By Anastasia Chernikova
In 2013, software engineer Vitalik Buterin proposed that blockchain, the technology that underlies cryptocurrencies, can be used to support not only finance but all sorts of decentralized applications. Buterin’s idea became the basis of Ethereum, the second-largest cryptocurrency and the “world computer,” a platform for running applications without the need for centralized servers.
From social networking to collectible cards, news publishing, and virtual reality games, the Ethereum blockchain powers all sorts of decentralized apps (dapps) today. But as the first blockchain of its kind, Ethereum is not a perfect platform. It suffers from high energy consumption, slow transaction speeds, and high transaction costs. It also suffered from scalability issues, which means transactions and applications become slower as more and more users are added to Ethereum.
In recent years, several other blockchains have emerged that provide platforms for exchanging monetary value and running applications while addressing the shortcomings of Ethereum. Here are five Ethereum alternatives that have great potential and are worth watching in the next few years.
Free TON is a high-performance, scalable, and secure blockchain platform with a throughput of millions of transactions per second. It is a spin-off from the Telegram Open Network (TON) project, the original plan of messaging platform Telegram to move its application to its own blockchain.
Free TON runs on multiple blockchains, which gives it the power to speed millions of transactions. The platform supports the development of services and applications for a wide range of sectors, from government bodies to private companies and individual users.
Unlike Ethereum, Free TON is not run and maintained by a centralized organization. It is supported by a decentralized autonomous organization (DAO), a community of diverse parties that use smart contracts to vote and approve changes and directions of the project.
Free TON’s currency is the TON Crystal. Among the key features of the TON Crystal are its fast speed and very small transaction fees. TON users will be able to make transactions for less than $0.01 in fees and pay less than $0.05 per coin exchange transaction (swaps). Free TON also uses the proof-of-stake consensus mechanism to approve and register new transactions on its blockchain, which is much more energy-efficient and environment-friendly than the compute-heavy proof-of-work consensus used in Ethereum and Bitcoin.
Polkadot is a multi-chain network that joins various blockchains together, which is why it is known as the “blockchain of blockchains.” It acts as a framework that makes it easy for developers to create dapps and smart contracts for various blockchains and cryptocurrencies without worrying about the underlying mechanisms that connect them together.
DOT is Polkadot’s cryptocurrency. Aside from its monetary value, DOT allows holders to vote on potential code changes, which then automatically upgrade across the network if a consensus is reached. Like Free TON, DOT uses the proof-of-stake consensus mechanism to verify and approve new transactions.
Since its launch in 2020, Polkadot has climbed to become among the top-ten cryptocurrencies with over $40 billion in market cap and $14 million in 24-hour trading volume. The Polkadot multi-chain already hosts more than 430 projects with more being added every day. And despite being young, it has already been endorsed and listed on several top exchanges. Polkadot also hosts its own decentralized exchange (DEX) platform, Polkastarter.
Cosmos aims to be an “internet of blockchains.” Like Polkadot, Cosmos’s vision is not to have a “blockchain to rule them all” but to have a constellation of blockchains that can coexist and interoperate (hence the name Cosmos). Cosmos has a streamlined model that allows developers to create their own blockchains in a short time. To show the power of the system, the creators of Cosmos used the platform to create an Ethereum clone called Ethermint, which not only supports smart contracts and dapps, but is also compatible with the original Ethereum.
Cosmos is composed of three components. Tendermint is a consensus mechanism that allows developers to create proof-of-stake protocols that are scalable, fast, and secure. The Cosmos SDK is the programming platform that allows developers to build their own blockchains on Tendermint. And the Inter-Blockchain Communication protocol (IBC) is the system that enables different blockchains to communicate with each other.
The native cryptocurrency of the Cosmos network is ATOM. ATOMs give their holder the ability to stake and validate blocks, vote on governance issues, and pay for transaction fees.
EOS launched in 2019 as a direct competitor to Ethereum. The developers and supporters of EOS market it as “Ethereum for big business” and say it is meant to solve the problems of scale and usability that developers face when building applications on top of the Ethereum blockchain.
Like Ethereum, EOS supports dapps and smart contracts. However, the blockchain outperforms Ethereum in terms of execution and transaction speed.
EOS is owned by the company block.one. Among its developers is Daniel Larimer, who is a veteran of other blockchain projects (BitShares and Steemit) and has allegedly been in touch with Nakamoto in the early days of bitcoin.
EOS’s cryptocurrency is the EOS Token, which is used to exchange value on the EOS blockchain. It is currently among the top-20 most valuable cryptocurrencies. EOS also has an operating system, EOS.IO, which manages and controls dapps and smart contracts on the EOS blockchain. Developers must hold EOS Tokens to be eligible to use network resources and run apps on the blockchain. EOS supports between 10,000 and 100,000 transactions per second, which is why it presents itself as a suitable platform for large-scale businesses.
EOS uses the “delegated proof-of-stake” consensus mechanism, in which token holders elect a limited number of voters to maintain transactions and updates to the EOS blockchain.
Cardano is another blockchain that, like Ethereum, is meant to run decentralized applications. Among the key features of Cardano are speed and scalability.
Cardano is developed by three organizations: IOHK, Cardano Foundation, and EMURGO. IOHK is doing the bulk of the engineering effort, and one of the key characteristics that set it apart from other blockchain development teams is its devotion to scientific methods. IOHK works with academic researchers across the globe to peer-review and vet updates before deploying them on the platform. Among Cardano’s founders is Charles Hoskinson, one of the co-founders of Ethereum.
Cardano has already established several robust applications on its blockchain in the banking, identity management, retail, supply chain, and education sectors.
Cardano’s cryptocurrency is ADA, which is supported by the environment-friendly proof-of-stake consensus algorithm and is currently among the top-20 most valuable cryptocurrencies.
Some closing thoughts
While cryptocurrencies and blockchains are still in their infancy in comparison to fiat currencies and centralized banks, they hold a lot of promise and can be the future of money and computing. The landscape is still diverse and fragmented, and not all existing solutions will make it to the finish line. Utility, scale, speed, and community adoption are four key traits to look out for when examining blockchains and cryptocurrencies.
About the author
Anastasia (Nastya) Chernikova is a tech journalist whose articles have been featured in Forbes and Esquire in Russia, Business Insider, Inc.com, and other publications. She has interviewed prominent tech founders, such as WhatsApp founder Jan Koum right after Facebook bought his app for $19 billion, and Vitalik Buterin, Ethereum founder, when his cryptocurrency ether was just in the beginning of its triumph. She is keen on the idea of the decentralized world and what the blockchain brings to the financial system.