duplicate Bitcoin. improve on its model or take the technology to another level.
The vast majority of “altcoins” (a somewhat derogatory term for coins marketed as alternatives to Bitcoin) are “me too” coins, clones of Bitcoin without interesting or useful extra features. Typically, me-too coins quickly disappear into oblivion after enjoying a few months of popularity. especially among the cryptocurrency enthusiasts and speculators who missed out on Bitcoin
Many other altcoins are ultimately proven to be scams, unable to deliver on the value or purpose that they promise, and some have been known to infect the computers of gullible miners with viruses and malware.
Therefore, readers should beware of investing energy or money in newly launched cryptocurrencies without conducting their own due diligence.
However, some cryptocurrencies have introduced innovative and unique features that represent real alternatives and complements to Bitcoin. Its worth noting that the “real” value of a cryptocurrency depends on many factors, which include its usability as “digital cash” (for payments) and/or “digital gold” (for investment), its privacy and security, and the utility of the underlying blockchain technology for nonfmancial applications. For a cryptocurrency to be successful, it must perform much better than Bitcoin and other available tokens in at least one critical use case.
Room for Improvement
Bitcoin can. and should, be improved upon in many ways. For example, without fundamental changes, the Bitcoin blockchain can only support a throughput of a few transactions per second, way fewer than the throughput supported by major credit card networks, which can process tens of thousands of transactions per second. Though Bitcoin offers a certain privacy to disciplined users who take appropriate measures, there are ways to de-anonymize Bitcoin transactions.
Last but not least. Bitcoin mining consumes a lot of energy. Switching the mechanism used to achieve distributed consensus from proof of work (or PoW. the consensus model performed by Bitcoin miners) to proof of stake (or PoS. a model that achieves consensus by having those with “stake” in the system create subsequent blocks) is seen as a necessary step to reduce the energy footprint of blockchain systems.
A handful of cryptocurrencies have emerged that have either already established themselves or are in the process of establishing themselves as serious alternatives to Bitcoin.