A Chance for Altcoins: Atomic Swaps
Bitcoin mining is already a professional game. But currently less visible coins may give access to the Bitcoin network via atomic swaps. With the rise of Vertcoin, atomic swaps are in the spotlight once again.
According to Bloomberg, Bitcoin is now "legit, for better or worse". The CME Group is preparing to launch Bitcoin futures, akin to gold and oil futures, thus making Bitcoin a mainstream asset class. On the cryptocurrency markets, in the past two months, Bitcoin has reasserted its dominance, and altcoins have lost appeal. It seems Bitcoin would try to establish itself as both an asset and the best-known cryptocurrency payment method.
Everything is Bitcoin
In addition, Bitcoin has enjoyed much more publicity, and is sometimes the only thing newcomers know about cryptocurrencies. Sometimes, other coins are even conflated with Bitcoin and called "bitcoins", as was the case of hidden mining. What the hidden browsers did was mine Monero, but the wide public believed it mined Bitcoin.
Taking a Ride on Bitcoin
But some coins are not giving up. The up and coming technology of atomic swaps may mean that owners of altcoins can make a friction-free exchange with Bitcoin. Granted, atomic swaps are still in a test stage- but things are moving quickly in the world of cryptocurrencies.
Atomic swaps depend on the ability of two different networks to achieve compatibility and communicate with each other in a trustless sense- using a form of "smart contract".
Coins that manage to apply this technology would probably become more valuable- creating a two-tier system where smaller, easier to mine coins use Bitcoin as well. The advantage of those coins is that a community may decide to build a digital asset with certain features, while also being able to keep in touch with Bitcoin.
Currently, Vertcoin and Litecoin are the two assets eyeing such opportunities, but Decred is also on board, having achieved an atomic swap with Litecoin in a test environment this September.
Up to now, the only coins tested are Bitcoin, Litecoin, Decred, Viacoin and Vertcoin.
Ease of Exchange
With the expansion of coins, exchanging has become a hassle. A lot of new coins and tokens cannot be traded in. But the presence of atomic swaps would be one more mechanism of exchange.
"On-chain atomic swaps are not useful in all cases where users want to perform an exchange. This process is well-suited to larger trades that do not require a particularly low latency or high frequency," explained the Decred development team in previous interviews.
Atomic swaps are not a panacea- they still face scaling problems and time lags, and the transactions still need to be mined. However, with exchanges disappearing, the world of cryptocurrencies needs more decentralized options.
Bitcoin: Royalty, Courtiers and Peasants
Recently, Reddit came with a biting joke for investors holding altcoins- calling them peasants. Bitcoin seemingly holds the position of royalty, backed by the most hashing power, a shining public image and broadening adoption. But coins with atomic swaps, especially those close to Bitcoin, may create another class- the role of courtiers, ministers, advisors and all the side roles in the Bitcoin kingdom.
Altcoins that are close to Bitcoin may be one solution for scaling. At this point, the approach starts to look much like Ethereum and the plan to deploy side chains, to lower the strain on the main network. Other projects also propose a two-tier approach with easy interaction between two digital assets.
Vertcoin: The People's Coin
While Decred and Litecoin are mined with specialized machines, ASICs, Vertcoin has promised it would change its algorithm as soon as an ASIC was built. Creating a specialized chip for a mining algorithm is an expert job, design-intensive. And while no algorithm is truly "ASIC-resistant", Vertcoin has promised it would actively retaliate against anyone building a specialized chip. So Vertcoin can safely remain a GPU-mined coin.
That is why some of the supporting members of the community would consider it "the people's coin", having a truly decentralized means of mining.
Vertcoin peaked from $0.40 to nearly $5.50, but sank back to current levels of $3.21, down 20% in the past day.