What is an Altcoin? A Basic Beginner’s Explanation

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What is an Altcoin? A Basic Beginner’s Explanation

What is an altcoin? For anyone who is new to Bitcoin or cryptocurrencies, the term altcoin is one that you may not have heard before. Simply put, an alt coin or alternative coin simply means it is an alternative to Bitcoin which are any cryptocurrencies created after Bitcoin. You may have heard of some alternative coins such as Ethereum, Bitcoin Cash, Ripple and many others, which would all be referred to as altcoins.

As of 6 March 2018, there are currently 1,541 cryptocurrencies including Bitcoin listed on coinmarketcap. However, there can be new ones cropping up every day.

In general, most altcoins are similar to Bitcoin in the sense that they involve a mining process, are peer-to-peer, and aim to offer a cheap and efficient way to make transactions and purchases on the Internet.

The chain is probably the most important part of these digital currencies. The chain itself is the consensus mechanism. The altcoins are typically a separate chain from Bitcoin, and there are separate coinage from Bitcoins.

In the early days, altcoins were something that people may have had a lot of faith in. Some might believe that maybe Bitcoin is not going to stick around for a long time. So what they built was an entire replacement for Bitcoin, something that required no Bitcoin whatsoever to work.

While sometimes altcoins can get manipulated by large investors and groups, most altcoins aim to solve problems that Bitcoin cannot handle on its own.

There are hundreds of different altcoins, each with their own individual features and functions. One of the first altcoins was Litecoin. Litecoin transactions are faster than Bitcoin, and it was designed as a lighter version of Bitcoin. There are also other innovations such as Namecoin, which allows for registration of website domains that are controlled via peer-to-peer network. Nextcoin is based on a proof of stake protocol which removes the need for traditional mining. Darkcoin offers greater privacy than Bitcoin by mixing up users’ transactions. Peercoin has an improved proof-of-work method to process transactions. Quarkcoin has the combination of many different algorithms in order to make it more secure. Ripple acts as a decentralised payment system in exchange for both digital and fiat currencies. Stellar is like Ripple but it includes inflation and a new consensus protocol. Dogecoin is based on the popular Shiba Inu meme designed to make cryptocurrencies fun!

What are some altcoins that you invest in?

 

Read also:

What Is An ICO (Initial Coin Offering)? A Simple Explanation

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The Ultimate Guide to Cryptocurrency for a Super Beginner

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