What is an altcoin?
The word Altcoin is an abbreviation of the words "alternative" and "coin." This term is used to refer to digital currencies — cryptocurrencies that are not bitcoins. The success of Bitcoin and its open source architecture contributed to the development of these alternative currencies.
Each cryptocurrency has specific and unique characteristics. The differences are very multifaceted. The user has to have a look at:
- Market capitalization. Market capitalization gives an idea of the economic significance of the project and is calculated by multiplying the number of coins in circulation by their price.
How did the first Altcoins appear?
One of the Altcoins starters was a project called NameCoin (NMC). NMC worked and still functions on the blockchain technology, repeating the structure of Bitcoin. The starting point in the creation of this cryptocurrency is considered to be the spring of 2011 when it was first spoken about on BitcoinTalk. Satoshi Nakamoto and Gavin Anderson — leading experts of this industry started a discussion on the development of new cryptocurrency. The project positioned itself as a service for storing names (hence the name) and used the capabilities of a decentralized network, thanks to which registration in the domain zone became possible.
The first successful project was Litecoin. Cryptocurrency was launched in October 2011 by a former employee of Google. The principal difference was the difference in protocols. BTC runs on the SHA256, and Litecoin runs on the Scrypt. In the LTC blockchain, it took just two and a half minutes to create a block, while BTC had as many as ten.
Litecoin identified himself as “ cryptocurrency silver”, as opposed to Bitcoin, which in everyday life acquired the name “digital gold". Litecoin targets daily payments with a very small commission and the rapid speed.
According to the CoinMarketCap, in 2013 the market has already attended 66 alternative currencies. Most of which were forks Bitcoin, and at the time of 2019 there are already 2124.
The most expensive alternative currencies
According to the CoinMarketCap, the largest alternative cryptocurrencies by capitalization are:
What is the reason for AN Altcoin creation?
Each altcoin is implemented from its own blockchain and its own P2P network. There are several models for creating Altcoins, but the main one is ICO.
Altcoins are primarily used as a source of alternative funding for business projects related to technology and the development of new digital concepts. When a new project is developing, it is known as “ICO” or “initial coin offering”. Project developers provide to the public a certain amount of coins that they can buy, and potential investors can help the project. The goal of “ICO” is the same as of the public offer on the stock market, but in this case, the securities that are provided to the investor are altcoins.
The most famous altcoins
|Title ||Ticker ||Launch date ||Algorithm ||Verification method ||Web site ||Block generation time|
~ 10 min
~ 2 min
~ 2 min
~ 10 min
PoW / PoS
~ 2.5 min
Why Altcoins are important for the modern world of cryptocurrency?
Most of the projects are decentralized. Most alternative currencies are not subject to the process of government regulation, therefore, the process of issuing and circulation of money is beyond the control of the authorities.
Developed functionality. The vast majority of alternative cryptocurrencies have certain functionality, therefore, they can be used for a variety of purposes to facilitate the execution of a particular task.
Innovation. Every new Altcoin that is released to the market tends to a revolutionary breakthrough, but there is a chance to stumble upon an unfair fraudulent project that will target money theft.
Transaction fee. One of the key features of virtual currencies is a low commission. Many prefer Altcoins, as it allows significant savings on translations. In case of growth of this parameter due to network overload, system malfunction or for other reasons, the rate of Altcoin may decrease. In more detail, this chronology can be studied on the charts of courses of altcoins.
What to consider when investing in altcoins?
There is never a 100% certainty that the currency you invested will turn into something big. First of all, the project must have a goal. Given the huge number of alternative currencies present in the market, there is a huge proportion of the likelihood that the project may be a fraud. One of the easiest ways to check is to analyze the purpose of the project.
- Raised issues
The purpose of the project is very important, but this is not enough. Must be present problematics. And the project should have a detailed plan for its solution. The solution should be practical, realistic. It’s easy to promise such big things as a desire to replace the banking system, but this is very difficult to accomplish.
Anyone who invests in cryptocurrency knows that the market is very volatile.
How to get Altcoins?
In addition to mining, there is another methodology for an Altcoins obtaining.
Exchange platforms. Purchase of cryptocurrency through the exchange platform. It’s possible to get real cryptocurrencies on them, which are stored in digital wallets, specially created for storing bitcoins and altcoins.