BitConnect characterized itself as a digital exchange, lending platform and community-driven investment fund that “provide[d] risk-free returns to its users.” The website claimed to have a “Volatility Software” trading bot that guaranteed users up to a 40% return per month in addition to returns from lending operations. The principal of every investment is guaranteed, but the there is a lock-up period of, on average, 220 days. As of this date, there is no information available on the actual methodology behind their trading bots, the team itself or the lending activities of the project. There are no testimonials from users that borrowed money using the platform and the loan application is inaccessible. Although BitConnect is listed as a Large Cap according to WorldCoinIndex, 90% of the volume and price data is self-reported using data from BitConnect’s proprietary exchange. On January 4, 2018, the Texas Securities Commissioner entered an emergency cease-and-desist order to BitConnect to halt its investment programs and five days later the Securities Division of the North Carolina Department of Secretary of State issued a similar order. On January 16, the project announced it would shut down its cryptocurrency exchange and lending operations because of the orders. During this time, it has been reported that several people affiliated from the project began distancing themselves from the project and people who visited the project’s website were informed about an ICO for an offshoot token called “BitConnectX”.
Vertcoin is a digital token based on Bitcoin. The project was originally forked in 2014 but did not receive much attention from the community until it was revived in 2017. Vertcoin’s main differentiator from Bitcoin is a change to its hash algorithm. Rather than use the SHA-256 algorithm, Vertcoin uses a function called Lyra2RE. This enables the average user to mine VTC without having to invest in a specialized computer. The project also proposes “one-click mining,” an initiative to lower frictions associated with cryptocurrency mining by enabling VTC users to mine the currency in only one click. Other changes from Bitcoin include block creation time (2.5 minutes), block rewards (50 VTC), and an increase in total supply (84M).
MonaCoin calls itself "the first Japanese cryptocurrency." The token was initially launched in January 2014 as a fork of Litecoin, but it did not get traction until it was recently revived by a group of developers. MonaCoin uses the same Lyra2REv2 consensus mechanism employed by Vertcoin. As with many other forks of Bitcoin, MonaCoin was one of the first tokens to activate SegWit, a technology developed by Bitcoin Core that increases transaction throughput. MonaCoin’s block reward is 25 MONA and block creation time averages 1.5 minutes. In October 2017, the MONA/BTC pair was listed on BitFlyer, a Japanese cryptocurrency exchange, which led to a massive increase in prices (400%+). Despite the increase in network value, most blocks in the MonaCoin blockchain consist of a single transaction (i.e. the block reward).
Hshare is trying to create a token that is exchangeable between traditional blockchains and DAGs (Directed Acyclic Graphs). The HSR token is a temporary token that is not currently being exchanged in this theoretical network. Instead, it enables its holders to exchange for a new token once the new network is launched. According to its white paper, the future Hshare network will have a combination of: (1) interoperability between blockchains and DAGs, (2) quantum resistant encryption, (3) hybrid consensus mechanisms, (4) private transactions through zk-SNARKs and (5) open governance through a Decentralized Autonomous Organization. Together, this is extremely ambitious technical functionality and successful development of such a network would likely require more than one developer, which is how many Hshare currently has. Moreover, Hshare’s CTO does not appear to have any experience in applied cryptography, a key discipline on which success of the project is likely dependent. Lastly, the CEO of the project is the host of a local Australian TV show and several unofficial reports indicate that Hshare is a scam.
Stellar Lumens is a payments rail that is specifically designed for remittances, micropayments, and low cost financial services. The protocol employs a novel consensus mechanism called the Stellar Consensus Protocol (SCP), which provides low latency for transactions regardless of the amount being transacted. SCP also allows trust ratings to be assigned to the nodes that validate transactions, thereby making validation power proportionate to a quantitative metric representing trust. This protocol design also allows for low network fees, thereby enabling low cost microtransactions. Many partnerships have been created to build services on the Stellar network. For example, Deloitte, in June 2016, announced a partnership with Stellar to build a cross-border micropayments app. In November 2017, a partnership with IBM was announced to move money across borders throughout the South Pacific.
Bitcoin Cash was the result of a forceful split of the Bitcoin network, an event referred to as a hard fork. As Bitcoin gained traction, the network could not handle the number of transactions demanded by users, which resulted in lengthy delays that could only be bypassed by paying higher fees. This is what led to the Block Size Debate, an ongoing discussion about the trade-offs related to increasing Bitcoin’s block size in order for more transactions to be allocated into one block. Since mining bitcoin is a capital-intensive activity, miners want to maximize the number of transactions on a per block basis to increase their level of profitability from transaction fees. The easiest way to achieve this is by increasing Bitcoin’s block size, which has been 1MB since the coin’s inception. In April 2017, mining hardware manufacturer Bitmain was the first to suggest a hard fork and the idea for Bitcoin Cash begun getting support. In the following month, the Bitcoin ABC Project (Adjustable Block Cap) announced it was developing a full node implementation of the Bitcoin protocol that would be compatible with Bitcoin Cash. The project’s goal was to support a version of Bitcoin that rejects SegWit and increases the block limit to 8MB. The fork occurred on August 1, 2017, and the first Bitcoin Cash block was mined 6 hours after Bitcoin block 478558 by ViaBCT, a Chinese digital token exchange and mining pool. On December 19, GDAX launched Bitcoin Cash trading, but halted trading for about a day after the price exceeded $9,500 on the exchange, when it was $3,500 on other exchanges. This has led to an internal investigation by and a lawsuit against Coinbase for potential insider trading.
Litecoin is a fork of Bitcoin that was developed in 2011 by Charlie Lee, a former Bitcoin developer and one of the initial employees at Coinbase. Litecoin branded itself as the optimized version of Bitcoin for payments because of its faster transaction confirmation times. Litecoin accomplished this by lowering its block creation time from Bitcoin’s 10-minute target to approximately 2.5 minutes. In addition, instead of using the SHA-256 hash algorithm used by Bitcoin, Litecoin uses a Scrypt hash. The purpose of using a Scrypt-based consensus mechanism was to leverage the hardware infrastructure built around Bitcoin to allow miners to participate in both the Litecoin and Bitcoin networks, otherwise called merged mining. As the Bitcoin mining industry developed, large-scale mining became highly specialized and simultaneously mining both tokens became impractical. Current block mining rewards imply a 10 percent annual inflation rate and the total supply is capped. Litecoin was the first Large-Cap token to implement SegWit, a technology that optimizes block storage and increases transaction throughput. Although originally developed for Bitcoin, SegWit was extensively tested by the Litecoin network, which greatly benefited from the upgrade. In December 2017, Charlie Lee announced that he sold all his LTC.
Ripple is a payments protocol and digital token developed by Ripple Labs beginning in 2012. Ripple’s XRP token is powered by a real-time gross settlement system (RTGS) that allows near-instant transaction clearing and settlement. The purpose of the protocol is to provide "secure, instant and nearly free global financial transactions of any size with no chargebacks.” In contrast to purely decentralized networks that rely on miners, the Ripple network is maintained by independent validating servers that reach consensus on the order of transactions being recorded. This protocol design enables consistent confirmation times and transaction throughput, but the project has received criticism for not being fully decentralized. Nevertheless, XRP’s market capitalization has grown exponentially since its inception and the token has consistently ranked in the top ten in terms of both market capitalization and transaction volume. Ripple was tailored for cross-border value transfers between financial institutions and has secured partnerships and investments from noteworthy entities, including CME Group, Google Ventures, Accenture, and Andreessen Horowitz.
IOTA is experimenting with Directed Acyclic Graphs (DAGs); an alternative data structure to the way blockchains are generally developed today. It attempts to provide a solution to one of the biggest risks faced by blockchain-based networks, which is the rise of immensely powerful quantum computers. Although still very theoretical, these supercomputers could enable hackers to attack blockchain-based networks in the future. IOTA’s “Tangle” network offers quantum-resisting features by structuring its transactions using Directed Acyclic Graphs (DAGs), which are supposedly more resistant to quantum attacks. Transactions are posted on-chain as they occur by nodes in the network and are linked to a signature system, thereby eliminating the need for mining, which enables free transactions. This design was also intended to ease Machine-to-Machine (M2M) transactions and power what is colloquially referred to as the Internet of Things, a network of objects, such as household appliances, that are authorized to transact with one another. IOTA is led by David Sønstebø, the CEO of Stealth, and Sergey Ivancheglo, the former lead developer of NXT. In late 2017, a group of MIT researchers found several technical issues with IOTA’s current implementation, including critical vulnerabilities that could ultimately result in the loss of funds.
Bitcoin was created in 2009 by a programmer, or a team of programmers, under the name Satoshi Nakamoto. It was built upon several technologies created in the 20th century, namely Elliptic-curve cryptography, Reusable Proof-of-Work and BitGold. It was the first digital token to effectively implement a distributed ledger that economically incentivizes participation. The value of Bitcoin is based on the principal of Digital Scarcity, as the underlying technology caps the maximum supply of tokens at 21M. Until that cap is reached, Bitcoin’s supply is inflationary as the network’s maintainers, also known as miners, are rewarded for validating and confirming transactions with newly minted bitcoins. One bitcoin can be divided into one million fractions, or Satoshis, and the effects of supply deflation can be eased by the token’s high divisibility. Bitcoin is the largest digital token by market capitalization and its user base has grown significantly over the past two years. Although it was initially intended for peer-to-peer transactions, its purpose has changed. As Bitcoin’s popularity increased, so too did transaction fees and confirmation times. For this reason, other digital tokens are preferred for P2P transactions and bitcoin now serves as a store of value or, as some refer to, digital gold. It also serves as a gateway to the digital token economy and the overwhelming majority of digital tokens can be exchanged for bitcoin. Many other popular digital currencies were forked from the Bitcoin protocol, including Dash, Bitcoin Classic, Bitcoin Dark, and, more recently, Bitcoin Cash.
FirstCoin is a cryptocurrency that forked from Bitcoin in 2016, an implementation similar to Litecoin. The project seems to revolve around the “FirstCoin Club,” a mining pool that rewards users by promoting and mining FirstCoin. At the time of writing, the majority of blocks in the FirstCoin blockchain only have 2 transactions in them.