Maybe you often hear Altcoins in cryptocurrency. However, what is Altcoin and how is it different from Bitcoin? The following is the explanation below.
What are Altcoins
Altcoin is actually a combination of words for alternative and coin which includes all alternatives besides Bitcoin. Altcoin is another cryptocurrency that emerged after the arrival of Bitcoin. The birth of Bitcoin paved the way, so in the early 2000s at least another 5,000 coins emerged.
Many Altcoins try to offer something Bitcoin doesn't have. The emergence of these Altcoins has their respective competitive sides. Some are competing to offer more secure privacy or a different method of spreading coins.
Altcoin types
With the emergence of many new Altcoins, finally the Altcoin types also vary. Here are some of the types:
Mining-Based
Altcoins of this type have a mining process which means that new coins can be generated by solving problems to open blocks. Altcoins of this type have something in common with Bitcoin. One of them that falls into this category is Ethereum which is now the second largest crypto after Bitcoin.
Stablecoins
Stablecoins seek to increase Bitcoin by reducing volatility. In practice, this is done by tying up the coin value to the existing currency. Popular choices for supporting this type of altcoin are the US dollar, euro and gold. One well-known example is Facebook's Libra which just launched in January 2020.
Security Tokens
Altcoins of this type are linked to businesses and are often launched in Initial Coin Offerings (ICOs). These security tokens resemble traditional stocks that often promise some type of dividend such as payment or ownership in a business.
Utility Tokens
This category provides a clause of service and is sometimes sold as part of an ICO. One example of utility tokens is Filecoin which is offered at the ICO. Filecoin is designed to be swapped for decentralized file storage space.
Examples of Famous Altcoins
Ethereum
You must have often heard of this digital currency. Ethereum is the biggest crypto after Bitcoin. Not only digital currency but Ethereum is a blockchain powered by cryptocurrency, Ether. Ethereum also has a very popular smart contract technology.
BitcoinCash
Bitcoin Cash is a peer-to-peer electronic cash system that aims to become sound global money with fast payments, micro fees, privacy, and high transaction capacity (big blocks). Unlike Bitcoin BTC, Bitcoin Cash aims to scale so it can meet the demands of a global payment system. At the time of the split, the Bitcoin Cash block size was increased from 1MB to 8MB. And in November 2020, Bitcoin Cash has a block size of 32MB.
Dash
This coin has a name which is a combination of digital and cash. Dash offers fast and instant transactions. This crypto asset claims to be able to complete the transaction process faster in just a few minutes than Bitcoin.
Ripple
Created in 2012, Ripple Labs developed the XRP cryptocurrency. The coin has a set of payment protocols for efficient cross-border settlement for financial institutions. Ripple is gaining momentum in the cryptocurrency market and saw a boom in early 2020.
Yearn.finance
Yearn.finance is an aggregator service for decentralized financial investors (DeFi). YFI aims to simplify the ever-growing DeFi space for investors. YFI has a total circulating supply of 30,000.
LeoFinance
LEO token rewards for publishing blog posts about crypto and finance. Content is stored on the Hive blockchain - which means that it is both immutable and censorship-resistant. As users receive upvotes, they gain more rewards on a Proof of Stake basis.
Users can stake LEO into LEO POWER which gives them influence over the daily rewards pool. The upvote economy allows them to distribute a certain amount of upvotes each day to content creators.
That's an explanation of Altcoins. Want to invest in Altcoins like BCH or LEO and others?