I am a long-time bitcoiner and have been interested in creating my own coin – the name of which I’ve decided to call ‘the next big cryptocurrency.’ I’ve been reading the forums and I’m really impressed with how active they are.
I’m not sure how many new coins may be based on bitcoin but, as a good bitcoiner, I want to make sure that mine isn’t. Because my coin is a fork of bitcoin, it will (ideally) share all its improvements but also, because it’s an attempt to create a unique currency, it will likely have its own unique features.
My goal is to create an environment that is more than just a copy/paste of the bitcoin protocol – a place where we can discuss the most interesting technical elements of the bitcoin codebase while also discussing interesting new developments and creative ways to improve upon bitcoins’ core technologies.
I am not qualified to think about the future of cryptocurrencies. I have no idea whether any of the existing currencies will be worth anything in a few years, or in a few decades. I would be horrified if you were reading this and thinking that it’s a good idea to invest your life savings in whatever is the current hotness. But I am qualified to say that there are three main reasons to be interested in [coin].
First, [coin] is interesting. You don’t make money from [coin] as much as you make money by using it. If it were worth nothing, then there would be no reason for anyone to use it.
Second, [coin] is different from other cryptocurrencies in important ways. It is not just another Bitcoin clone, but something qualitatively different. It looks like an excellent platform for building new kinds of software applications on top of blockchain technology. And I think that this extra functionality is exactly what cryptocurrency needs right now, because it offers an opportunity for people to make money other than by mining gold or buying and selling bitcoin.
And third, [coin] isn’t yet successful enough to justify putting all my savings into (e.g., my retirement fund).
The most obvious difference is that [coin] is not Bitcoin. There’s no single point of failure: a bug in the code or a stolen laptop won’t result in an endless chain of confirmation delays. The only reason you need to know how to use Bitcoin is to make sure you don’t accidentally send your money to a duplicate address.
Bitcoin is not the first cryptocurrency, and it will not be the last. There have been dozens of other coins since Bitcoin was launched. Each has its own strengths and weaknesses, but they all have one thing in common: they are all inspired by Bitcoin, they all try to solve some problem that Bitcoin doesn’t address, and they all take the same source code from the Satoshi Nakamoto whitepaper as their starting point.
The term “altcoin” is a misnomer. It’s not-so-subtly suggesting that other cryptocurrencies are somehow inferior, and it’s based on the presumption that the reader has never heard of bitcoin.
That’s ridiculous. Bitcoin is now more than two years old, and you’ve already heard of it! And you’ve probably heard some of its rivals, including litecoin, feathercoin and dogecoin.
But what are they? Litecoin is a peer-to-peer electronic currency that uses Scrypt hashing algorithm. Feathercoin is a digital currency using the Primecoin algorithm designed to be mined with consumer-grade hardware. Dogecoin was created as a tongue-in-cheek parody of bitcoin (their motto is “to the moon!”).
Sure, all these currencies have some things in common: they’re decentralized, not controlled by any one entity or country; there’s no central bank printing money; transactions are anonymous and instantaneous; there’s no need to pay fees to transfer money or pay taxes to receive it. But there are also significant differences between them. Each has features that make it more attractive – or less attractive – for different people at different times in different places.
Insert coin name here is the next big cryptocurrency. It’s the next Bitcoin, the new Ethereum, Litecoin, Dash, Zcash, and so on.
A lot of people are making that bet. And they are doing it in order to make money: you can buy coins with real money or mine them; either way you make a profit.
But that doesn’t mean it’s likely to be true.
The history of cryptocurrencies suggests that these coins will all fail–and probably quite spectacularly. This doesn’t mean that the developers who made these coins up were wrong; it just means that they were wrong about two or three of the things they were betting on.
Bitcoin is a great example of a cryptocurrency that was not so much an advancement as a copy-and-paste job. The most obvious difference between Bitcoin and other cryptocurrencies is that it has no rules. In theory, anyone can start their own cryptocurrency and make their own rules (for example: “To receive coins you must wear your hat with the logo on it when you go to the beach”).
But if there were no rules, how would it work? The answer is that you can’t control a currency by making rules. Bitcoin’s success shows that people are willing to take a risk that Bitcoin won’t fail because no one enforces the rules—the same way they would take a risk that everyone would use dollars rather than gold or bitcoins.
Bitcoin is just the most successful of several different kinds of cryptocurrency. Bitcoin is only one part of a huge and growing field of work.
The other important part is altcoins, the other cryptocurrencies.