Altcoins: What Are They?
In actuality, Altcoins stands for “alternative cryptocurrency (coin).” All cryptocurrencies are included, except Bitcoin. The majority of them are designed to function as alternatives to Bitcoin or to deliver features that the main cryptocurrency is unable to. The fact is that they all share at least one aspect of Bitcoin’s technology, although in somewhat different ways. While some approaches require consensus, others try to introduce new techniques through token distribution.
Tens of thousands of altcoins have already been created, even though the cryptocurrency space is relatively new. As of the time of writing, 10027 cryptocurrencies are listed, according to the well-known data aggregator CoinMarketCap.
A Synopsis of Altcoin History: Its Origins and Development
The first cryptocurrency, Namecoin (NMC), debuted in 2011 while the Bitcoin network came up in 2009. The main goal of Namecoin was to promote the decentralization of online identities, which would make censorship more challenging to impose and enforce.
I’m sure you’re wondering where Namecoin is at the moment. NMC is being traded on a few relatively unpopular exchanges as of this writing. It has little value, and there is little trading volume.
However, during the past ten years, there have been significant changes to the altcoin scene. The top cryptocurrency rankings for the years 2014, 2017, and 2021 will be looked at.
Ethereum as Altcoin
Approximately no coin that was in circulation in 2014 was able to hold onto its value for the three years leading up to 2017, a year that proved to be highly important in cryptocurrency history due to the December peak of Bitcoin, which reached approximately $20,000.
Rather, there were new currencies that significantly surpassed them in the market. By then, Ethereum had become popular, a split in the original Bitcoin network had produced Bitcoin Cash (BCH), and cryptocurrencies focused on privacy, like DASH and Monero, were also gaining traction.
The Most Well-Known Altcoins and Their Functions
We’ve selected a few of the most well-liked cryptocurrencies. These are cryptocurrency projects with large communities that have withstood the test of time.
Although theoretically technically possible, we won’t use either because it’s not USD. It is a cryptocurrency, nevertheless, and unlike other altcoins, it is 1:1 tied to the US dollar.
Ethereum (ETH)
Ethereum, in contrast to Bitcoin, is a platform intended to let programmers create decentralized programs (apps) by utilizing smart contracts.
A smart contract is a set of predetermined conditions between two or more parties that, when satisfied, trigger an automated execution of the contract. The contract won’t take effect if the conditions aren’t fulfilled.
This makes decentralized systems run by a protocol rather than a central authority possible, eliminating the failure risk inherent in traditional contracts and perhaps improving their security and transparency.
The native token of the Ethereum network is called ETH.
It’s important to remember that Ethereum and Bitcoin both employ the Proof-of-Work consensus mechanism. However the team is preparing to make the switch to Proof of Stake with Ethereum 2.0, and we’ve already witnessed the debut of ETH 2.0’s Phase 0 (Beacon Chain).
Ripple (XRP) as Altcoin
The business that created the XRP cryptocurrency is called Ripple Labs. Based on market capitalization, it is among the most established and steady cryptocurrencies in the past.
The purpose of XRP is to enable faster and more secure transaction settlement for banks and other financial organizations. Sending XRP takes place in seconds, in contrast to conventional transactions.
However, the United States Securities and Exchange Commission (SEC) hit the business with a lawsuit in 2020. The watchdog claims that Ripple Labs executed an unauthorized securities offering valued at $1.3 billion and that XRP is a security. The cryptocurrency’s market value crashed by 70% shortly after, and its future is still unknown.
Litecoin (LTC)
LTC and BTC appear to have a lot in common. Charlie Lee launched Litecoin in 2011 and referred to it as the “lite version of Bitcoin.”
A consensus technique called Proof of Work is used by both cryptocurrencies. Nonetheless, the design of Bitcoin ensures that there can never be more than 21 million coins in circulation. In contrast, Litecoin has raised this ceiling to 84 million.
It’s also important to note that Litecoin employs the somewhat more recent Scrypt hashing method, whereas Bitcoin employs the more established SHA-256 hashing algorithm.
TRX (TRON)
Justin Sun, a Chinese businessman, formed the TRON Foundation, which introduced TRON. With the use of distributed storage technology and simple, affordable digital content sharing, the project seeks to create a global, free, digital entertainment system. It does this by delivering a decentralized platform built on blockchain.
TRX is its native cryptocurrency. With TRON’s superior transaction processing speed and other characteristics, Justin Sun has made every effort to position it as an Ethereum rival. But before the network ever approaches Ethereum’s scale in any way, it still has a ways to go in terms of development and usage.
Purchasing Altcoins: Potential Hazards and Benefits
A lot of novices are hesitant about investing in cryptocurrencies. The primary explanation for this is that they are often far less expensive than Bitcoin and may seem more appealing since they “have more room to grow.”
But, there is a reason why they are far less expensive than Bitcoin—or, maybe more accurately, why their market capitalization is lower—and Bitcoin is leading in this regard. The network with the most traction is Bitcoin. It is therefore the most secure as well. Everyone, including the biggest institutional investors, is focusing on it. You’re not going to hear of a big hedge fund investing in a cryptocurrency other than Bitcoin very often.
