Bitcoin might be the currency that comes to mind when people hear the word “cryptocurrency” or alt currency. But it’s not the only option out there. In fact, several Bitcoin alternatives might be a better bet for investors, since they lack the volatility and risks connected to Bitcoin. If you’re ready to make the switch, check out this list of cryptocurrencies to find the alternative that’s right for you.
Why Find Alternatives To Bitcoin?
According to Wired, back in 2013, Bitcoin’s value climbed from $200 to more than $1,200 over the course of a month. About three months later, its value had dropped back to below $600. These days, one Bitcoin is worth more than $4,500 (as of Aug. 30, 2017).
Another big reason to look for Bitcoin alternatives is this: Bitcoin is very vulnerable to theft, as the Guardian points out. In recent years, there have been several high-profile cases of hackers breaking into Bitcoin exchanges and stealing loads of money.
For example, in 2014, hackers stole more than $400 million from Mt. Gox, which was one of the most well-known Bitcoin exchanges at the time, according to Forbes. These days, Mt. Gox is no more since it shut down soon after the breach. Even worse, people who had Bitcoin on the platform lost it all.
In 2016, hackers got into the exchange Bitfinex and swept off with $70 million worth of Bitcoin, according to Fortune. Fortune also reported that a third of Bitcoin exchanges or platforms had been hacked at some point.
Since Bitcoin and other crypto currencies don’t offer the same protections to the user as, say, a credit card, once your coins are stolen, they are gone. There’s no fraud protection or refunds.
Another reason to find alternatives to Bitcoin is this: the currency doesn’t live up to the myth surrounding it. Bitcoin seems appealing to many because it has an air of mystery about it. Not much is known about its founder, for example. It claims to be disrupting the financial system.
But the truth is, it’s just one of many other options when it comes to alternative currencies. Bitcoin isn’t the first example of people trying to make a new form of currency or trying to completely deregulate the financial market. It’s just the one that’s making the most noise.
The Bitcoin Bubble
From an investing standpoint, another reason to be cautious of putting all your eggs in the Bitcoin basket is this: it’s very volatile. In January of 2017, one Bitcoin was worth a little over $1,000. By August 2017, one Bitcoin was trading for more than $4,500. Many predict that the bubble is bound to burst at some point.
You can tell you’re in a bubble when the price of something climbs, but there’s nothing to back up that increase in price, according to Investopedia. Bitcoin might be pricey today, but that’s just because there’s been such demand for it, not because it has any real value. Another sign of a bubble is that the price suddenly contracts or drops to reflect the true value of the item better.
So far, the current Bitcoin Bubble is being compared to the tech bubble from the 1990s and to Tulip Mania, which hit Holland in the 1600s and caused the price of tulips to skyrocket. While those comparisons cause some people to recommend buying up Bitcoin, it’s important to remember what happened to both of those bubbles.
The tech bubble crashed and took years to bounce back. As for Tulip Mania, well, when was the last time you saw a huge demand for the flowers?
Of course, it’s possible to make money in a bubble. You just have to know when to get out before it bursts. That’s the tricky part, though.
If you’d like to dabble in crypto currency, but the thought of buying Bitcoin when it’s currently valued so high doesn’t sit right with you, it’s best to wait for the bubble to burst or try one of the numerous Bitcoin alternatives.
Bitcoin alternatives offer several advantages over Bitcoin itself. For one thing, they’re less popular than Bitcoin, so they are less likely to be the target of thieves. For another thing, they’ve also benefited from the Bitcoin bubble by having their values increase. In August of 2017, the value of all digital currency climbed to $160 billion, according to MarketWatch.
Bitcoin competitors might cost less, but you can still make a decent amount from them.
Litecoin is another open source, decentralized currency. It’s often described as a complement to Bitcoin, designed to be more accessible and easier to use. While people think of Bitcoin as an investment, Litecoin’s purpose is to be spent like a traditional currency.
Litecoin’s blockchain can handle a greater transaction volume than Bitcoin, which results in faster confirmations. It also means that the Litecoin network can support more transactions without software modifications.
Like Bitcoin, Litecoin is “mined” using computer programs. The current network is on track to produce 84 million coins or about four times the number of available Bitcoins.
Litecoin has also benefited from the Bitcoin bubble. In August of 2017, CNBC reported that its value was up nearly 1,400 percent for the year. At that time, the coin was trading for $64.20.
Ethereum is a newer crypto currency, first launched in 2015. Although it’s newer, it’s quickly become a major player in the alt-currency sphere. GoBankingRates called it the second largest cryptocurrency, as it holds a 30 percent share of the market.
Unlike Litecoin, Ethereum isn’t meant to be used for everyday transactions. Instead, it was designed for use by developers on the Ethereum network. The way Ethereum describes itself is as ” an open software platform based on blockchain technology that enables developers to build and deploy decentralized applications.”
You can purchase Zcash on several exchanges, using either another form of crypto currency or fiat currency. As one of the newest crypto currencies, first available in Oct. 2016, it remains to be seen how Zcash will fare in comparison to Bitcoin and other options on the market.
Dash is a “digital cash” alternative currency. It’s based on Bitcoin and was first launched in 2014. As of August 2017, one Dash is worth around $367.
Like Zcash, transactions made with Dash are anonymous and private. If you use Dash to pay for something, another person won’t be able to see that it was you or see where you sent the money or how much money you sent. Dash also claims to be much faster than Bitcoin, with transactions taking place instantly.
Ripple is an enterprise blockchain solution, designed to streamline global payments. In plain language, that means it was designed to help banks exchange funds between existing fiat currencies. Most transfers between banks take at least a few days and occasionally fail because of a lack of funds.
Ripple provides instant transactions and reduces the rate of failure considerably. It’s digital asset or currency is XRP. In May of 2017, CNBC reported that around 100 billion XRP existed. Each one was worth about 26 cents, making Ripple XRP the second most valuable crypto currency (behind Bitcoin).
Although Ripple was created for enterprises, individuals can purchase it. You can find it on several exchanges.
Bitcoin alternative Monero
To keep transactions private, Monero uses three separate technologies: ring signatures, ring confidential transactions, and stealth addresses. The techniques mask the amount sent, the name of the sender, and the identity of the receiver. Its focus on privacy as made Monero very popular with people looking to complete illegal transactions online.
A website, LocalMonero, launched in 2017 to help make the currency even more anonymous. Users of the site can find others in their area who have the currency to sell. Through, the site they can arrange to trade Monero for cash. The site also offers online trades, which use an escrow account to protect you from scams.