It always happens. An innovator comes along with a genuine game changer and then, having done all the groundwork and introduced a whole new concept to the world, the imitators start to pop up. It happens in films – look at all the movies set in space that started to appear after Gravity’s huge success. It also happens in cars: for example, when VW brought out the original Golf it was virtually the only hatchback on the market, but very soon every manufacturer was making an equivalent model.
The same is now true of cryptocurrencies, with Bitcoin being far from the only option. What’s more, some of the new arrivals offer distinct advantages over the original.
Take Dash, for example. Created by Evan Duffield and Kyle Hagan, it includes some important innovations, especially in terms of anonymity. In order to make its transactions untraceable, it uses computers called Masternodes which carry out several transactions at once, making it very hard to determine exactly who is paying who. It’s a system that also does away with the need for a public ledger, making it all but impossible for others to analyze an individual’s transactions and calculate their holdings.
Inspired by the Japanese Shiba Inu dog breed, the Dogecoin is one of the better-known altcoins and quite a few retailers already accept the currency – around 200 according to Dogecoin – and users are very enthusiastic about it too. It uses an algorithm called Scrypt, which takes more computing power to run than other more commonly-used ones and it was first adopted with the aim of undermining users running special hardware to monopolize mining.
Unfortunately, it soon became obvious that it, too, can be run on the same hardware, eliminating this benefit. It is a very secure cryptocurrency, though, and the community who use it are determined to make sure it really is a currency for buying and selling and not one that just attracts short-term investment.
Third up is Primecoin. This is a very interesting example because, as well as working as a currency, it also harnesses users’ processing power to carry out mathematical research.
It manages this because, in order to verify the next block of transactions, users have to first solve difficult maths problems by using collections of prime numbers called Cunningham chains, which academics would normally have to use expensive dedicated servers to find. So its dual purpose and its energy-saving nature certainly make Primecoin appealing to an admittedly niche audience.
Of course, what any of these currencies need to really take off is to be adopted by a particular sector as the favoured method of transaction. For example, the nature of cryptocurrencies – and their security and potential anonymity in particular – would seem to make them a natural fit for the online casino industry.
However, even a quick look at a comparison site such as CasinoUK.com, which gives an overview of even the newest entrants to the market, reveals that few, if any, accept cryptocurrencies as methods of payment. Given that they were some of the first to adopt alternative payment methods like Skrill and Neteller, online casinos would surely be lucrative organisations for the new cryptocurrencies to court.
Obviously, it’s still very early days for the world of cryptocurrencies and not even Bitcoin has made any really serious inroads into widespread acceptance. But now the momentum has started to build and other currencies like the three mentioned here have started to gain some traction, how long can it be until they do become many people’s preferred method of payment?