Challenging Practical Features of Bitcoin by the Main Altcoins

TL;DR

This paper analyzes how main altcoins differ from Bitcoin in features and market perception, highlighting their advantages, drawbacks, and potential impact on future cryptocurrency success.

Contribution

It provides a comparative analysis of major altcoins' features and market reception, offering insights into their potential to challenge Bitcoin's dominance.

Findings

Litecoin's shorter block times benefit commerce but cause orphaned blocks.

Zcash's anonymity appeals to regions with limited economic freedom.

Bitcoin Gold's decentralization has led to stagnation.

Abstract

We study the fundamental differences that separate: Litecoin; Bitcoin Gold; Bitcoin Cash; Ethereum; and Zcash from Bitcoin, and draw analysis to how these features are appreciated by the market, to ultimately make an inference as to how future successful cryptocurrencies may behave. We use Google Trend data, as well as price, volume and market capitalization data sourced from coinmarketcap.com to support this analysis. We find that Litecoin's shorter block times offer benefits in commerce, but drawbacks in the mining process through orphaned blocks. Zcash holds a niche use for anonymous transactions, benefitting areas of the world lacking in economic freedom. Bitcoin Cash suffers from centralization in the mining process, while the greater decentralization of Bitcoin Gold has generally left it to stagnate. Ether's greater functionality offers the greatest threat to Bitcoin's dominance in the market. A coin that incorporates several of these features can be technically better than Bitcoin, but the first-to-marketadvantage of Bitcoin should keep its dominant position in the market.