Altcoins and Bitcoin are often used interchangeably but there is a difference between the two. Altcoin stands for alternate coins, meaning that they are just like bitcoin but have some differences. For example, Litecoin has higher transaction speeds than Bitcoin or Monero has more privacy features than Bitcoin.
Bitcoin and altcoin are both cryptocurrencies. While Bitcoin is the first cryptocurrency, it has faced significant competition from other currencies such as Ethereum and Litecoin. In this blog post we’ll walk through at the difference between an altcoin and how they differ from bitcoin so you can decide which currency fits your needs best.
What is Bitcoin?
Bitcoin is the first decentralized digital currency, a payment system invented by Satoshi Nakamoto, who published the invention in 2008 and released it as open-source software in 2009. The system is peer-to-peer, users can transact directly without needing an intermediary.
Bitcoin was created by Satoshi Nakamoto and has been around since 2008. Its purpose is to allow transactions between two people without going through a bank or any other third party. Bitcoin can be used as an exchange of goods, services, funds, e.t.c
Satoshi envisioned this system as one where all online payments could be made directly from party to another rather than through financial institutions, making it more secure and cost.
What Are Altcoins?
Altcoins are alternatives to Bitcoin. Most famously, it’s referred to other cryptocurrencies like Litecoin, Dogecoin, and Bitcoin Cash.
Altcoins are digital currencies that do not rely on banks, financial institutions or any other middleman in order to be transferred from person-to-person.
Unlike fiat, Altcoins transactions must first be verified by blockchain technology which is a digital ledger of cryptocurrency transactions, details about all transactions are stored in “blocks” that must be verified to ensure that the transactions are legitimate.
Once the blocks have been accepted by consensus algorithms and become permanent parts of the distributed ledger it would be impossible to hack into an entire network because because the blockchain is stored in computers and servers around the world, and that’s why blockchain technology is considered secure.
Facts About Altcoins
Meaning: “alternative” cryptocurrency coin to Bitcoin
Number of Altcoins: over 11,245+
First Altcoin: Namecoin
Examples of Altcoins: Ethereum, Dogecoin, Tron, Ripple ZCash, Cardano, Binance Coin, USDT, Dash, etc.
4 Main Types of Altcoins
A stablecoin is a cryptocurrency that has low volatility against major currencies, such as USD or EUR. Stablecoins are ideal for currency exchanges and financial applications where stability and transparency are what users want to see from their altcoin.
2. Mining-based altcoins
Mining-based altcoins have the same process as mining for Bitcoins. That involves solving problems to unlock blocks. Currently, Ethereum is at the top with most miners around it and includes a platform of smart contracts which allows developers to build whatever they can think up on its blockchain technology.
3. Security Tokens
A security token is a type of cryptocurrency that can be used in place of stock shares. A company issues these tokens to make their stocks available for purchase by the general public, with an ICO being one way they are introduced into the market. The most successful security token there has been so far would have to be NEO
This Chinese open-source blockchain project calls itself “China’s Ethereum,” and it stands out among other cryptocurrencies because its focus on smart contracts which allow users to create agreements without interference or third-party intervention from intermediaries.
4. Utility Tokens
Like security tokens, utility tokens are also offered through ICOs for altcoins tied to specific services. Utility tokens have the ability to support a cryptocurrency that can be exchanged with their issuers of these coins for goods or services.
Before investing in any altcoin, ask yourself these questions:
- If it’s a token, does the coin have real-world application?
- Is this an improvement upon bitcoin?
- What are you trying to achieve with your investment and is that goal achievable through this particular Altcoin?
- Finally, if it’s a fork – why was it created and do you agree with that decision?
So, as an investor, if you like the ideas and rules found in a new Altcoin of an existing blockchain, then you can buy their coin. If it’s successful enough to rise in value over time – which is not guaranteed for any new cryptocurrency – just keep holding onto that investment or sell off some of your holdings if you wish it won’t increase in value over time.