The Bitcoin changed its value numerous times during the latest weeks, attracting the attention of financial analysts from all over the world, not only because it does not behave like a normal currency, but also because of its concept that makes it unique. The value of a bitcoin can only be established today, and any transaction that you make must be made at the current exchange rate, as tomorrow, you never know what website would accept it as a payment method, or what country would declare bankruptcy, increasing the value of the bitcoin three times in two hours.
However, the Bitcoin is not the only currency based online. In fact, we can already talk about the world of crypto-currency, which might offer us numerous possibilities in the near future. Can we talk about tens of currencies on the internet, used for all kinds of actions? Not now, but the attempts that we can observe in this area are pretty encouraging.
The second largest market in crypto-currency is the Litecoin, which had a value of 2.4$/LTC during the latest months, and a market of 38$ dollars, and the PPcoin, which had a value of 0.22$ on a market of 4$ million.
The bitcoin is based on mathematical algorithms that control the bitcoin production. This way, the number of bitcoins introduced in the market is connected the number of transactions in the market, so the rhythm of growth is adapted to the needs of the economy. Maybe we can’t talk about a perfect market, but it is the closest principle that we have seen since now with this ideal scenario.
The Litecoin has the advantage that it is introduced and verified a lot faster, claims Charles Lee, the designer of the new currency. The disadvantage is that there is only a small community gathered around this currency, which is currently maintained on the private servers of some enthusiasts. For this reason, some might say that the litecoin is not as secure as the bitcoin. The number of transactions and the possibilities to exchange the litecoin are also pretty limited, but this is expected to change if the coin gains popularity, and if it will be accepted as a payment method by some major websites.
The litecoin transactions, on the other hand, are confirmed a lot faster. While in the case of bitcoins, verification might last from ten minutes to a few hours, the average time of processing a litecoin transaction is 2.5 minutes. In simple words, we can say that the litecoin is actually a faster bitcoin. On the other hand, the speed of execution probably affects the security of the network, and this is why it is better to wait a little before investing time and hardware in this currency.
Every transaction made with bitcoins is placed at the end of a queue, where it is taken, verified and confirmed by many computers from all over the world, and it is also associated with a unique number called hash. When a section of the chain is confirmed, it is transformed in a block of 25 bitcoins, and it is released on the market. The way the bitcoins are divided amongst the contributors to the chain depends on the type of mining. The disadvantage is that stronger computers can solve more complicated puzzles, meaning bigger transactions, which favor the high-performing computers. Litecoin also used algorithms to create blocks, but the puzzles are solved with the help of common processors, not with the graphical hardware of the computer. This means that the Litecoin depends on all the miners in the pool, not on some powerful computers that get the biggest share of the rewards given to a pool.
PPcoin is also based on mining, but in order to favor the smallest miners, the rewards are given in the base of a lottery, where the chance of miners is calculated considering the number of PPCoins that they already have.
PPcoin has the advantage of low energy consumption, which is not the case of bitcoin. In fact, people mining bitcoins have to consider the electricity bill as a major setback, and they need to make their calculations accordingly. In the case of Litecoins, the electricity consumption is also big, but reasonable, while in the case of PPCoins, the difference in consumption is hardly felt in the bill.
Some financial specialists said some time ago that the design of Bitcoin leaves loom for solid competition. On the long run, it is expected for rivals to emerge, and considering the fact that the bitcoin system could be greatly improved, it is expected for those currencies to become even more popular than their model.
Bitcoin fans say that competition might affect their efforts to make this currency a mainstream payment method, but financial analysts say that competition would only give any crypto-currency more chances to succeed.
Competition usually means development, and in the case of crypto-currency, it will be the same. The dollar will still be the strongest currency in the world, ready to absorb any shocks created in the crypto currency markets, and this safety net will provide all the perquisites needed for those currencies to grow.
The creators of the Litecoin and of the PPC don’t want to talk about the way their currencies would affect the Bitcoin, but they are optimistic about the possible appearance of other currencies. Litecoin has been designed as an alternative to the bitcoin, giving people a refuge in case something happens to the star of crypto-currencies. Moreover, if many currencies of this type appear, those would be harder to control by governments of different countries with operations in their own currency.
The creators of the new currencies are optimistic about their creations, estimating that crypto currency will take a solid portion of the ecommerce market soon.