Other cryptocurrencies - forks, altcoins

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Bitcoin is not only a digital currency that can be used to pay for goods and services, or an investment tool. It is also a testing ground for new technologies that can transform not only the financial world. It is a decentralized, fully transparent and cryptographically protected global transaction processing network and distributed database based on a blockchain called blockchain. The investment attractiveness of Bitcoin is due to the fact that its supply is limited - no more than 21 million BTC can exist, and in practice about two thirds of this amount have been generated (just under 14 million coins as of March 2015).

What is a "fork"?

Since Bitcoin has an open source code, its technology has become known to the whole world. It has become the basis for the development of many alternative digital currencies. Any digital currency that uses the Bitcoin code as a basis is called a fork (from the English word “fork”, a branch, a fork). The term “altcoin”, which is similar in meaning, is also common. For the average user, forks allow you to choose which functionality is most important:

• Digital currency, convenient for quick settlements with minimal commissions;
• A digital product with a mathematically limited supply;
• Further development and improvement of Bitcoin technology;
• Convenient investment tool.

The first fork was Namecoin (NMC, Namecoin). Based on it, an alternative DNS domain name system, which is not controlled by the US government, was created, including approved by Wikileaks. Namecoin is mined together with Bitcoin.

Scrypt Algorithm - Litecoin (LTC) and Dogecoin (DOGE)

One of the first and most successful cryptocurrencies was Litecoin. It uses a modified hashing algorithm (Scrypt) rather than pure SHA-256 like Bitcoin. Trades with Litecoin are confirmed on average 4 times faster than on the Bitcoin network, and the block database takes up much less space. The number of litecoins is also mathematically limited - there can be no more than 84 million coins in total.

While Bitcoin has payment solutions for online stores, ATMs, POS terminals, and even gateways to the banking system, Litecoin is not as well provided with infrastructure. In terms of its level of development, it resembles Bitcoin a few years ago - there are not many stores that accept this cryptocurrency, there are no ATMs and other infrastructure yet. To date, LTC has gained its share of the market, gaining popularity on the exchanges and loyal supporters. They believe that Litecoin still has a long way to go.

The second known representative of the Scrypt family was Dogecoin (DOGE). Cryptocurrency, which started as a joke, has gained just crazy popularity. The cute Shiba Inu chosen for the logo played a significant role in this. Imagine if there was a bull terrier there... There are a huge number of these coins (more than 100 billion) which is not limited, unlike most cryptocurrencies. The advantages of calculating with "dogs": an imperceptible amount of commission and a high speed of confirmation of transactions.

This cryptocurrency has a wide range of supporters who are constantly working on its promotion and arrange various promotions. The decision to jointly mine Dogecoin and Litecoin was not unambiguously perceived by many. Joint mining means that when you earn one cryptocurrency by mining Scrypt, you automatically earn another. Due to this, LTC and DOGE do not compete with each other using the same computing resources.

Non-Fork: Ripple Payment System (XRP)

The second place in terms of capitalization after Bitcoin is occupied by the payment system Ripple (Ripple). It cannot be attributed to the forks of Bitcoin, since the Ripple program code is written from scratch. This system uses its own payment unit - XRP. Commissions for transferring money between system participants are only $0.00001. At the same time, no one collects even a thousandth of a cent - these funds are used to prevent network congestion due to DDoS attacks. The transaction takes only a few seconds, and the source code of the system is completely open.

Proof-Of-Work and Proof-Of-Stake

The only way for Bitcoin and Litecoin to confirm transactions is PoW (Proof-Of-Work). Cryptocurrencies such as Peercoin (Peercoin, PPC) and Novacoin (NVC) use both Proof-Of-Work and Proof-Of-Stake (PoS, proof of storage) technologies. Simply put, to confirm transactions, those coins are used that are motionless in users' wallets. At the same time, the user receives a reward in the amount of several percent per year on his capital. This significantly (by a factor of 100 or more) reduces the amount of electricity required for mining. At the same time, Peercoin uses the same cryptographic algorithm as Bitcoin (SHA-256), and Novacoin is based on the Scrypt algorithm (same as Litecoin and Dogecoin).

Cryptocurrency NXT

Cryptocurrency Nextcoin (NXT) uses Proof-Of-Stake technology in its purest form, which means that no mining is required, the emission of 1 billion coins occurred at the start of the system and was divided among 73 investors and project developers who began their distribution. This is not a fork of Bitcoin, as the coin code is written from scratch in Java. The system is completely decentralized and manages even without installing a wallet program. To use your funds, you log into the web interface with a complex passphrase known only to you. The NXT system is initially very convenient for creating various services and applications, of which there are already quite a lot.

Forks on hashing algorithms X11, X13, X15

The sensation of last year was the original cryptocurrency Darkcoin (DarkCoin, DRK), which uses the X11 hashing algorithm. It is a combination of 11 cryptographic algorithms that use different mathematical models. Its exactingness in computing resources becomes a guarantee that only graphics cards and processors can be used for mining (now only graphics cards are used). DRK is positioned as the first truly anonymous cryptocurrency, and the latest update of the program code made it possible to make instantly confirmed transactions in “gifts”.

You can earn this cryptocurrency not only through mining, but also through the maintenance of the so-called "nodes", which are the key nodes of the network. The developers also provided the ability to quickly fix problems if something goes wrong. Constant work is underway to improve Darkcoin, and its price immediately responds to growth in positive changes.

Many other cryptocurrencies have been created on the basis of X11. Algorithms X11 and X13 became a continuation of X15. Their principle is the same - a combination of 13 and 15 cryptographic algorithms, improved user anonymity, the impossibility of mining with special chips (only processors and video cards are used). These algorithms are of particular interest to those who mine with video cards. X13 and X15 heat the GPU less, so the graphics cards last longer.

Crypto 2.0 projects

To some developers, the “old man” Bitcoin and all its forks already seem outdated and archaic. They came up with the big name “Crypto 2.0” (second generation cryptocurrency), although even Bitcoin has not yet officially left the testing stage and its version number still starts from zero. However, most of these projects are nothing more than add-ons to Bitcoin using its blockchain.

Mastercoin

The first Crypto 2.0 project was Mastercoin. It was created as an add-on to the blockchain, allowing the conclusion of cryptographically verified smart contracts. However, development is extremely slow and has disappointed many followers. As sad as it is, it looks like the best days of Mastercoin are over.

Ethereum

The most notorious of the Crypto 2.0 projects was Ethereum. Suffice it to say that the idea of ​​21-year-old talent Vitalik Buterin, which came to him during a trip around the world, has already interested such an industry titan as IBM, and raised more than 15 million US dollars in just a month and a half. Now everyone is frozen in anticipation, what will come of it? The developers promise complete decentralization, support for the Internet of Things, meager commissions and the ability to create automatically executed contracts for anything.

colored coins

The most promising of these projects are "colored coins" (colored coins). They will make it easy to issue digital stocks, bonds, transport tickets and events that take full advantage of blockchain technology. It also has the potential to revolutionize the sale and purchase of digital goods. But so far, "colored coins" are far from practical implementation.

Forks on exotic algorithms

Cryptocurrency enthusiasts have come up with a variety of mining algorithms: N-Scrypt, SHA3 (Keccak), Scrypt-jane, Groestl, CryptoNote. Of these, the CryptoNote algorithm is the most popular. It uses such cryptographic technology as "ring signature". The advantages of CryptoNote are the ability to mine coins with the central processors of home PCs, a high degree of user anonymity without the use of "nodes", as in Darkcoin. At the same time, transactions are carried out incredibly quickly and they can be additionally protected with a secret password. The most famous fork on the CryptoNote algorithm was the Monero cryptocurrency.

In total, more than two thousand forks have been created - there are those created for the sake of a joke or a scam. There are even such forks that have lived for several weeks, or even days.