Bitcoin's Best Competitors: The Top Altcoins of 2013

Bitcoin has dominated the headlines this year, with massive price fluctuations, regulatory developments, and even Senate hearings by the US government. All these factors indicate that people are beginning to take the young currency seriously.

But let's not forget about the alternative coins out there. 2013 has been a busy year for them, too. How have they fared? Though CoinDesk has covered some of these alternative coins in depth already, it is interesting to note which currencies have stood out from a market capitalization perspective this year.

Here are the six top altcoins of 2013, based on market capitalization figures from Dustcoin.

Much like bitcoin, litecoin's value has fluctuated wildly over the last few months. The altcoin spike in March and April, during the bitcoin bubble, demonstrated how closely linked litecoin is to the price of the incumbent top virtual currency. At the time, its value rocketed from approximately $0.05 to $5.00.

In November, prices spiked again – but far higher this time, reaching around $48 for a brief period, before slowly falling once more. Now, following bitcoin’s fall in value after China’s policy shifts on virtual currency, litecoin is hovering around the $22 mark.

All this interest in the currency has caused its difficulty to increase, tripling in the last two months. Litecoin's market capitalization has also skyrocketed. On 16th November, its market cap stood at around $95m. It may be on the same roller coaster ride as bitcoin, but as of now, it still stands at a very respectable $573.9m or so.

Peercoin, the currency launched by the mysterious 'Sunny King', currently rests at just under one sixth the market cap of litecoin, making it the third-largest coin in existence.

Peercoin uses proof-of-stake, an alternative to the conventional proof-of-work mechanism used by bitcoin. It is designed to produce more coins automatically, based on the number of coins that a person already has in their possession.

John Manglaviti, previously the community relations leader for feathercoin, came on board earlier this year to try and breathe life into peercoin's community. Working with King (who focuses on technology development), he has recruited 120 volunteers for the currency. Most recently, Canadian exchange Vault of Satoshi announced that it would support peercoin, lending more credibility to the currency.

Namecoin is bouncing back from a nasty technical flaw it suffered late in 2013, which allowed anyone to take advantage of its domain naming system. The coin was designed to enable people to cryptographically store and transmit pairs of keys and values, in a system that enabled it to create a domain name system that was entirely decentralized. Its top-level domain is ‘.bit’, and it is effectively a form of dark web.

The currency operates on a merged mining basis with bitcoin, meaning that clients can be configured to check both the bitcoin and the namecoin block chains when solving proof-of-work problems.

Namecoin’s market capitalization stands at a little under half that of peercoin.

Worldcoin's biggest claim to fame this year may have been its involvement with phenixcoin and feathercoin in UNOCS, the abortive attempt to create a bridge between these altcoins. While phenixcoin subsequently imploded after a prominent developer absconded with many peoples' coins, worldcoin continues to forge ahead.

Its goals are also very clear, with a stated claim to become the “cryptocurrency of choice for merchants and consumers”, with a 60-second confirmation time.

Feathercoin, itself a relative newcomer to the market, was founded in April, and gained heavy traction as many people began mining and trading the currency.

With a market cap of just over 13,000 BTC, feathercoin is still a relative featherweight compared to bitcoin, but there's no denying that founder Peter Bushnell has done a good job of developing the coin. In turn, the community has gone from strength to strength.

Actually, that's not quite true. It went from strength to relative weakness after UNOCS collapsed, but has since gone back to strength again, regaining some of its former enthusiasm under the new community leadership of Chris Ellis.

In addition to a weekly newsletter to keep everyone abreast of events, there was also an Amsterdam conference. That itself was an interesting story, because the Amsterdam bitcoin-based event conference that feathercoin members were supposed to attend was reportedly canceled. So they just organized another one, with both physical and virtual attendees. And it did so in just a couple of days.

This seems to be the story of feathercoin. It is a plucky little currency, with a very dedicated following, and able to weather apparently any storm, including the 51% attack that someone threw at it earlier in the year (Bushnell simply bought peercoin’s Sunny King on board and had him help secure the block chain with a feature called advanced checkpointing, which was built into the client’s code).

Since it was launched, feathercoin has also established its own nascent eBay-style marketplace, and there is now a Local Feathercoins website, enabling people to trade coins directly with each other. Someone is developing a physical version of feathercoin, potentially with an NFC reader embedded in it, and another enthusiastic developer is working on a proposal to put metadata in the block chain, to assist with the transmission of files. There's lots going on here.

Market capitalization figures at Dustcoin show dogecoin in seventh place overall, just behind feathercoin. It's a currency based around a meme, it's been around for about five minutes, and has already been accepted by Cryptsy, which is now trading it. The price spiked at least 400% in mid-late December, and what's interesting is how this bizarre phenomenon bucked the trend and continued to rise even after bitcoin’s value fell in the wake of the China fiasco. There are few other altcoins that can make that claim. Dogecoin's value and place in this list did, however, slip after a Christmas holiday "hacking incident" that saw a total of 21m dogecoins disappear from users' wallets.

Dogecoins are being traded for bitcoins, which means they have a market cap which currently stands at 10,421 BTC, or a little over $7.8m at the time of writing. That’s partly because, while the value of the coins is still relatively low, there are a lot of them. At least an eighth of the coins (which a total limit of 100 billion), have already been mined. Not bad, for a currency based on a dog joke.

Bitcoin may be the incumbent top virtual currency, but there is no doubt that there are many alternative coins with a lot to offer, if nothing other than inspiring communities dedicated to their survival. It's been a busy 2013. What will the next year bring?

*All market capitalization figures accurate as of time of writing

Coin grab image via Shutterstock