The word Altcoin comes from two words, “alt” for alternative and “coin” which signifies all cryptocurrencies that are not bitcoin. Therefore, altcoins are the alternative cryptocurrencies launched after the success of Bitcoin. Generally, they project themselves as better substitutes to Bitcoin. Here, we will guide you on the complete information of Altcoin.
The success of Bitcoin as the first peer-to-peer digital currency paved the way for many to follow. Many altcoins are trying to target any perceived limitations that Bitcoin has and come up with newer versions with competitive advantages. Since Bitcoin’s inception, there have been upwards of 500 altcoins created. Litecoin, Dogecoin, Blackcoin, Freicoin, Peercoin, Vericoin, Myriad, NXT are just a few examples of altcoins.
What led to the emergency of Altcoins?
Most altcoins were created to eliminate the perceived limitations of Bitcoin and by so doing, achieve the competitive advantage. Some of the limitations that made the altcoins a necessary move include:
- To increase the acceptability of cryptocurrencies and Bitcoin at large, upon the launch of Bitcoin, resistance on its market acceptability as legit electronic cash increased. On the other hand, some government refused to open up the economy for the currency. Thus, alternative cryptocurrencies were necessary to make people familiarize with this new form of this cash.
- Bitcoin wallets have been lost before. Malware and viruses have been linked to the loss of Bitcoin wallets before. Therefore, altcoins with retrievable wallets had to be created.
- Fluctuating value. The price of Bitcoin has ever been unsteady since it was created, sometimes it is high, and the investors make huge profits while other times the value lowers leading to huge losses. People prefer a coin that they can predict and count on. It then became necessary to create a coin that would at least have a steady price.
- The buyers are not protected. Several factors contribute to this; first, it is the lack of identification and then the absence of a body to oversee these transactions. Let’s say you are an online entrepreneur, and you hold your end of the agreement and deliver your service to a buyer who then refuses to pay. Do you want to know what happens? Nothing. Nothing happens because no one cares.
Therefore, it became necessary to create other coins which have a bit of structure and thus assure the traders of protection.
What are altcoins currently available in the market?
There are hundreds of altcoins in the market currently. They are very similar to the Bitcoin in terms of how they are built and how they operate. Some of the popular altcoins include:
1. Litecoin (LTC)
Was invented in 2011 by Charlie Lee to cater for insufficiencies’ of Bitcoin. It was named as the silver to bitcoin. It operates on an open source of global payment network that is decentralized to work on a peer-to-peer decoded by the help of CPUs of the consumer.
Litecoin is faster in transaction hence preferred by many.
2. Ripple (XRP)
Ripple is a real-time global payment system launched in 2012 and operated on a blockchain network. It is used by banks to settle transparent end-to-end payments across borders in real-time cheaply. The most impressing quality that the coin holds is its swift transaction speed.
3. Zcash (ZEC)
Zcash is a decentralized, open sources crypto launched in 2016 that operates a private and a selectively transparent transaction. Its transaction is recorded on a blockchain ledger but the details on the sender, amount sent and the recipient is concealed in a private crypto technique called Zero-knowledge proof
4. Ethereum (ETH)
Was launched in 2015 as decentralized software ground that supports smart contracts and distributed Applications which can operate in a decentralized manner and fraud.
Its application is based on its cryptocurrency called Ether.
5. Dash (DASH)
Also known as dark coin, Dash coin is a more concealed version of Bitcoin invented by Evan Duffield in January 2014. Dash coin is inspired by Bitcoin but has features that speed up payment processing. This is one of those coins that were created just for the sake of increasing the transaction speed. Its anonymity is based on a decentralized master code network that gives transactions untraceable.
6. Cardano (ADA)
This is one of the new coins that are playing it safe with rules and authorities. It was launched in 2017, and it emphasizes privacy and regulatory compliance. Its creators hope that it will eventually hoist smart contracts just like Ethereum. Like most other coins that were built to save up the energy consumed by cryptocurrencies, it uses a proof-of-stake consensus protocol.
7. Neo coin (NEO)
Neo coin is fascinating because it is thriving in an economy that has generally not been very receptive to the cryptocurrency movement. It was launched in 2014; it is China’s largest cryptocurrency. Despite the Chinese government being protective of its citizen when it comes to internet and technology, Neo has successfully been adopted bitcoin yet, and many other Altcoins were rejected. Neo is fast in terms of its transaction because it uses a fault tolerance that allows for 10,000 transactions per seconds, compared with Ethereum.
8. Name-coin
Name-coin was the very first Altcoin, and its creators wanted to improve decentralization, security, privacy, and also increase the speed of transactions. Of Course, it is heavily based upon the bitcoin protocol both in its architecture and in the way it operates. Unfortunately, the coin has not been competitive enough, and people rarely hear about it.
9. Dogecoin
It is decentralized just like the other cryptocurrencies, and it uses peer-to-peer technology to carry out its operations. This coin is script-based, and it enables faster transactions from anywhere in the world.
10. Peer-coin
Peer-coin is another alternative cryptocurrency; it was launched in 2012. Just like all other altcoins, it is based on the cryptocurrency framework. Since most altcoins were created to counter certain shortcomings in Bitcoin, this one was created to counter the problem of high energy consumption and speed. The coin conserves energy and enhances faster transactions.
Advantages of altcoins
Around 2010, anyone interested in cryptocurrencies had limited options, but Bitcoin was the most dominant in the market. However, that is not the case currently as the crytosphere has evolved and given a number of alternatives to choose from.
The following list is for anyone contemplating between investing in Bitcoin or the other altcoins available. It is inarguable that Bitcoin offers several advantages to its users, but so do altcoins. Below are some of those advantages.
- The main advantage is that they are an alternative to Bitcoins. In case, Bitcoin crumbles they will be a soft landing for many people
- Another advantage is that they have unique functions. Some enable publishers, content creators and other online entrepreneurs to manage their licensing
- Most are faster than Bitcoin
- Most are more structured, and they offer protection to their users
- Most are global as they have been widely accepted all over the world.
Disadvantages of altcoins
It varies from one altcoin to the other; the main disadvantage, however, is the general lack of acceptance by users globally. There are hundreds of cryptocurrencies available, yet most people only know just a few.
Also, the altcoins have a limited number of ways in which they can be used
Conclusion
Bitcoin is the largest cryptocurrency and the most supported electronic cash. On the other hand, Altcoin are equally significant because they complement limitations of Bitcoin and reinforce the advantages of cryptocurrencies by availing a number of options to choose from. As a precaution, an investor should diversify their investments to different altcoin available and besides opting for a more stable coin in the market.
