When Bitcoin (BTC) first launched, it promised a payments revolution – a way for people to trade digital money without needing an intermediary (like a bank or government). Payments could be processed almost instantly rather than over several days. In addition, it would be cheaper and safer.
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Don’t we already have digital money?
Only a small percentage of today’s transactions are made in cash. Customers use debit and credit cards, wire transfers, payment apps, and many other forms of electronic payment.
However, there is a difference between a regular currency that can be transferred electronically and a digital currency. A digital currency has no physical form. You will never be able to hold a real Bitcoin in your hand. You can, however, withdraw paper dollars from your bank account and put them in your wallet or under your mattress.
Cryptocurrencies will always be digital. And the idea of decentralization is that cryptocurrencies exist outside of banks or other financial institutions.
Has Bitcoin been delivered?
Unfortunately, so far, the Bitcoin network has proven to be too slow and volatile to make it a realistic global digital payment option. This year alone, we’ve seen the price go from around $ 29,000 in early January to a high of over $ 64,000 in April. It then halved in the following months.
Some believe that Bitcoin has value as a store of wealth, much like digital gold. Others believe that second layer solutions (an additional framework that sits on top of the existing blockchain) could improve its speed and make it more viable for use as a payment method.
Bitcoin has successfully generated a multitude of other cryptocurrencies – over 11,000 and up. Some are pure digital payment currencies that aim to be faster than Bitcoin. Others are able to transform entire sectors, from healthcare to supply chains. In this article, we are going to focus on pure payment coins.
These eight coins are all faster than Bitcoin
Since speed is one of the limiting factors for Bitcoin, it’s no surprise that new payment cryptocurrencies aim to be faster. In fact, at 7 transactions per second (TPS), Bitcoin is the slowest cryptocurrency. To give a bit of context: Visa says it can process around 24,000 GST.
Here’s how the other pieces stack up.
1. Ethereum (ETH): 25 TPS
The first cryptocurrency to use smart contracts. Ethereum’s network is used by many other cryptocurrencies and applications.
2. Zcash (ZEC): 27 TPS
Zcash is a digital currency that prioritizes privacy. It is accepted by various third party payment providers and promotes itself as a good way to pay family and friends.
3. Dash (DASH): 35 TPS
This digital currency became popular as an alternative to cash in Venezuela during the country’s economic crisis. The Dash app works on various devices and has ATMs around the world.
4. Litecoin (LTC): 56 TPS
Litecoin was launched in 2011. It has four times more coins available in total than Bitcoin and completes transactions four times faster. Interestingly, its open source software was the basis for the popular Dogecoin meme currency.
5. Bitcoin Cash (BCH): 300 TPS
Released in 2017 to facilitate smaller and faster payments, it is a fork of Bitcoin. This means that it has moved away from the original code, but the basic operation is very similar.
6. Monero (XMR): up to 1,000 TPS
Monero is a privacy-focused blockchain and payment system. It prioritizes anonymity by hiding wallet addresses from network users.
7. Ripple (XRP): 1,500 TPS
Ripple is an international payment system that ranks in the top 10 crypto. However, he was hampered by an ongoing lawsuit with the SEC over whether his cryptocurrency should have been sold as security.
8. Solana (SOL) 50,000 TPS
Solana is built for speed. It’s more than a digital payment crypto, because it’s also a platform where developers can build apps. He has been criticized for sacrificing safety for speed.
The future of digital payment cryptocurrencies
The scope of what cryptocurrencies can do has gone beyond just a form of digital payment. For example, Ethereum and Solana are programmable blockchains that can also be used to build applications. It manufactures cryptocurrencies that alone operate in the payment space somewhat two-dimensional feel.
The popularity of stablecoins and the possible introduction of govcoins could also be significant competition for pure payment cryptos.
Stablecoins are cryptocurrencies that avoid volatility by attaching their value to a commodity like gold or the US dollar. They offer the speed and cheap transactions of digital currencies, but without the crazy price fluctuations. The problem is, it’s not always clear whether stablecoins are backed by adequate cash reserves.
Govcoins, or central bank digital currencies (CBDCs), are starting to appear. The Fed is considering a digital dollar and China is already piloting its digital yuan. These coins use blockchain technology, so transactions can be fast and cheap. But they would be backed by the government, just like the dollars in your bank account.
Speed won’t be enough
There is a lot of debate about the pros and cons of CBDCs. But if more governments decide to launch their own coins, it’s hard to see how Bitcoin Cash and Litecoin could compete.
Bitcoin is different because not many people see it primarily as a form of payment. And some of these digital payment coins also offer increased privacy or have adopted more environmentally friendly mining methods, which can set them apart. But fundamentally, being faster than Bitcoin alone probably won’t be enough to help some of these coins survive in the long run.