Cryptocurrency: Not Just Bitcoin (Part III)

Bitcoin thoroughly dominates media coverage and public discussion of cryptocurrency. It is the oldest crypto-currency and does by far have the largest market capitalization—all Bitcoins are together estimated to be worth US$5.5 billionMore than sixty peer-to-peer currencies existed as of November 2013, and that number has dramatically risen since. As of April 8th, lists market capitalization values for over 200 cryptocurrencies.  Market capitalizations range from Litecoin’s US$300 million, much a smaller than Bitcoin but still substantial, to LiteBar’s $384. The sheer number of similar-sounding names (well more more than half include the word “coin”) raises the question… Why? Two weeks ago, I began a series of posts on Bitcoin-alternatives. This week, I’ll conclude the series by writing about two more motivations between the exploding diversity of cryptocurrencies.

{For a primer on Bitcoin, consider reading Holly’s interview with Emily Neville about her thesis on the currency.}

humor and journalism
The internet has earned infamy for weird fads and odd humor. JesusCoin, Coinye (as in Coinye West), Koindashian, and DogeCoin (for the unfamiliar, some background on the Doge meme) likely fall primarily under that banner. Journalists, generating fodder for their articles, have also created currencies of their own. Notable examples include ArsCoin—born from the website ArsTechnica—and Stawart Bucks, created by Joe Weisenthal for Business Insider. I, unfortunately, did not go those lengths for this post. This type of “just for fun” coin tends to be a direct clone of Bitcoin or another crypto-currency with no or very few technical alterations.

+ scams
New currencies are vulnerable to “pump and dump” scams. In this scheme, the creators of a currency release it to the public once they have acquired a pile of coins for themselves. Through marketing efforts, they increase the value of their currency and sell off their coin stash for a quick buck. However, pursuit of financial gain by its creator doesn’t necessarily doom assign small-market coin systems to mothballed failure. Like the creators of sketchy, pump and dump, small-market altcoins, Bitcoin’s creator also seems to have derived direct financial benefit from his work. In November of 2013, it was estimated that the creator of Bitcoin held a stake in that currency worth more than a billion dollars. Unlike the creators pump-and-dump altcoins, he has not yet sold off his holdings.

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