Other currencies equivalent to Bitcoins

From around $1000 in the beginning of this year, Blockchain based cryptocurrency bitcoin is today nearing $20,000 mark. The boom in Bitcoin value has also helped its rivals surge. Cryptocurrencies like Ethereum, Litecoin and Ripple too have soared to records in the past few weeks. Here are some closest rivals of Bitcoins.

Ethereum – It is one of the hottest rivals of Bitcoins. Launched in the year 2014, it is currently the second most valuable cryptocurrency. Like Bitcoin, it is also a type of Blockchain network. Ethereum is a decentralized platform that runs smart contracts. Applications that run exactly as programmed without any possibility of downtime, censorship, fraud or third party interference.

The Bitcoin and Ethereum Blockchains differ primarily in purpose and capability. While the Bitcoin Blockchain is used to track ownership of the digital currency bitcoin, the Ethereum Blockchain can be used to build decentralized applications. The virtual currency associated with Ethereum is called Ether.

Ripple – It is reportedly considered as logical successor to Bitcoin. It was launched in the year 2012 by former Bitcoin developers and is a startup using Blockchain technology that as per its website connects Banks, payment providers, digital asset exchanges and corporates. It also operates as a payment network called RippleNet. XRP is Ripple cryptocurrency. It has been soaring to record high since Bitcoin jumped. Currently, Ripple XRP is up more than 7,000% from its 0.65% at the beginning of last year.

Litecoin – The digital currency Litecoin too has emerged as a strong rival to Bitcoin, giving tough competition to other cryptocurrency rivals like IOTA and Ripple. Litecoin has surged over 5,700% last year till December 12, whereas Bitcoin had gained 1,550% during the same period. It is a peer to peer cryptocurrency, launched in 2011. Litecoin is very similar to Bitcoin in its technical implementation. The biggest advantages of Litecoin are claimed to be speed and low fees. Litecoin uses Scrypt Algorithm; it reportedly demands memory instead of processor resources. Generating new Litecoin is possible through mining as well.

Zcash – It claims to be the first open, permission-less cryptocurrency that can fully protects the privacy of transactions using zero knowledge cryptography. Like Bitcoin, Zcash is a Blockchain based currency. Launched in October 2016, as per Zcash website, its monetary base too is the same as Bitcoin’s – 21 Million Zcash currency units and is mined over time.

It is a scarce token just like Bitcoin which can be transferred globally and exchanged to/from other Cryptocurrencies or flat currencies via online exchanges, in-person transactions etc. Recently, Zcash became the third digital currency to receive the backing of the Bitcoin Investment Trust and the Ethereum Classic Investment Trust.

Dash – Is an open source peer to peer cryptocurrency. Dash can be used to make instant private payments online or in-store using our secure open source platform hosted by thousands of users around the world. Bitcoins shortcomings led to the development of cryptocurrency Dash. Its three biggest benefits, as per its website, are said to be Instant, Private and Security. It claims to send payment confirmations in less than a second. Two protect user’s financial information by safeguarding their activity history and keeping balances private. Three transactions are claimed to be confirmed by 200 TerraHash of X11 ASIC Computer power and over 4,500 servers hosted around the world.

Monero – It is claimed to be a secure, private and untraceable cryptocurrency. The open source cryptocurrency created in April 2014 has been soaring for the past five weeks with prices more than tripling since early November. Monero Research Labs is also said to be working hard to bring down the network’s transaction fees by as much as 80%. Monero developers are said to be implementation Bulletproofs to bring down transaction sizes on the network.

IOTA – It is another emerging bitcoin rival. It has marked capitalization of Rs 0.75 Lakh crore. IOTA represents a third generation of Blockchain after the development of Bitcoin.

Facts about Bitcoins

Bitcoin’s supply is limited to 21 Million – a number that is expected to be reached around the year 2140. So far, around 16.7 Million Bitcoins have been released into the system, with 12.5 new ones released roughly every 10 minutes via a process called “mining” in which a global network of computers competes to solve complex algorithms in reward for the new Bitcoins.

These mining computers require a vast amount of energy to run. As the price increases, more miners enter the market, driving up the energy consumption further. A recent estimate by tech news site Motherboard put the energy cost of a single bitcoin transaction at 215 kilowatt-hours, assuming that there are around 300,000 bitcoin transactions per day. That's almost enough energy as the average American household consumes in a whole week.

If you want to buy bitcoin, you do not need to buy a whole one. Bitcoin's smallest unit is a Satoshi, named after the elusive creator of the cryptocurrency, Satoshi Nakamoto. One Satoshi is one hundred-millionth of a Bitcoin, making it worth around $0.0002 at current exchange rates.

Bitcoin has performed better than every central bank-issued currency in every year since 2011 except for 2014, when it performed worse than any traditional currency. So far in 2017, it is up more than 1,400 percent. If you had bought $1,000 of bitcoin at the start of 2013 and had never sold any of it, you would now be sitting on around $1.2 million. Many people consider bitcoin to be more of a speculative instrument than a currency, because of its volatility, high transaction fees, and the fact that relatively few merchants accept it.

More than 980,000 Bitcoins have been stolen from exchanges, either by hackers or insiders. That's a total of more than $15 billion at current exchange rates. Few have been recovered. Despite many attempts to find the creator of bitcoin, and a number of claims, we still do not know who Satoshi Nakamoto is, or was. Australian computer scientist and entrepreneur Craig Wright convinced some prominent members of the bitcoin community that he was Nakamoto in May 2016, but he then refused to provide the evidence that most of the community said was necessary.

It is not clear whether Satoshi Nakamoto, assumed to be a pseudonym, was a name used by a group of developers or by one individual. Nor is it clear that Nakamoto is still alive - the late computer scientist Hal Finney's name is sometimes put forward. Developer Nick Szabo has denied claims that he is Nakamoto, as has tech entrepreneur Elon Musk more recently.

Until earlier this year, it was thought that Chinese exchanges accounted for around 90 percent of trading volume. But it has become clear that some exchanges inflated their volumes through so-called wash trades, repeatedly trading nominal amounts of bitcoin back and forth between accounts. Since the Chinese authorities imposed transaction fees, Chinese trading volumes have fallen sharply, and now represent less than 20 percent, according to data from website Bitcoinity.

The total value of all Bitcoins released into the system so far has now reached as high as $283 billion. That makes its total value - sometimes dubbed its "market cap" - greater than that of Visa, and bigger than the market cap of BlackRock and Citigroup combined. Bitcoin is far from the only cryptocurrency. There are now well over 1,000 rivals, according to trade website Coinmarketcap.

It is already possible to short bitcoin on a number of retail platforms and exchanges, via contracts for difference (CFDs), leveraged-up margin trading or by borrowing bitcoin from exchanges without leverage. But a number of big financial institutions - including CME Group, CBOE and NASDAQ - have recently announced that they will offer bitcoin futures, which will open up the possibility of shorting the cryptocurrency to the mainstream professional investment universe.

Many fewer than the 16.7 Bitcoins that have been mined are actually in circulation and accessible, because of forgotten passwords, accidental losses, hoarding, owners forgetting about coins or even dying. It is impossible to know for sure how many Bitcoins have been permanently lost, because those that have are still in the system, in dormant addresses. But according to a December 2013 research paper by the University of San Diego and George Mason University, 64 percent of the 12 million Bitcoins that had by then been mined had never been spent. Bitcoin developer Sergio Lerner estimates that almost 1 million unspent Bitcoins belong to the crypto currency’s mysterious creator.

There are 5,638,155 Bitcoins in the 1,000 biggest wallets - more than a third of all Bitcoins in circulation. That makes the 1,000 biggest wallet-holders worth a collective $87 billion, at current rates. The average fee paid to process bitcoin transactions has soared over the past year, outpacing even the staggering price increase of the cryptocurrency itself. Each bitcoin transaction now costs around $7.30 to process, up from around 30 cents at the start of the year, according to trade website BitInfoCharts.

If you owned Bitcoin prior to Aug 1, 2017, you also own Bitcoin cash – a clone of the original. That is because on that date Bitcoin underwent a so-called “fork” in which the underlying software code was split into two. One unit of Bitcoin Cash is now worth more than $1300. That adds roughly another 135 percent to the returns from a bitcoin investment at the start of the year. 

Bitcoin – The Digital Currency

It’s worth more than an ounce of gold right now. It’s completely Digital and it’s the currency of choice for the cyber attackers who crippled computer networks around the world in recent days. When the attackers' "ransomware'' sprang into action, it held victims hostage by encrypting their data and demanding they send payments in Bitcoins to regain access to their computers. Bitcoin has a fuzzy history, but it's a type of currency that allows people to buy goods and services and exchange money without involving banks, credit card issuers or other third parties. 

How Bitcoins work – Bitcoin is a digital currency that is not tied to a bank or government and allows users to spend money anonymously. The coins are created by users who ‘mine’ them by lending computing power to verify other user’s transactions. They receive Bitcoins in exchange. The coins also can be bought and sold on exchanges with U.S dollars and other currencies.

Why are Bitcoins popular? - Bitcoins are basically lines of computer code that are digitally signed each time they travel from one owner to the next. Transactions can be made anonymously, making the currency popular with libertarians as well as tech enthusiasts, speculators and criminals.

Is it really anonymous - Yes, to a point. Transactions and accounts can be traced, but the account owners aren't necessarily known. However, investigators might be able to track down the owners when Bitcoins are converted to regular currency. For now, the three accounts tied to the ransomware attack appear untouched and it'll be difficult for perpetrators to cash in anytime soon without getting traced. 

Who's using bitcoin? - Some businesses have jumped on the bitcoin bandwagon amid a flurry of media coverage. Overstock.com accepts payments in bitcoin, for example. The currency has become popular enough that more than 300,000 daily transactions have been occurring recently, according to bitcoin wallet site blockchain.info. A year ago, activity was closer to 230,000 transactions per day. Still, its popularity is low compared with cash and cards, and many individuals and businesses won't accept Bitcoins for payments. 

How Bitcoins are kept secure? - The bitcoin network works by harnessing individuals' greed for the collective good. A network of tech-savvy users called miners keep the system honest by pouring their computing power into a Blockchain, a global running tally of every bitcoin transaction. The Blockchain prevents rogues from spending the same bitcoin twice, and the miners are rewarded for their efforts by being gifted with the occasional bitcoin. As long as miners keep the Blockchain secure, counterfeiting shouldn't be an issue.

How bitcoin came to be - It's a mystery. Bitcoin was launched in 2009 by a person or group of people operating under the name Satoshi Nakamoto. Bitcoin was then adopted by a small clutch of enthusiasts. Nakamoto dropped off the map as bitcoin began to attract widespread attention. The currency obeys its own internal logic.