What are the alternative cryptocurrencies to Bitcoin?

The rise of Bitcoin - as bubble or bona fina currency of the future - is the subject of fierce debate.

But there has been much less attention turned to the value and potential of alternative cryptocurrencies, the most high-profile of which are Ripple and Ethereum.

The collection of digital currencies inspired by Bitcoin are collectively called Altcoins, and there are now thought to be more than 1,100 of them, with a total market capitalisation of about $150bn as of October 2017.

In addition, some countries are developing their own national cryptocurrencies, with Dubai launching its first official cryptocurrency - Emcash - last year, and the Chinese central bank also reportedly developing its own digital currency after having banned the trading of Bitcoin.

All these digital currencies are relying on blockchain technology - a method of recording data on a digital ledger of transactions, agreements and contracts. The big difference is that, for security, the ledger isn't stored in one place but rather distributed across hundreds or even thousands of computers around the world.

The Ripple Effect

The rapid rise of Ripple has attracted attention in recent weeks: at the start of 2018, its market capitalisation hit more than $100bn. This value will fluctuate, but nevertheless represents growth of almost 8000% during the course of 2017.

The key difference between Ripple and Bitcoin is that it is not “mined” - the process which requires Bitcoin users to use algorithms to verify transactions. In contrast, Ripple is controlled by a San Francisco-based company. It creates the currency and releases new batches periodically. This frees Ripple from some of the recent criticism of Bitcoin, which pointed to the enormous amount of energy used during the mining process.

And the company’s emphasis on facilitating global financial transactions means it has been adopted by banks and other financial institutions, including Santander, the Bank of America and UBS. Ripple says it has licensed its blockchain technology to more than 100 banks to date.

Increased credence

Ethereum is a close rival to Ripple, with both competing to be the second biggest cryptocurrency after Bitcoin. It launched in 2015 and is in fact a platform which trades “ether” tokens.

The fact that it is a platform allows Ethereum to create “blocks” - or records of transactions - more quickly than Bitcoin. Ethereum also lets apps run on its networks, allowing for smart contracts, written in code, which can be automatically verified and enforced. That in turn allows for the creation of decentralized apps and even decentralized companies, involving no other parties outside of the Ethereum network.

It has also won the backing of some big multinationals, with almost 200 companies, including JP Morgan and Microsoft, signing up as members of The Enterprise Ethereum Alliance. The Alliance aims to deal with issues for businesses who want to use Ethereum, such as governance and accountability.

Amongst other cryptocurrencies:

* Litecoin is based on an open source global payment network that is not controlled by any central authority

* Monero is also open-sourced and promises a special technique called “ring signatures” that promises that all transactions are completely untraceable

* Cardano claims to be the first blockchain platform to evolve out of a scientific philosophy and a research-first driven approach

*Zcash promises strong privacy protections, with the sender, recipient, and value of the deal all hidden on the blockchain ledger

* Dash promises instant transactions, where payments are confirmed in less than a second

Bitcoin has considerable first-mover advantage, and already has a base of loyal users as well as the greatest liquidity and the greatest overall value.

Some of the newer cryptocurrencies, however, are easier to mine and have already won the backing of big business, giving them significant credence.