Posted by & filed under Media Hub.

The technologies, ideas, companies, and products operating in the so-called “Bitcoin 2.0” space change constantly, and even the term “Bitcoin 2.0” isn’t well-defined. This leads to a lot of confusion. Here we break down some of the different types of technologies into four categories to better understand what they are and aren’t.

 

1) Traditional Alt-coins

What are they?

Traditional alt-coins use very similar code to Bitcoin, but run completely separate from it. Since Bitcoin is open-source technology, anyone can take the code, change a few parameters, and launch it with a different name. This began happening in 2011 with the launch of Namecoin and Litecoin, and it’s now estimated that over 1000 alt-coins have been released. Most are no longer in operation.

Examples:

Some currently operating alt-coins include: Namecoin, Litecoin, Dogecoin, Darkcoin, NXT

More:

Some alt-coins are almost exact clones of Bitcoin with very little changed, and others try to achieve new or different functionality vs Bitcoin (such as better privacy, or a different monetary model). While no alt-coin has achieved anywhere near the market and adoption success that Bitcoin has, they have nevertheless served as valuable experimental ground.

 

2) “Layered” Coins

What are they?

As with Traditional Alt-coins, layered coins run their own blockchains and have their own “coin” unit. But unlike Traditional Alt-coins, layered coins do interact with Bitcoin. Specifically, they typically use the Bitcoin blockchain in order to leverage Bitcoin’s unparalleled security and permanence, but employ their own coin in order to offer more native features than Bitcoin offers at the protocol level.

Examples:

Colored Coins, Omni (formerly Mastercoin), Counterparty

More:

Some of the enhanced services offered by layered coins are decentralized exchange and asset-backed securities. Many of these layered coins offer ways to mark a coin (or fraction thereof) as representing some real-world asset like a stock, bond, ounce of gold, or even title to physical property. Once properly marked, these assets can then be traded and transferred in a much more liquid and flexible fashion than otherwise possible.

 

3) App coins

What are they?

“App coins” generally refers to a coin with a narrow purpose, and are typically employed by projects/companies that raise funds through a crowdsale of the new coin. For example, App Coin projects and sales have occurred for a distributed data-storage coin, “proof of publication” coin, and a general “smart-contract” engine.

Examples:

Storj, Factom, Ethereum

More:

App Coins can blur the line between the above two categories and may not fit neatly into any. For example, Ethereum crowd-sold its native unit, “ether”, in one of the first such sales, and considers ether to be “fuel” for complex transactions on the forthcoming Ethereum network. But once released, it’ll function more like a Traditional Alt-coin. By contrast, Factom uses a layered approach and relies on Bitcoin transactions for its data-integrity and authority.

 

4) Other Consensus Systems

What are they?

Finally, there are projects which bear less technical or use-case resemblance to Bitcoin than most of the projects that would fall into the above categories, but which nevertheless are sometimes termed “Bitcoin 2.0″. These projects typically take different approaches to solving the global consensus problem that Bitcoin solves, but usually in a way that requires pre-authorized, “permissioned”, or trusted, access to the network in some way.

Examples:

HyperLedger, Ripple, Eris.

More:

These other systems may not even employ the concept of “coins” or “tokens”. Interpretations vary, but these technologies are considered by many to be advances in distributed database technology, and it may be inaccurate to consider them Digital Currency, as they solve fundamentally different problems than Bitcoin and many of the above systems attempt to solve.