\u201cWhat sets each cryptocurrency apart from the others?<\/em>\u201d<\/p>\n<\/blockquote>\n \u201cCryptocurrency\u201d is a broad term. It refers to payment coins, of course\u2014such as Bitcoin and Litecoin. But, because most tradeable tokens attain an asset value, the word is often used to refer to smart contract devices, such as Ethereum, a host of other blockchain based tokens, functional Internet-of-Things tokens, and even ICOs (Initial Coin Offerings). Since people treat ICOs and IOT tokens as investment instruments even if they are useless as a payment mechanism, they all fall within the realm of a cryptocurrency.<\/p>\n So, before addressing the question, let\u2019s distinguish between Altcoins and ICOs. I assume the question refers to Altcoins, and not ICOs\u2026<\/p>\n <\/a><\/p>\n ICOs are almost all scams<\/i><\/b>. A very few of these are designed to function in a well-defined IOT role (Internet-of-Things<\/i>). But, any ICO that you are likely to hear about share one or more traits described here<\/a><\/span>.<\/p>\n But Altcoins are different<\/b>. These are typically forked from Bitcoin or another established blockchain-backed coin. They are created because developers feel that they have solved one or more of the problems that limit the growth or appeal of Bitcoin. For example, Bitcoin has (or recently had) all these problems or perceived limitations:<\/p>\n Fortunately, developers and armchair inventors have proposed or demonstrated clever POW alternatives<\/a><\/span> to achieve a fair distributed consensus. Some of these use a Proof-of-Stake mechanism, while others add a limited central-authority nexus to facilitate governance and scaling. Some are built on a modified blockchain that weaken several pillars of a true decentralized, p2p network. Of course, researchers are concerned that these systems deteriorate the decentralized nature of Satoshi\u2019s original blockchain.<\/p>\n But, other systems may allow for a fully distributed and democratic trust platform, such as BFT Replication<\/a><\/span> (IBM) or Distributed Objective Consensus<\/a><\/span>, which was proposed by an amateur mathematician.<\/p>\n In reply to the title question, Altcoins are set apart by their claim to address the above problems & limitations, or to add features.<\/i><\/p>\n Will an Altcoin Triumph over Bitcoin?<\/b><\/p>\n Perhaps, a few altcoins will thrive, due to specific niche advantages; features that Bitcoin chooses not to address, such as deep anonymity or with a novel utilitarian feature that facilitates a specific Internet-of-Things process.<\/p>\n Unfortunately for altcoins, all coins require public trust and transparency<\/i>. For this reason, they are open source, permissionless, without licensing, without patent protection and with a fully disclosed pre-mining history. And for that<\/i> reason, Bitcoin is free to steal any clever advantage that works. It\u2019s all up for grabs and no one can be sued.<\/p>\n In effect, each altcoin as a beta test platform for Bitcoin<\/i>. Now that Bitcoin is finally addressing the problems of scalability and fair\/speedy governance, there is little doubt that it will continue to dwarf other coins.<\/p>\n Philip Raymond<\/a> sits on Lifeboat\u2019s New Money Systems<\/a> board. He co-chairs <\/i>CRYPSA<\/i><\/a><\/span>, hosts the New York <\/i>Bitcoin Event<\/i><\/a><\/span> and is keynote speaker at <\/i>Cryptocurrency Conferences<\/i><\/a><\/span> around the world. <\/i>Book a presentation<\/i><\/a><\/span> or consulting engagement<\/i>.<\/p><\/p>\n","protected":false},"excerpt":{"rendered":" Today, I was asked to answer this question at Quora: \u201cWhat sets each cryptocurrency apart from the others?\u201d \u201cCryptocurrency\u201d is a broad term. It refers to payment coins, of course\u2014such as Bitcoin and Litecoin. But, because most tradeable tokens attain an asset value, the word is often used to refer to smart contract devices, such [\u2026]<\/p>\n","protected":false},"author":353,"featured_media":0,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1318,1761,39,45,418],"tags":[2971,2930,3000,2161,2121,3001,3002,3003,2972,2974],"class_list":["post-76855","post","type-post","status-publish","format-standard","hentry","category-bitcoin","category-cryptocurrencies","category-economics","category-finance","category-internet","tag-altcoin","tag-altcoins","tag-benefit","tag-bitcoin","tag-blockchain","tag-comparison","tag-feature-comparison","tag-features","tag-ico","tag-icos"],"_links":{"self":[{"href":"https:\/\/lifeboat.com\/blog\/wp-json\/wp\/v2\/posts\/76855","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/lifeboat.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/lifeboat.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/lifeboat.com\/blog\/wp-json\/wp\/v2\/users\/353"}],"replies":[{"embeddable":true,"href":"https:\/\/lifeboat.com\/blog\/wp-json\/wp\/v2\/comments?post=76855"}],"version-history":[{"count":4,"href":"https:\/\/lifeboat.com\/blog\/wp-json\/wp\/v2\/posts\/76855\/revisions"}],"predecessor-version":[{"id":76868,"href":"https:\/\/lifeboat.com\/blog\/wp-json\/wp\/v2\/posts\/76855\/revisions\/76868"}],"wp:attachment":[{"href":"https:\/\/lifeboat.com\/blog\/wp-json\/wp\/v2\/media?parent=76855"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/lifeboat.com\/blog\/wp-json\/wp\/v2\/categories?post=76855"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/lifeboat.com\/blog\/wp-json\/wp\/v2\/tags?post=76855"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}\n
\n![\"\"](\"https:\/\/lifeboat.com\/blog\/wp-content\/uploads\/2018\/03\/altcoin-confusion-t-300x169.png\")
One big problem facing Bitcoin is that the distributed consensus mechanism that makes it a trusted, peer-to-peer mechanism is based on Proof-of-Work<\/a><\/span> (POW). Coupled with a mining incentive that increases dramatically<\/i> with exchange rate, Bitcoin is\u2014quite simply\u2014untenable. With consumption topping 33 terawatt hours in December 2017, it already consumes more power than some countries. If even 2% of the world\u2019s payment transactions were settled in Bitcoin, the mining would consume more power than is generated throughout the world. This just cannot continue!<\/p>\n
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