PDF - Litecoin and The Altcoin Army
PDF - Litecoin and The Altcoin Army
PDF - Litecoin and The Altcoin Army
Is Bitcoin Perfect?
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Litecoin
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Peercoin
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Dogecoin
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Namecoin
Dash
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Cloakcoin
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least 4X. This, in turn, will hurt the Altcoins value vs. Bitcoin, as it's abundance
in the market will lower values of each coin, but in the long-term, it may help
mainstream acceptance and overall market access. So new competitors also
target higher volumes of coins, being mined in shorter intervals, or more often.
Also, Bitcoin may become a victim of it's own success, attracting a lot of scrutiny,
attention and regulators. Regulators who may look to attack Bitcoin's system to
thwart the masses from converting to a superior, incorruptible, decentralized
system that the government, banks, and influential private interests do not
control. Being a maverick, a rebel, and being just plain better creates a whole lot
of powerful enemies, who may work together in the future to bring down
Bitcoin. Maybe they can, maybe they cannot, but using an Altcoin will definitely
lower your financial profile from overzealous regulators, and that's not a bad
thing in any scenario.
So there are legitimate reasons to consider less expensive, less precious, less
famous Altcoins in this space, so I will help break down the advantages of using
the top four Altcoins available, as of Q1 2014, and maybe one is just right for
your financial situation.
Litecoin - (https://litecoin.org)
Origin: USA. October 7th, 2011
Market Cap Value:
$114 Million USD (As of September 2015)
Total Headed for Production:
84 Million (4X BTC)
Produced every 2.5 Minutes
Current price: $2.71 USD (As of September 2015)
Market Niche: Mainstream appeal
The issue with Litecoin is "The Network effect" of Bitcoin casts a huge shadow
over Litecoin, as Litecoin is going after the same customer as BTC. There can be
only one leader, and Bitcoin has easily assumed that role, and the merchants,
investors, and miners have responded in kind. There hasn't been a great deal of
demand in history for the 2nd best currency available at any given time, and
Litecoin is definitely Fredo to BTC's Michael Corleone.
And it doesn't do anything a Bitcoin doesn't. It's main market advantage is it's
lower price point. It's not strong enough to compete with BTC, and not an
effective niche product like Darkcoin or Peercoin, which we'll go over soon.
Peercoin - (http://www.peercoin.net)
(Also known as PPCoin)
Origin: August 12, 2012
Total Headed For Circulation:
Unlimited, but regulated for 1% annual inflation
Currently 22 Million in circulation
Peercoin White Paper
http://www.peercoin.net/whitepaper
Market Cap Value: $7.5 Million (September 2015)
Current Price: $0.33 USD (September 2015)
Market Niche: Hybrid/Eco-friendly production
Peercoin's main engineer, Sunny King, says that this makes a malignant ambush
on the Peercoin Blockchain system more unlikely to succeed. (See White paper
reference guide link above.)
A research paper from Cornell University goes over a potential flaw in the
Bitcoin Blockchain that Peercoin's system eradicates through it's protocol.
If a group of miners can generate 51% of the total CPU power currently on the
Blockchain (A LOT of computing power!), then, in theory, they can "fork" the
Blockchain, and make their own more powerful Blockchain, where they can be
as selfish as they want. Not follow Bitcoin security protocols, double-spend
Bitcoins, and limiting use of others Bitcoins.
In other words, if let's say a government, hell-bent on destroying any
competition to their currency, wanted to "disrupt the disruptor", the Bitcoin
Blockchain, what they could do is generate at least 51% of the total computing
power of the Blockchain, assuming proxy control of it, for at least 10 minutes.
The Blockchain basically resets itself every 10 minutes, so how long a usurper
could control it without the Blockchain countering the attack may end up being
negligible. But, in theory, it could be overrun by a hacking 3rd party.
Considering the fact that Bitcoin's Blockchain uses over 250X the computing
power of the worlds Top 500 Supercomputers combined, and growing
thousands of percent a year, this scenario is becoming more and more a fairy
tale than any part of a future reality, but it is a legitimate selling point, non-theless.
Dogecoin - (www.dogecoin.com)
Pronounced: Doh-j-coin
Origin: December 8, 2013
Total number made for production:
75 Billion currently available
(100 Billion by the end of 2014, plus 5.2 Billion annually)
Market Cap Value: $12 Million USD (September 2015)
Current Price: $0.0001 USD (September 2015)
Market Niche: Online Tipping/Novelty
Namecoin (www.namecoin.info)
Date of Origin: April 18, 2011
Total coins produced: 21 Million
(Same as Bitcoin, production will halve every
4 years, also the same as Bitcoin)
This may come in handy down the road if you have a website, and a centralized
third party, like a government body, looks to co-op the Internet and occupy
centralized Internet servers and DNS systems like GoDaddy or Google Chrome.
It provides extra security from online piracy, government centralization and
hackers by creating an open-source DNS system that is just as tough against
infiltration as The Blockchain itself.
The overriding idea is if, and when, Bitcoin takes off, the next big thing will be
decentralized servers, DNS and website protection through open-source DNS,
versus corporate systems that can be attacked by 3rd parties. In effect, it is a
Bitcoin with its own domain, called .bit.
The .bit domain costs .02 of a Namecoin, and an also be purchased through
some providers who subscribe to the Namecoin blockchain. Namecoin is betting
on long-term upheaval of the current Internet DNS and the mainstream
adoption of Bitcoin to carry it into the future.
Dash (https://www.dashpay.io/)
(Previously Darkcoin)
Origin: USA, Phoenix, AZ - January 18, 2014
Whitepaper Link:
https://www.dashpay.io/wp-content/uploads/2015/04/DashWhitepaperV1.pdf
but the nature of the actual transfer prevents tracking of the funds from Point A
to Point B.
Picture a game of 3-card Monty and you'll have the basic idea. More than 2
transactions can be used. The larger the transaction, the less effective this
method of transfer will be in hiding the identities of those involved, as it will
become harder and harder to find a similar transaction at the time of transfer.
You can also adjust the setting to not be so private.
The premise behind Darkcoin is why not have any financial transaction online be
as secure as possible, and why have a Blockchain full of eyes on any transaction
you make, if you do not wish? You can have maximum security and ease of use.
The best of both worlds, except that virtually no merchants are accepting
Darkcoins currently
Obviously the main downside is lack of infrastructure that the popular Bitcoin
has built over 5 years. Darkcoin is 5 years behind the curve in real-world
usefulness of the actual currency.
There is just one issue with Darkcoin, and that is the Master nodes. The
Master nodes are the ones who help create the Darksend transactions, and
help mix the transactions together, so they can't be traced back to the sender of
origin. However, the issue here is who is preventing the Master nodes from
accessing the transaction information?
It would appear that Duffield has not successfully cracked that code, so Darkcoin
has suffered for it, dropping to $2.30 by August.
What is more possible is that something befalls Bitcoin and damages its
reputation or brand. Mainstream media has already been pretty biased in their
approach to Bitcoin, not reporting the market acceptance and innovations, but
making sure to point out any issue in the market that pops up. Bitcoins biggest
threat is most likely not another Altcoin, but a private interest, well-funded
smear campaign, or government attack/takeover of some sort. Being the biggest
and most accepted crypto-currency has made Bitcoin a marked coin, if you will.
There are plenty of establishment factions that have a vested interest in taking
Bitcoin down.
Over the last 3 years, no Altcoin has shown themselves to be any type of
marketplace threat to Bitcoin, and Bitcoin has only gotten stronger through The
Network Effect, as its popularity only attracts more new businesses, venture
capitalists, and consumers to its brand. The competition has been relegated to
niche status, and have few true innovations to separate themselves from the
crowd. The only opportunity is if Bitcoin stumbles and falls, and another coin
assumes the top spot, by default.
One more weakness that could be exploited by the alt coin market, but has not,
is the fact that Bitcoin does not seem to have any substantial marketing
department, belying its decentralized nature. The Bitcoin Foundation does
some educational work in Washington, lobbying politicians , but there is no
mass-media marketing infrastructure for Bitcoin as a brand.
With the decentralized nature of this new coin market, no entity may want to
take the burden of promoting and aligning themselves with any digital money.
The creator of Bitcoins technology, Satoshi Nakamoto, has seen fit to avoid the
spotlight, and the target on his back, for good reason, if you followed the
Newsweek cover story scandal, when they said they found Mr. Nakamoto, and
actually just found someone who shared his name (Actual first name is Dorian).
The inept journalism, publication of his home address, and attention of the
authorities mad him a marked man of mistaken identity. The Bitcoin
community, of a very charitable nature as always, sent him more than $20k in
donations to help him with his legal troubles caused by the errors of Newsweek.
Over the next decade, youre sure to see plenty of Altcoins, maybe tens of
thousands, that will look to target every potential demographic. From kids
making their own Altcoins for their classmates, to gamblers and online gamers
looking to create sports-team related or video game-based coins to sell in their
online forums.
ANY currency only has true value if enough people believe in it, the same as any
paper currency we currently use. But paper currencies are losing value
worldwide, and economies are collapsing because of their mismanagement. This
will only strengthen the alternative currency market going forward.
Bitcoin, or BTC as it's legal abbreviation, will always be the King of Coins. It's
Network Effect and established ground-breaking design, which many of the
altcoins either emulate or build from themselves, plus it's funding and
leadership behind it will stand the test of time. But altcoins will definitely have a
nice place in the future of digital currency. Think of the future relationship in
dollars and cents. Bitcoins would be dollars, but there is plenty of quarter,
dimes, nickels and pennies around that have usefulness, under certain
circumstances.
Bitcoin currently has around 80% of the overall digital currency market. But
there will be a couple of currencies that will take 10-15% for themselves over
time, and may even eat away an extra 5% from BTC over time, and I believe
those will be Litecoin and Darkcoin.
Litecoin is already accepted in many commercial venues, and merchants like it's
quick transaction-friendly pace (4X faster overall than BTC). And it is a fraction
of the price. People have been trained over thousands of years to want to hold
onto a unit bias when it comes to money or currency. Unit bias meaning
would you rather hold 20 fractional units of a Bitcoin, pennies on the coin, as
BTC may become worth well over 10,000 USD per coin, as I go over in my
Bitcoin eBook Bitcoin Bonanza, or hold 20 full Litecoins for the same
amount? Many people would rather have whole units of currency. Somethin
analogous to holding twenty dollars in your hand over 20 nickels in your hand,
even if they have the same actual value in relation to each other. So that is the
value Litecoin brings to the table.
Darkcoin works differently, in that it's primary function is user security,w hich is
attractive to many different user and demographics. It holds the original idea
behind crypto-currency most fervently among all altcoins. It may have less
commercial appeal, and more of a negative stigma from media and
governments, but it's similar price point to Litecoin will help it be a better
transactional currency that BTC. It will just be less mainstream than LTC.
But the most secure of any genre will always have appeal, especially when it
comes to a person's financial well-being, so only expect continued interest in
Darkcoin in the long run. Plus, it's X11 mining algorithm also makes it about
30% more energy efficient that BTC's proof-of-work, allowing new miners to
join easier, and environmentalist to have an attractive alternative, without
sacrificing a strong appreciation in value, like Peercoin forces users to.
So I hope this introduction to the Altcoin market has been of service to you.
It should give you a foundation to work from when deciding how to enter the
digital currency markets.
Evander Smart
www.EvanderSmart.com
@Evandersmart (Twitter)
www.CoinTelegraph.com (My Daily Bitcoin articles)