Bitcoin, the new kid on the block. Well, amongst the cryptocurrencies, bitcoin is the father of virtual currency, the grand daddy. Not the first cryptocurrency ever, but definitely the one that has made the biggest impact. Amongst the other virtual coins are Litecoin, Dogecoin, Ethereum, Monero, Bitcoin Cash, Gold, and many more. Bitcoin Cash and Gold are forks of Bitcoins and thus share many commonalities, but are different. They were created after their parent Bitcoin was forked. In principal, a fork in cryptocurrencies is a split into two separate coins. The reasons for forks are manifold and can range from developments in the underlying algorithms to different opinions amongst miners, traders, and coders – the coin's community in essence).
I will confess, I am a massive fan of cryptocurrencies. There are thousands now, but I consider only a few really promising. I am not a psychic so don't quote me on this, but amongst all the coins that are currently minable and tradable, only a handful strike me as potentially useful to a greater audience. There are only so few cryptocurrencies that have a mainstream appeal. Amongst these are undoubtedly bitcoins, followed by litecoins and ethereum, dogecoins, and monero. Some other coins, such as potcoins, may be of interest to a small part of the population, but theses five are standing out from the mass of virtual currencies.
Bitcoins - digital gold, not a currency
The mackdaddy bitcoin is undoubtedly the leader of the pack, the gold of cryptocurrencies if you will. Rather than a real currency that will be used in daily transactions, it appears that, given the price development of recent years and months, bitcoins are transforming into a value storage rather than a money that you will buy your coffee with. Even though a bitcoin is essentially 100,000,000 (100 million) satoshi and could hence be used as a means for daily transactions, it seems to carve out its place as the virtual gold equivalent. Just as gold, which would also generally not be used to pay for your morning coffee, for it being too difficult to be broken into smaller pieces, breaking bitcoins into satoshis appears increasingly unlikely given its tremendous increase in price. Or could you imagine being asked to pay 0.0000013 bitcoin for your coffee? Unlikely. Humans love simple numbers and tend to stay away from complex numbers, particularly if they had to deal with it on a daily basis or when tired and not really awake in the morning or late at night. Imagine going for a couple of drinks and someone asked you for 0.0000017 bitcoin for your beer. It would be impossible to grasp how much you have already splashed out on your drinks. Bitcoins are thus more a value storage than a real currency.
Another reason why bitcoins will most likely not become the cryptocurrency of choice for daily transactions is that most currency need some sort of benchmark, another asset they are somehow related to. Whether this is the former gold standard that the US dollar was linked to or currencies such as the dollar or Euro, bitcoins may become the cryptocurrency gold, the benchmark other cryptocurrencies are compared against. It may, and in fact already is, the benchmark, the gold standard that other cryptocurrencies and fiat currencies are marked against.
A third possibility: bitcoins will be used not for daily transactions, but for major purchases such as property or cars. Their sheer price (which obviously may change anytime, but appears to stabilize and find some ground) of one bitcoin would make its use for major financial transactions a feasible option.
Litecoin - the digital silver
Second in line in the the cryptocurrency universe appear to be litecoins, or as some call it, the silver of cryptocurrencies. Litecoins, worth only a fraction of bitcoins, seem much better suited to smaller transactions. Just as bitcoins can be split into the much smaller unit satoshis, litecoins are separable. Their smaller units are called litoshis and the ratio is just the same as that of bitcoins and satoshis, there are 100 million litoshis in one litecoin. Given the current price for one litecoin at around 300 US dollar, the use of litecoins in daily transactions is much more likely. I am still not convinced that litoshi will become the currency of choice to pay for a cup of coffee. This is where I see dogecoins or any other currency of similar character. Litecoins, given their recent price increases, will also become to valuable as to be used in daily transactions. Maybe we will someday use them as a currency to buy electronics for a few hundred dollars, pay for services, or simplay use them as an alternative value storage.
Dogecoin - the dollar of today
With dogecoins current value hovering around 6/10th of a US cent, an upswing in its price may be accompanied in their applicability for daily transactions. Rather than a price tag of 16,000 satoshi or 1,600,000 litoshis, the price for a cup of tea may simply state 30 dogecoin (given that the price of a dogecoin reaches anything around 10 cents). 1,600,000 litoshis simply sounds too much like hyperinflation, too Zimbawean. Currencies that demand for prices to be expressed in millions tend to not be the most stable. Just think the good Italian Lira, the former Reichsmark, or the Zimbawean dollar. For that reason I believe it to be a genuine possibility for dogecoins to be the currency for smaller daily transactions. Another important factor is that there is no cap on their supply. In other words, both bitcoins and litecoins, amongst other coins, have a maximum number of coins that will eventually be produced (84 million litecoins and 21 million bitcoins). A currency that is used in daily transactions, however, needs to allow for an almost infinite supply. By that I do not mean that it should be printed out of hot air (although that is exactly how cryptocurrencies are produced), but a cryptocurrency that stands a chance of becoming a real means for daily transactions should never carry the character of a value asset. In other words, with a limit on the maximum supply of bitcoins, litecoins, and others, there is a very big chance than those who are in their possession will not spend them. Just as someone who owns rare expensive wines or bars of gold is unlikely to use these to pay for everyday life, the owner of a bitcoin or other expensive cryptocurrency is unlikely, once they are in its possession, to again part ways. Too big for bitcoins and litecoins to go up even further in value. Dogecoins and similar coins, on the other hand, are not designed with a supply maximum allowing for the constant production of new coins. This is a major factor for their potential use as everyday money. If there is an ever increasing amount of coins, just as there is an ever increasing number of dollars, euros, yen, or pounds printed, a cryptocurrency that wants to serve as a true currency for daily transactions and not a value storage or a payment system for the rare property purchase, needs to be cap free.
Ethereum - the business currency
Ethereum is certainly one of the hottest contenders for being the number two cryptocurrency with litecoin, but it is likely that ethereum will find its place as a currency for business transactions between companies in lieu of a virtual coin that is used by individuals to pay for their clothes shopping or morning croissant. The current ethereum price, in the hundreds of dollars, renders it rather useless, just as is the case for its sister currencies bitcoin and litecoin, to ever be used for anything but larger transactions.
Monero and Dash
The currencies of choice for those who prefer to remain anonymous. Bitcoins, Litecoins, and many other cryptocurrencies are far from anonymous. Of course it sounds much more exciting when the mainstream press writes about them in the light of underworld activities, but the truth is that they are very easily traceable, all the way back to their origin. You can check their journey, all transactions online, accessible to everyone. Just look for blockchain transactions, bitcoin blockchain, or similar, and you will find sites listing all addresses bitcoins and litecoins have been sent to and from. Monero and Dash, however, are different in that they are really anonymous. Even if you see an address shown online, these are not the real owners of these coins, these are, just as your VPN, a ghost address. Will they ever become the currencies of show for your morning coffee - very unlikely, but they are some of the most exciting coins.
There are so many other currencies out there, but these six are certainly the most exciting and interesting ones with lots of potential. But who knows, maybe an entirely new cryptocurrency will pop up rendering everything we know today negligible. Maybe the new currency will become a money of choice in the future.
If you want to join the craze, here a list of ways of earning bitcoins, litecoins, dogecoins, dash, and monero.