The cryptocurrency market consists of bitcoin and alt coins or any coin that is not bitcoin. “Alt coins” is a term short for alternate coin — a substantial number of the coins created after bitcoin were forks of bitcoin. A fork is a coin that is built off of the same protocol and tries to accomplish the same general thing. The coins were just alternates of bitcoin and most of the changes made in the code were incremental at best.
Today, alt coin refers to any coin outside of bitcoin. This may include coins with a completely different purpose from bitcoin. The term also includes coins and tokens that are built on different protocols. The most well-known altcoin, ether of the Ethereum project, has achieved its audience and use cases completely outside of bitcoin. Even Ethereum began as a potential alternate for bitcoin until it developed into something completely different.
Below we discuss some of the most successful and productive alt coins.
The Best Alt Coins Right Now
The modern market for alt coins continues to expand. There are currently more than 5,000 altcoins on most major exchanges, with Coinmarketcap listing more than 6,500. Coins with the holy grail of liquidity, credibility and a viable use case are difficult to come by, however. Here are some of the most promising alt coins in the crypto space.
1. Chainlink
Chainlink is a decentralized oracle network for smart contracts. Some definitions:
- Smart contract: A contract executed through computer code instead of through a human intermediary
- Oracle: A computer program that determines the correct outcome for a particular input. The “oracle problem” occurs when an outcome is based on a single perspective (such as a judge in a court) instead of an objective standard.
- Decentralized oracle network: Solves the oracle problem by allowing inputs to be evaluated through multiple “chainlinks” before an output or outcome is determined
Among many other use cases, Chainlink is currently being used to help farmers hedge against bad weather. The smart contracts filtered through Chainlink pay out insurance claims if values in the contract like temperature or rainfall do not meet a certain standard. Payments are instant because they can be deployed as soon as the program receives the appropriate weather data.
Chainlink is closely tied to the optimized deployment of Ethereum smart contracts, a concept that’s growing in popularity.
2. Cosmos
Cosmos is a project that addresses the problem of scalability in many blockchains. To keep a public ledger for bitcoin, each transaction adds new data. None of the old data can ever be erased to maintain the veracity of the chain’s history, so the chain just keeps getting bigger. As a currency becomes more popular, more people want to make use of the chain. This leads to long waiting times for transactions, a problem that bitcoin still wrestles with.
Cosmos looks to solve the scalability problem by connecting multiple blockchains, which were previously siloed and completely useless to each other. With the combined power of multiple chains, projects can scale much more easily regardless of how popular they get or how much data they need to add. Additionally, developers ideally would be able to build across blockchains without affecting the sovereignty of each chain.
Developers are most excited about the prospect of an “internet of blockchains,” the end goal of the Cosmos project.
3. Algorand
Algorand claims to create a fully transparent, scalable, secure and decentralized platform for developers with immediate transaction finality. The ideal use case of the Algorand blockchain is to create a borderless economy. Among other projects being built on top of Algorand, Attestiv is using Algorand to reduce insurance fraud.
Investors are excited about the credentials of Algorand founder Silvio Micali as well as the project’s use cases. Micali is a longstanding MIT faculty member and a pioneer in the cryptography space. Although the project is growing, Micali retains a hands-on approach and blogs quite frequently on the Algorand website.
4. yEarn.finance
Although a relatively young project, yEarn.finance is a yield aggregator that rebalances to produce an optimized yield during a transaction. The website gets straight to the point — deposit a supported cryptocurrency and immediately begin earning interest. The company currently works with Dai (DAI), USD Coin (USDC), Tether (USDT), True USD (TUSD) and sUSD (SUSD).
If you use $DAI, you can participate in the curve.fi project as well. You receive $yDAI for the $DAI you deposit, which you can immediately redeposit into curve.fi for a 0.04% trade fee on top of your yield. Its market cap is only a fraction of bitcoin, however, coming in at a total value of approximately $453 million. The current circulating supply of YFI is only 29,962 coins.
5. VeChain
What VeChain lacks in originality it makes up for in immediate utility. The purpose of VeChain was to integrate with real-world business applications as a turnkey solution. The project is looking to build a trust-free and distributed business ecosystem for high-speed transaction, transparent flow of information and easy collaboration. Investors will move on this coin as more enterprises make use of its infrastructure. It is already in use in the automotive, retail, logistics and natural gas industries.
VeChain currently offers Blockchain as a Service (BaaS) package ToolChain, which prides itself on ease of use. The BaaS package offers improved supply chain efficiency, increased compatibility between partners, transparent logistics and anticounterfeit features.
Trade Cryptocurrency
The trading platform you choose will determine the altcoins that you have access to. There is no centralized entity or standard separating viable altcoins from complete trash — each exchange is free to make its own decisions of what to list. Make sure that you choose a platform that you trust with alt coins that you want to invest in.
Bonus: Which Cryptocurrency Will Explode in 2020?
All of the crypto projects above benefitted from the resurgence of mainstream interest in bitcoin and new interest in the Ethereum ecosystem. Ethereum may be the story to follow rather than bitcoin. Talented developers are migrating into its token structure, building out new use cases and creating more possibilities for the market.
As Ethereum separates itself from bitcoin, it is good to have a diverse portfolio of projects in both ecosystems. Outside of the altcoins mentioned above, here are a few more projects that have a buzz:
- Cardano: Cardano is a competitor with Ethereum with an experienced core development team that may have improvements over Ethereum’s protocol.
- Kyber: Kyber ideally provides liquidity and lowers the operating costs in decentralized networks.
- Digibyte: The creator of the Digibyte actually stepped back from it, leaving it as a fully open source project. This could be an advantage in a world of centralized projects posing as decentralized protocols. Litecoin and Ripple, top coins, have faced a loss of popularity as people discovered that they were quite centralized and even built to integrate within the legacy bank structure.
Prime Time for the Alternate
Bitcoin can certainly be your introduction to the crypto industry in the same way that buying a share of Apple is an easy introduction to the securities market. However, there is so much more under the surface. This could be the year that many alt coins hit prime time. As people begin to understand alt coins through their real-world use cases, you can bet that their implementation will rise with the price of their currencies and tokens.