What Is An Altcoin And Why Do They Exist?

What Is An Altcoin And Why Do They Exist?

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Blockchain

Bitcoin the most popular cryptocurrency is no longer the only one making news. There are other cryptocurrencies too. These currencies are often referred to as Altcoin short for “alternative coin.”

An Altcoin is a cryptocurrency that depends on set of rules, protocol different from Bitcoin. Some of the most popular Altcoins include Either, Ripple and Litecoin.

Altcoins Differ From Bitcoin in Following Ways:

  • Distinct economic model.
  • Different coin distribution method.
  • Uses different proof-of-work mining algorithm or none.
  • Offers more adaptable programming language.
  • Offers more security and privacy compared to Bitcoin.
  • Created through a mining procedure.
  • Depends on shared system meaning they are decentralized.
  • Offer less expensive and effective method of exchange and trade.

Besides, Altcoin are riskier than Bitcoin, their exchange rate is often more volatile, they are tokens on an open blockchain for a specific purpose, have properties that are supposed to meet particular needs and can be layered on a blockchain like Bitcoin or Ether.

This explains about Altcoins but there is more to it. To know more about let’s read further.

Important facts about Altcoins

  • Altcoins are not as popular, expensive, and competitive as Bitcoin.
  • Altcoins can be mined using CPU power.
  • They are technically different.
  • Many altcoins use SHA-256 hashing algorithm same as Bitcoin.
  • Most popular Altcoin of 2017 was Litecoin.

Benefits of Altcoins

As opposed to Bitcoin, Altcoins can be used for many different purposes. Bitcoin the first cryptocurrency has scalability issues while Altcoins offer more scalability.

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Besides, this Altcoins offer many other benefits like:

  • Altcoins offer greater privacy, common example of which is Monero, zcash Altcoin. These Altcoins guarantees users anonymity by using ring signature and uses stealth addresses.
  • Faster and greater transaction ability.
  • Bitcoin the traditional cryptocurrency is limited to a block size of 1 Mb, while Bitcoin cash an alternative to Bitcoin offers 8 MB blocks. Because of which Bitcoin Cash is able to handle more transactions than Bitcoin. Apart from it Ripple, Ether and Litecoin too can handle more transactions.
  • Bitcoin uses SHA-256 hashing algorithm while some Altcoins use different algorithm named Scrypt.
  • Convincing returns is another major perk of Altcoins.
  • Then comes diversification.

Why Altcoins are created?

Bitcoin the widespread cryptocurrency has its own issues like Bitcoins exchanges have high fees, they can take time to process on exchanges and to improve upon them Altcoins were created.

They are designed to reduce expenditures and increase processing speed.

Apart from this, as we all know Bitcoins have shown great price rise that made people see dollar sign when anyone use to talk about Bitcoin. This forced people to create alternate coins and earn great profits.

Popular Altcoins

Out of the all the Altcoins released so far here we list down the most popular amongst them:

Ethereum: the most interesting altcoin with its own currency Ether uses blockchain technology to record and verify transactions. It is digital money created by Ethereum platform known as Ethereum.

Ripple: Owned by a private company, Ripple has recently gained popularity for its price rise, settling for traditional money and digital IOUs.

Litecoin: Fork of Bitcoin uses an alternate calculation that is dependent on memory as opposed to Bitcoin which relies on processing power. Litecoin system can complete a block 4x faster than Bitcoin. This means it is designed to speed up transaction speed.

Monero: the altcoin designed to be untraceable, private and secure does not let anyone trace the exchanges. Any transaction made using Monero the Altcoin cannot be tracked back to its client.

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Undeniably, Altcoins are a great alternative for Bitcoin as they overcome almost of all its weakness. They can be beneficial and valuable for short term trading investors as an asset but without knowledge and patience you can lose as Altcoins can be risky. Therefore, as an advice if you wish to invest into Altcoins make sure you have done enough research and you are sure that the coin you are investing in not a scam.

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