Bitcoin is not only a digital currency that can be used to pay for goods and services, or an investment tool. It is also a testing ground for new technologies that can transform not only the financial world. It is a decentralized, fully transparent and cryptographically secured global transaction processing network and distributed database based on a chain of blocks called the blockchain. The investment attractiveness of Bitcoin is due to the fact that its supply is limited — there can be no more than 21 million BTC, and in practice, about two-thirds of this amount is generated (just under 14 million coins as of March 2015).
What is a fork?
Since Bitcoin has an open source code, its technology has become known all over the world. It became the basis for the development of many alternative digital currencies. Any digital currency that uses The bitcoin program code as the basis is called a fork (from the English word “fork”, branch, fork). The term “altcoin”(altcoin), which is similar in meaning, is also common. For the average user, forks allow you to choose which functionality is most important:
A digital currency that is convenient for quick payments with minimal fees;
A digital product with a mathematically limited offer;
Further development and improvement of Bitcoin technology;
A convenient investment tool.
The first of the forks was Namecoin (NMC, Neimcoin). It is based on an alternative DNS domain name system that is not controlled by the US government and has been approved by Wikileaks, among others. Namecoin is mined in conjunction with Bitcoin.
Scrypt algorithm — Litecoin (LTC) and Dogecoin (DOGE)
One of the first and most successful cryptocurrencies is Litecoin. It uses a modified hashing algorithm (Scrypt), rather than pure SHA-256 like Bitcoin. Transactions with Litecoin are confirmed on average 4 times faster than in the Bitcoin network, and the block database takes up much less space. The number of litecoins is also mathematically limited – there can be no more than 84 million coins in total.
While Bitcoin has payment solutions for online stores, ATMs, POS terminals, and even gateways to the banking system, Litecoin is not as well provided with infrastructure. In terms of its level of development, it resembles Bitcoin a few years ago — there are not many stores that accept this cryptocurrency, there are no ATMs and other infrastructure yet. To date, LTC has gained its market share, gained popularity on exchanges and loyal supporters. They believe that Litecoin still has everything ahead of it.
The second well-known representative of the Scrypt family was Dogecoin (DOGE). Cryptocurrency, which started as a joke, has become just crazy popular. A significant role in this was played by the cute Shiba inu chosen for the logo. Imagine if there was a bull Terrier there… These coins are a huge number (more than 100 billion) which is not limited, unlike most cryptocurrencies. The advantages of calculating “dogami”: an imperceptible Commission amount and high speed of transaction confirmation.
This cryptocurrency has a wide range of supporters who are constantly working on its promotion and arrange various promotions. Many people did not clearly perceive the decision to jointly mine Dogecoin and Litecoin. Joint mining consists in the fact that when you earn one cryptocurrency by mining Scrypt, you automatically earn another. Due to this, LTC and DOGE do not compete with each other using the same computing resources.
Non-fork: Ripple payment system (XRP)
The second place in capitalization after Bitcoin is occupied by the ripple payment system (ripple). It can not be attributed To bitcoin forks, since the ripple program code is written “from scratch”. This system uses its own payment unit-XRP. The Commission fee for transferring money between system participants is only $0.00001. At the same time, no one collects even a thousandth of a cent — these funds are used to prevent network congestion due to DDoS attacks. The transaction takes only a few seconds, and the source code of the system is completely open.
Proof-of-Work and Proof-of-Stake
The only way for Bitcoin and Litecoin to confirm transactions is PoW (Proof-of-Work). Cryptocurrencies such as Pircoin (Peercoin, PPC) and Novacoin (NVC) use Proof-of-Work and Proof-of-Stake (PoS, proof of storage) technologies together. Simply put, the coins used to confirm transactions are those that are motionless in users ‘ wallets. At the same time, the user receives a reward of several percent per year on their capital. This is significant (100 times or more) reduces the amount of electricity needed for mining. However, Pircoin uses the same cryptographic algorithm as Bitcoin (SHA-256), and Novacoin is based on the Scrypt algorithm (just like Litecoin and Dogecoin).
The Nextcoin (NXT) cryptocurrency uses Proof-Of-Stake technology in its purest form, which means that mining is not required. the issue of 1 billion coins occurred at the start of the system and was divided between 73 investors and the project developers who started distributing them. This is not a fork of Bitcoin, since the code of the coin is written “from scratch” in Java. The system is completely decentralized and does not even need to install a wallet program. To use your funds, you log in to the web interface using a complex password phrase known only to you. The NXT system is initially very convenient for creating various services and applications, of which there are already quite a lot.
Forks on hash algorithms X11, X13, X15
The sensation of last year was the original darkcoin cryptocurrency (DarkCoin, DRK), which uses the X11 hashing algorithm. It is a combination of 11 cryptographic algorithms that use various mathematical models. Its demand for computing resources is the key to the fact that only graphics cards and processors can be used for mining (currently only graphics cards are used). DRK is positioned as the first truly anonymous cryptocurrency, and the latest update of the software code allowed you to make instantly confirmed transactions in the “dark”.
You can earn this cryptocurrency not only by mining, but also through the content of the so-called “nodes”, which are the key nodes of the network. The developers also provided the ability to quickly fix problems if something goes wrong. We are constantly working to improve Darkcoin, and its price immediately responds to the growth of positive changes.
Many other cryptocurrencies have been created based on X11. The X11 extension was the X13 and X15 algorithms. Their principle is the same-a combination of 13 and 15 cryptographic algorithms, improved user anonymity, and the impossibility of mining with special chips (only processors and video cards are used). These algorithms are especially interesting for those who are engaged in mining using video cards. X13 and X15 less heat the GPU, so the video cards last longer.
Crypto 2.0 Projects»
For some developers, the” old man ” Bitcoin and all its forks seem already outdated and archaic. They came up with the big name “Crypto 2.0” (second-generation cryptocurrency), although even Bitcoin has not yet officially left the testing stage and its version number still starts from zero. However, most of these projects are nothing more than add-ons to Bitcoin that use Its blockchain.
The first project of “Crypto 2.0” was Mastercoin (Mastercoin). It was created as an add-on to the blockchain, allowing you to enter into cryptographically verified smart contracts. However, the development is extremely slow and has disappointed many followers. Sadly, it seems that the best days of Mastercoin are behind us.
The most sensational of the “Crypto 2.0” projects is Ethereum. Suffice it to say that the idea of a 21-year-old talent, Vitalik Buterin, which came to him during a trip around the world, has already interested such an industry Titan as IBM, and has collected more than 15 million US dollars in just a month and a half. Now everyone is waiting to see what will happen. The developers promise full decentralization, support for the “Internet of things”, scanty commissions and the ability to create automatically executed contracts for anything.
The most promising of these projects is “colored coins”. They will allow you to easily issue digital shares, bonds, transport tickets and events that use all the advantages of blockchain technology. This technology can also radically change the sale and purchase of digital goods. But so far,” colored coins ” are far from practical implementation.
Forks on exotic algorithms
Cryptocurrency enthusiasts have come up with a variety of mining algorithms: N-Scrypt, SHA3 (Keccak), Scrypt-jane, Groestl, CryptoNote. Of these, CryptoNote is the most popular algorithm. It uses cryptographic technology such as”ring signature”. The advantages of CryptoNote are the ability to mine coins with Central processors of home PCs, a high degree of user anonymity without using “nodes”, as in Darkcoin. At the same time, transactions are carried out incredibly quickly and they can be additionally protected with a secret password. The most famous fork on The cryptonote algorithm was the Monero cryptocurrency.
In total, more than two thousand forks were created — there are those created for the sake of a joke or Scam. There are even forks that have lived for several weeks, or even days.