What are Altcoins?
The word “altcoin” stands for “alternative cryptocurrency (coin).” It talks about all coins except Bitcoin. What Are Altcoins (Alts): Each has at least one thing in common with Bitcoin’s technology. Some altcoins introduce new consensus techniques, while others try to improve things like speed, scalability, transaction processing, token distribution, etc. Even though cryptocurrencies are new, tens of thousands of altcoins have been created. The well-known data database CoinMarketCap listed 8,200 coins when this was written. This follows the removal of several “dead” cryptocurrencies throughout time.
Alternative Coins: An Overview of Their Origins and Future Development
Namecoin (NMC) was the first currency. Bitcoin’s network started up in 2009. What Are Altcoins (Alts): When Namecoin started to work in 2011, its primary goal was to help make online names less centralized so that censorship would be more complicated. I’m sure you want to know where Namecoin is now. When this was written, NMC was trading on some platforms that weren’t very well known. It doesn’t have much worth, and not many people sell it. Despite this, the world of altcoins has changed a lot in the last ten years. The list of the top cryptocurrencies in 2014, 2017, and 2021 (at the time of this writing) looks different.
Bitcoin in 2014: A New Frontier
The first was Bitcoin, which wasn’t a surprise. Another one was XRP, which is Ripple’s cryptocurrency. The third was Litecoin (LTC), created by Charlie Lee and often called “the silver to Bitcoin’s gold.” Now is when things start to change in a big way. The next ones on the list were cryptocurrencies like Mastercoin, Namecoin, ProtoShares, Primecoin, Peercoin, and others. Dogecoin is a famous meme coin. It’s important to note that none of these coins are even close to being at their all-time highs.
Ethereum Is Here to Stay in 2017
The 2017 chart shows how quickly things change in the altcoin world. A critical year in the history of crypto was 2017—the year Bitcoin hit a high point of nearly $20,000—and almost none of the coins around in 2014 kept their value over the next three years. Instead, new coins were on the market that were much better than theirs. When Ethereum first came out, it became trendy. Bitcoin Cash (BCH) was made when the original Bitcoin network split. Privacy-focused cryptocurrencies like DASH and Monero were also becoming more popular.
What the Future Will Be Like in 2021
It looks like the Bitcoin market is a lot more grown up now. It finally surpassed the $1 trillion market value mark, proving that cryptocurrencies are here to stay. Some of the top cryptocurrencies from 2017 were still around in 2021, but a lot has changed. Ethereum is still in second place, but Tether’s USDT, a stablecoin that has become very famous in the last few years, is now in third. New to the top 10 are Polkadot, Stellar, and Chainlink’s LINK, an Oracle provider. Polkadot is a network that competes with Ethereum for dApp creation.
What Are Altcoins (Alts): The most crucial thing to understand is that Bitcoin has been the only constant since cryptocurrencies were developed and studied. It has always had the largest market capitalization of any coin. From what the following chart shows, there has never been a time when a cryptocurrency other than Bitcoin had the largest share of the market.
But in June 2017, Ethereum came very close to it, which could have caused a “flipping.” This is an event in the market where another cryptocurrency “flips” Bitcoin to become the most popular one. As of June 19, 2017, BTC made up 37.8% of the market, while ETH made up 31.17%. The most significant share of ETH ever was at this point, and it hasn’t come close to it since.
The Most Common Alternative Coins and Their Purposes
These are some of the most well-known alternative coins. What Are Altcoins (Alts): You can trust these cryptocurrencies because they have been around for a long time and have huge groups behind them. Even though Tether’s USDT is truly an altcoin, we will not discuss it. Conversely, this cryptocurrency is tied to the USD 1:1 and doesn’t work like other altcoins.
Ethereum, on the other hand, is a tool that lets developers use smart contracts to make decentralized applications (apps). A smart contract is a set of rules agreed upon by two or more parties that will be carried out automatically when certain conditions are met. Following the rules is essential, or the deal won’t be valid. In contrast to traditional contracts, this eliminates the risk of failure and makes it possible to create decentralized apps run by a system instead of a central authority. This should make them safer and more open.
The Ethereum network’s currency is called ETH. It’s important to know that Bitcoin and Ethereum use the Proof-of-Work consensus method. But the team is trying to switch to Proof of Stake when Ethereum 2.0 comes out. Phase 0 of Ethereum 2.0 (Beacon Chain) is already live.
The company that makes XRP is called Ripple Labs. It is one of the oldest cryptocurrencies and has been the most stable. The idea is that banks and other financial institutions will use it to settle transactions faster and safer. Sending XRP takes only seconds, unlike different types of transfers. But in 2020, the US Securities and Exchange Commission (SEC) sued the company. The watchdog group says that XRP is a security and that Ripple Labs sold $1.3 billion worth of securities without being listed. The cryptocurrency’s market value dropped by 70% soon after, and its future is unclear.
LTC and BTC look a lot alike at first glance. While Charlie Lee was launching Litecoin in 2011, he called it the “lite version of Bitcoin.”Both cryptocurrencies use the Proof of Work method. One thing that is certain about Bitcoin is that there will never be more than 21 million BTC in circulation. But Litecoin has raised this limit to 84 million. Also, Bitcoin uses the SHA-256 hashing algorithm, which has been around for a long time, while Litecoin uses Scrypt, a relatively younger algorithm.
Hong Kong businessman Justin Sun started the TRON Foundation, which made TRON possible. The project aims to create a decentralized blockchain-based platform for a global, free digital content entertainment system. The system will also include distributed storage technology, making sharing digital content easy and cheap.TRX is its cryptocurrency. Justin Sun has done everything he can to market TRON as an alternative to Ethereum, saying it can handle more transactions. But right now, the platform has a long way to go in growth and use before it can even come close to Ethereum’s size in any way.
Polkadot is a blockchain-based platform that isn’t very old and fights with Ethereum. It lets more than just tokens be sent across blockchains, including data and assets. It’s also very scalable; users can use their Substrate platform to make blockchains. In addition, it has a complex system of government that gives everyone a chance to be heard. In the past few years, polka dots have grown a lot and become very famous. The DOT token, its cryptocurrency, is now one of the ten most valuable coins in the world. The Polkadot blockchain is being used for many different projects.
Chainlink is the biggest and most well-known Oracle provider. For blockchains to get information from outside their environment, they need to use oracles. Oracles are safe; decentralized data feeds blockchains can trust to give them the correct information. That’s what Chainlink does, and its coin is called LINK. Chainlink has become one of the most popular projects in the crypto community over the past few years, and its fame is only going to grow as more and more blockchains use its oracles to gather data.
Binance Coin (BNB)
Coins owned by an exchange, like BNB, are a relatively new cryptocurrency asset type. This is the coin that Binance works with. It is the biggest exchange in the world. The main thought behind BNB initially was to let people use it and lower their trading fees. Users can now invest their BNB to get passive income, farm different DeFi coins, take part in initial coin offerings (ICOs) through the Binance Launchpad and use it as part of Binance’s blockchain, the Binance Chain. It currently has the largest market capitalization of any coin an exchange owns. This is the end of our list, but it’s important to remember that there are many more good projects out there that I couldn’t fit into this one.
Alternative Coins: The Perils and Promises of Investment
What Are Altcoins (Alts): A big question for many newbies is whether or not to invest in altcoins. Their main draw is that they are usually much less expensive than Bitcoin and might seem more appealing because they “have more room to grow.”They are, however, much cheaper than Bitcoin or, more accurately, have a lower market capitalization. There is also a reason why Bitcoin is the market leader in market capitalization. Bitcoin’s network has been around the longest. Of course, this also makes it the safest. Everyone, even big institutional buyers, is looking at this one. A prominent hedge fund probably won’t say they want to invest in a cryptocurrency other than Bitcoin.
Charts above from CoinMarketCap’s past show that altcoins can come and go. There are a few well-known ones, but the risk is usually much higher with them. Of course, this doesn’t mean they don’t offer chances, so let’s look at these.
- Putting money into altcoins is risky, especially in the long run, since most will lose value over time.
- They are more likely to be pumped and dumped because they have a smaller market cap and less trade volume.
- These are easy for whales (big investors) and bag holders to change.
- If something better comes, the tool they offer might not work anymore.
Even though investing in altcoins is risky, it can also pay off. What Are Altcoins (Alts): But before you put your money into any coin, you should learn everything you can about it and treat it like a real investment. Just because something is $0.01 doesn’t mean you should put money into it. If it hits “only” $0.1, you can make much money with a simple 10X. Alternative coins, like thousands, are no longer used because they have no value in the real world.
Where Can I Acquire Alternative Coins?
Keep your investments away from cryptocurrency exchanges as a general safety tip. You should always use cold storage and follow our safety tips when buying coins you want to keep for a long time. However, you would have to use an exchange to believe unless you have an OTC (over-the-counter) exchange. They accept hundreds of different cryptocurrencies, which is excellent, and much trading is happening. We made a complete guide on signing up for and using the platform.