People involved in the Bitcoin and cryptocurrency ecosystem are aware of the proof-of-work algorithm of Bitcoin. New coins can only be generated through a mining process. However, there are also non-mineable cryptocurrencies with great potential out there — such as IOTA, Ripple, Cardano, and numerous others — which are only bought rather than mined.
A PoS (proof-of-stake) type of algorithm doesn’t reward participants for solving complex crypto puzzles to validate transactions and build new blocks through mining. Because of a circulating supply, the more altcoins you can hold, the better chances you have to benefit from a high interest rate. The approach is much more streamlined for cryptocurrency fans. With non-mineable PoS cryptocurrency, you buy the token (“seed”) and you hope for the “seed” to grow up into a fully-developed tree with lots of “beautiful apples” (return on investment).
Non-mineable cryptocurrencies can be highly valuable due to their limited potential to increase in size. This happens because of the constant supply. If we were to compare Bitcoin with IOTA, for example, IOTA’s overall price may increase because the supply is limited. The price of Bitcoin stagnates or devalues because new BTC have to be introduced into the market.
In the following lines, we will talk more about the 3 more popular non-mineable cryptocurrencies on the market today. Each is unique in its very own way because the aim is ultimately to make a difference to appeal to investors. Who wouldn’t want to invest in a coin that promises to takes the cryptocurrency scene to the next level?
IOTA is a non-mineable cryptocurrency that focuses on M2M (machine-to-machine) transactions. Its core purpose is to enable feeless M2M payments, thus serving the machine economy. IOTA goes beyond the blockchain. It renders an ecosystem built on a blockless blockchain to provide lightweight, secure, efficient, feeless micro-transactions in real-time.
Engineered for the Internet of Things (IoT), IOTA is open-source, scalable ecosystem that aims to change the mechanics of the IoT. The foundation of IOTA stands on three core pillars: indefinite scalability, zero transaction fees, and offline transactions.
A next-gen altcoin
IOTA goes beyond the basic definition of an altcoin. It’s actually an addition to the blockchain based on Tangle. Rather than use blocks, Tangle retains blockchain features of the secure transactions and distributed ledger using the DAG (Directed Acyclic Graph) form.
DAG technology enables features that the blockchain can’t, such as infinite scalability, offline transactions, and zero transactional fees. The architecture of IOTA cannot compare with any other blockchain because within Tangle, the validator and the user is one and the same.
Every transaction comes at a cost. However, within Tangle, the cost involved is meant to verify other transactions. The idea beyond IOTA is to create an on-demand, self- sustainable economy.
From the IoT to the IoE
The Internet of Things has gone mainstream. There’s a startup popping up every week, introducing the next smart something. Technology is in the lead, and many argue that humanity’s next big step in evolution is concealed in technology.
The IoT is more than a buzzword. It paves the way to a digitized economy. Our core challenge is not in the development of smart machines and devices; but in the way we interact and communicate with them. Soon enough, there will be more machines than people. At some point, there will be a need for a decentralized network to allow machines to communicate with one another.
This is where IOTA comes in. It can be used as a bridge between systems that can connect and systems that can communicate and evolve within the Internet of Everything. IOTA’s protocol helps machines communicate through channels that go beyond the internet. Whether it’s ZigBee, Bluetooth or LoRa, the way we stay connected might go beyond the Internet.
IOTA solves the blockchain’s limitations
IOTA abides by a completely different protocol. It can solve the limitations of the blockchain because it doesn’t have nor live on one. From a investor’s perspective, IOTA’s potential is limitless. What could be better than feeless, fast, and scalable altcoin which is not an altcoin? There’s no blockchain able to compete with that. Unless Bitcoin switches to DAG (unlikely), it will never reach IOTA’s level of scalability.
Is Ripple the black sheep of the cryptocurrency industry? Created in 2012 by venture- backed capital-backed startup, Ripple connects payment providers, banks, digital asset corporates and exchanges through RippleNet, the core payment network. The aim is to provide frictionless money transfers at global level, all transactions being recorded on the XRP (Ripple token) Ledger.
Unlike Bitcoin, which is a mineable PoW (proof of work) type of coin, Ripple is a PoS (proof of stake) type of altcoin that enables people to go rogue and break free from conventional financial networks and institutions (e.g. banks, PayPal, credit cards) that charge fees for currency exchanges and money transfers.
Ripple — a friend or foe to banks?
In layman’s terms, Ripple is a real-time payment system that facilitates money exchanges between people irrespective of their location. What makes it unique is the Interledger Protocol. There’s no secret that the traditional financial system is broken. Money transfers
between people via banks and intermediaries is an expensive process. Money exchanges overseas is even worse.
By leveraging the Interledger Protocol, Ripple simplifies the process. It issues a monetary payment via a digital channel, making transactions and exchanges between individuals more secure, seamless, and above all, cheap. Ripple’s unique function help it get one step ahead mineable cryptocurrency like Bitcoin. With fight with banks when you can join them?
Ripple’s investment potential
Unlike other cryptocurrency, mineable or non-mineable, Ripple works with actual clients. Some might call it the “black sheep” of the crypto world because it works with financial institutions that are the reason why the blockchain emerged in the first place, but from an investor’s perspective, it does has potential.
In a recent interview, CEO of Ripple, Brad Garlinghouse, mentioned that there’s no competition with Bitcoin. The reality is that XRP is a highly-performing digital asset optimized for institutional use in performing global payments. Bitcoin solves different use cases, not to mention that BTC transactions can take up to 4 hours. XRP transactions are completed in a few seconds.
A closer look at the numbers
With the recent price surges of Bitcoin, Ripple has remained in the shadow for the last couple of months, until now. On December 13, its price spiked by 84%. Furthermore, its market cap went from $237 million at the beginning of the year to $10 billion in the beginning of December, and now is more than $30 billion halfway through December. Why the sudden increase?
After banning ICOs and placing a red flag around cryptocurrencies, both South Korea and Japan have begun testing Ripple’s technology to reduce costs and timeframe linked to international money exchanges between the two countries. Several trials are scheduled for next year between a series of banks between South Korea and Japan. The end goal could result in savings of 60% compared to conventional methods.
In a market packed with altcoins and tokens, Ripple aims to help banks streamline transaction processes. Why don’t banks just create their own version of Ripple, you may ask? Because it’s not that easy to create an decentralized altcoin and still be in control of a centralized system.
As far as investing in Ripple is concerned, it all boils down to whether or not you truly believe Ripple Labs will succeed in its quest to take down PayPal, or any other third party companies that charge fees for transactions.
With all eyes on Bitcoin, we bet you didn’t notice Cardano (ADA) was growing at the same pace. However, many still consider it an obscure altcoin. Its potential though is greater than meets the eye. Created in 2015 by Ethereum’s former CEO, Cardano grabbed some attention earlier this year, when it finally announced a roadmap.
Is Cardano a better version of Ethereum?
Cardano was launched through an ICO that began in 2015 and ended in January, this year. The end goal is to build a exchange platform for smart contracts. At a first glimpse, yes, it’s something like Ethereum. But the underlying technology makes Cardano different.
Whereas the altcoin is non-mineable, its ADA tokens are generated through the PoS (proof of stake) method. Rather than use raw computing power, Cardano aims to eliminate “monopolies” by making its mining system 100% random.
From zero to crypto hero
Among Cardano’s plans for the future is the development of an individual blockchain. The backbone of the project will be the Daedalus wallet. The team behind Cardano aims at making the wallet usable for exchanging different cryptocurrencies for increased interoperability.
At this point, predictions for the future of Cardano are based of speculations. The altcoin is still in its early stages. 95% of investors are Japanese, not to mention that the team behind the cryptocurrency is not yet focused on marketing but on proving the functionality of the technology.
Love them, hate them, judge them, invest in them — but non-mineable cryptocurrencies are here to stay. Famous for their usage of the PoS consensus mechanisms, these altcoins have revolutionized the way people interpret the cryptocurrency world. In layman’s terms: it’s not all about Bitcoin. Someday one specific non-mineable coin, whether IOTA, Ripple, Cardano or other, might actually outperform the popularity of Bitcoin.
Non-mineable cryptocurrencies are not designed to replace fiat money. They’re digital assets issued usually during an ICO (initial coin offering). The more promising the ICO and its goals, the better chances for a non-mineable cryptocurrency to increase in value upon completion.