Bitcoin and its Alternative 2

  1. ETHEREUM (ETH)

Ethereum has the 2nd largest market capitalization following BTC. It built on the innovation, blueprint and adoption of Bitcoin. Unlike Bitcoin, Ethereum goes further than being a payment facilitator, means of exchange and store of value to a marketplace for financial services, and a platform where decentralized applications can be built and operated. It was built by Vitalik to have different functions.

Ethereum developed the use of smart contracts which provides a way for different forms of transactions and activities to be executed with no third-party intervention. According to CoinDesk, Ethereum aims to change how apps on the internet work today, awarding users more control by replacing intermediaries with smart contracts that implement rules automatically.

The digital token, Ether, is used for facilitating all the interactions and transactions on the network.

Like Bitcoin, Ethereum uses proof of work and is looking to move to a proof of stake mechanism in the creation of new Ethers.

Decentralized finance (Defi) is one of the biggest achievements of the Ethereum Network. The network also powers Decentralized Autonomous Organizations (DAOs) which is useful for reaching consensus in different decentralized platforms.

Ethereum has quite a number of real-life applications/use cases from Defi powering lots of financial products and services e.g loans, staking, decentralized exchanges, etc, to DAOs being used as effective voting systems. Also, lots of agreements are being carried out via smart contracts, and solutions in logistics and digital identity are being built.

2. POLKADOT (DOT)

Polkadot is a blockchain with the major aim of improving how different blockchain systems, decentralized applications interact with one another. It uses its core network- the relay chain- to achieve seamless interoperability of different blockchains. Achieving interoperability is a big deal towards improving the adoption of cryptocurrencies as it allows information, payments, money to move across multiple or different blockchains.

DOT, is the token that powers the network; Polkadot’s coin. It is used as a transaction or network fee when exchanging data between 2 blockchains, for governance voting and validating rights, etc.

Polkadot’s DOT Token has the 8th Largest crypto market cap and is a utility token, meaning it serves a specific purpose within a network.

It performs 3 functions within the network: Governance (participate in decisions made concerning the network or in its protocol), Bonding (the ability to add new parachains, like blocks, to the system), and Staking (facilitating the consensus mechanism/creation of new tokens in the network).

In a subsequent article, we’ll look at what utility tokens are and the different types of tokens.

3. CARDANO (ADA)

Cardano is a blockchain network that powers the Cardano coin (ADA) and other applications. ADA is used to power transactions on the network. It aims to be an upgraded alternative to Ethereum improving on its blindspots. It has similar functions to Ethereum as it provides a platform that powers decentralized applications and smart contracts while providing more scale and interoperability side by side energy efficiency/sustainability with its use of proof of stake rather than proof of work consensus mechanism.

Currently, applications on the Cardano network are around identity management and traceability for supply chain purposes.

4. TETHER (USDT)

Tether belongs to the class of cryptocurrency called stablecoins. Unlike Bitcoin, Ethereum and other cryptos, Tether’s value is stable as it is backed by a fiat currency- The US dollar. This means that 1 tether is equal to 1 USD. Thus, it helps to avoid the associate volatility from owning crypto.

As of October 2021, USDT is the fifth-largest cryptocurrency by market capitalization, worth more than $68 billion.

The utility of stable coins like Tether is that it really fills in the gap in crypto’s functionality as a medium of exchange and a mode of storage of value as opposed to being used majorly for trading as some popular cryptos are.

It also solves the problem of constantly having to convert between fiat and crypto. It has become like a base coin that can easily be used to purchase a variety of crypto coins and tokens.

5. BINANCE COIN (BNB)

Binance Coin is the cryptocurrency issued by the Binance exchange. It is the native coin of the Binance chain (Binance’s Blockchain) and it powers the entire Binance ecosystem.

Binance Coin was initially created as a utility token but it now has quite a lot of applications and use cases. It is used to pay for trading fees on Binance Exchange, Binance Decentralized Exchange(DEX), Binance Chain, and Binance Smart chain. Used to apply for Crypto loans through Binance loan, used for staking on Binance smart chain ecosystem and can be spent in more than 60 million merchants worldwide with Binance visa card.

It is also used for payments in places like PundiX and Monetha, used for travel on travelbit, for entertainment on Decentraland, On Mywish to create smart contracts, etc.

To conclude, alternative coins just like Bitcoin are currently being used more as assets. Hopefully, with the constant developments in the system and increasing adoption, these coins transcend being a speculative investment and their other functionalities shine through.

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Ayomipo Jesutomisin Adeniyi

Ayomipo Jesutomisin Adeniyi

I love to read and write about my experiences and Interests. Follow me for a wonderful learning adventure😎.

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