Altcoin is an alternative digital coin to Bitcoin. The word Altcoin combines two words, ‘alternative ‘and ‘coin.’ Altcoins are all the other cryptocurrencies other than Bitcoin. However, the basic frameworks of Altcoins and Bitcoin are similar. They share code and function as a giant computer capable of processing large amounts of data and transactions simultaneously.
Altcoin’s desire to become the next big crypto is there. They will do so by becoming an inexpensive method for digital transactions.
Many altcoins are a variant of Bitcoin. They are built with bitcoin’s open-sourced original protocol with changes to its underlying codes. Hence a new coin is created with a different set of features. The creation of new coins from a central concept of modifying open-sourced codes is called Hard Forks. Hard Forks refer to a software upgrade that is not compatible with the cold version. In that case, all participants must upgrade to the new software to continue participating and validating recent transactions.
Examples of some Altcoins that are variants of Bitcoin codes are Litecoin, Namecoin, Peercoin, Auroracioin, and Dogecoin.
Some coins are not conceived from Bitcoin’s open-source protocol. Instead, they have generated their blockchain and protocol that supports their local currency. These include Etherum (ETH), Omni, Ripple, Bitshare, Neo, Waves, and counterparty.
A similarity of all Altcoins is that they each possess their independent blockchain where transactions relating to their local coins occur.
In April 2011, the first Altcoin was created, namely Namecoin. It is a decentralized open-source information registration and transfer system.
Differences between Altcoins and Bitcoins
Altcoins distinguish themselves from Bitcoins by providing new or additional capabilities such as low-price volatility and intelligent contracts.
Altcoins accounted for over 40% of the cryptocurrency market cap, with more than 9000 cryptocurrencies and counting. Altcoin price movements tend to mimic Bitcoins’ trajectory because they are derived from Bitcoin. However, the development of new markets for these coins and the maturity of the cryptocurrency investing ecosystem will make price movement for Altcoins independent of Bitcoin trading signals.
Bitcoin is the first utterance of cryptocurrencies and their philosophy. Bitcoin also sets the benchmark for the development of other coins.
Implementation of Bitcoin, however, has several limitations, which include:
- Limited Bitcoin smart contract capabilities.
- The Proof of work and the mechanism that creates blocks are energy-intensive and time-consuming.
On the other hand, Altcoins improve upon Bitcoin’s perceived limitations to establish a competitive advantage. For example, some Altcoins use proof-of-stake consensus to minimize energy consumption and time required to create blocks and validate new transactions.
Ether, the world’s second-biggest cryptocurrency by market cap, used for gas in smart contracts for Ethereum or payment for transaction costs. Altcoins address critics against Bitcoin. The stable coins do not display Bitcoin’s price volatility. Thus, making them ideal vehicles for daily transactions.
Altcoins have created a market for themselves. This has attracted investors who see potential in them as alternatives to Bitcoin.
Pros and cons of using Altcoins
Altcoins are better versions of Bitcoin because they aim to stop cryptocurrency shortcomings. On the other hand, they have a smaller investment market compared to Bitcoin. Altcoins had a 40% share of the overall cryptocurrency market in April 2021, while Bitcoin had a 60% share.
Some Altcoins like the stable coin can potentially fulfill Bitcoin’s original promise of a medium for daily transactions.
On the contrary, Altcoins prices are more volatile as compared to that of Bitcoin. This is so because of the absence of regulation and defined criteria that means that the Altcoin market is characterized by fewer investors hence thin liquidity.
Altcoins like Ethereum’s ether and Ripple’s XRP have gained traction among mainstream institutions resulting in high valuations. But, at the same time, it’s not easy to distinguish between Altcoins and their use cases, making investment decisions even more complex and confusing.
Altcoin investors can choose from a wide variety of altcoins that perform different functions in the cryptocurrency economy. On the contrary, there are “dead” altcoins that end up sinking investors millions of dollars.
Some Examples of Altcoins:
- Namecoin: these were the earliest notable Altcoins. Namecoin was introduced in April 2011. They are primarily diverged from Bitcoin by making user domains less visible. However, they are based on Bitcoin and used the same proof-of-work algorithm. In addition, Namecoin allowed users to register and mine using their bit domains. Their bit domains were intended to increase anonymity and censorship resistance.
- Litecoin: in October 2011, Litecoin came into the picture and most saw it as the Silver of Crypto while Bitcoin being the gold. Litecoin’s code and functionality are similar to those of Bitcoin. It differs from Bitcoin in several ways, though. First, Litecoin allows mining transactions to be more frequent. Second, it provides for the creation of 84 million coins every four minutes. As a result, many say Litecoin could be a better investment than Bitcoin itself.
Crypto exchange Platform Altcoins to Crypto
A good crypto exchange can make or break your cryptocurrency trading career. One wants a platform with the lowest fees possible, a large selection of Altcoins, good customer service available 24/7, fast trade, and payouts.
Here are the best scoring sites and what stands out about them;
This is the best cryptocurrency overall. This platform is based in Malta, and it also has branches in different parts of the world. This platform has over two hundred coins in total. These coins range from usual ones like Bitcoin and to native-like ones known as Binance coins. Binance has a 0.1 percent flat trading fee on most transactions.
Some of the shortcomings of Binance are slow-to-respond customer service and potential investors’ issues with ID verification. In addition, the ID verification process takes a long time to set up. Also, the United States must use Binance.US, which has only eighty cryptocurrencies available.
Binance has a credit brokerage for more convenient purchases and sales of cryptocurrency.
This platform uses a Secure Asset Fund for Users that ensures investors are safe from theft of funds.
Kraken’s platform offers the best customer service. It is available in most parts of the world and has low charging fees. The fees are between 0 and 0.36 percent, depending on your type of trading and trading volume for the last 30 days. Of course, you enjoy lower rates if you trade more.
This cryptocurrency platform takes pride in offering fast bank withdrawals. It also facilitates discreet trading through its dark pool feature, another reason why it’s prevalent. However, the user experience is not the best in the market if you compare it with other trading platforms.
This cryptocurrency exchange platform is the best platform for Bitcoin buyers and beginners. Lots of beginners trying to get their hands on digital currency use this platform. It is the most common platform for people looking to make both deposits and withdrawals of Bitcoin. It also has a UI that is almost perfect and easy to understand.
Coinbase has 30 million users worldwide. It also accepts debit cards, credit cards, and wire transfers.
On the other hand, it has very slushy customer service. Their fees are a little bit on the higher side and have extensive monitoring trades.
Here you can trade the most popular cryptocurrencies that include Litecoin, Bitcoin, Etheruem, amongst others.
Our verdict on Altcoins
Altcoins are the future of Crypto. Therefore, be very careful while choosing an exchange platform. Know what you need; hence, choose what suits your needs.
PS: Miningwatchdog plans to open a unique Crypto exchange. The platform will allow the exchange of Altcoins to Major cryptos.
For more on Crypto and the Altcoin exchange, join our community.