This article is all about cryptocurrencies and in particular, Altcoin, a term that might be unfamiliar to a lot of people.
What is Altcoins?
To put it simply, Altcoin is not the name of a particular cryptocurrency but any alternative to Bitcoin is usually termed Altcoin.
Hence, Altcoins are alternatives to Bitcoins and their working is very similar to a Bitcoin. Few examples of Altcoins are Litecoin, Ethereum, Monero, zcash, etc. But in general, this term is used to describe coins that have lower market value.
Altcoins are different from Bitcoins in many ways. For now, let us look at some uses of these alternative cryptocurrencies.
How Altcoins Works?
Altcoins employ different coin-distribution methods and work on different mining algorithms. Some of them may offer a more versatile programming language to build other applications on top of. While some others may offer more privacy as compared to Bitcoin.
Some of the Altcoins have very specific uses that may not be monetary at all but for applications like data storage and name registry, etc.
But usually, most of the Altcoins does not offer more benefit over Bitcoins as the latter is more secure. Also, as these coins are not so popular, only a few developers work on them and improve them.
Thus they have a smaller network which limits their application. Also, while there are a lot of Altcoins like Litecoin which are popular and reliable, many of the other Altcoins are not so reliable and secure and may even be scams.
So, while it is possible that some of the Altcoins are useful, this is an area where you can get scammed easily. So if you are planning to invest in some, make sure that you do thorough research and always be wary.
Do Altcoins are better than Bitcoin?
Now, you might be wondering why bother with Altcoins if they are not as great as Bitcoin? While this is true in most of the cases, there are some Altcoins that can give you an advantage over Bitcoins.
Bitcoin mining requires a lot of computing power and dedicated hardware is required to mine them. Even so, there can only exist 21 million Bitcoins ever and the use of Bitcoin is limited to electronic money and nothing else.
These rules are not set in stone but the developers of Bitcoin are quite cautious because the market capitalization of Bitcoin comes up to billions of dollars. Anyway, making huge changes to Bitcoin’s software is not a good idea as a lot of businesses depend on it and changing these rules can create problems. These are some of the reasons that explain why we need Altcoins.
How to Find If a Altcoin is Spam coin or Not?
To know if an Altcoin is valid, you can look for a few features to ensure that these Altcoins are not scam coins that are created purely with the intent to make profits for the creators.
A good Altcoin will often do something unique and may even have a specific application.
For example, some coins were designed as a unit of power exchange for solar production while some coins may be used for domain name registry. If an Altcoin does something that adds value, then it is a good indicator that the coin is genuine.
Also, deeply research the developers of the coin. A genuine Altcoin will have a solid team backing it with a good track record. Another thing that you can check is the market support of Altcoins. Valid Altcoins will have broad market support and they can even develop into something more than just coins, like frameworks for a variety of applications.
Why are Altcoins getting more popular by the minute? There are many valid reasons, of course. For one thing, the Bitcoin market is very competitive and it is difficult for beginners to get into. But Altcoins are much less popular than Bitcoins and also much cheaper.
Even amateurs can start mining them and some of these coins can be mined with just a CPU and do not require advanced dedicated hardware. Also, with Altcoins, you have a lot of choices. There are thousands of different Altcoins each with different price, applications and technical details.
Also, Altcoins can be a fun way to learn something new and exciting. Investing in Altcoins is a good idea as they cost less but can increase in value in the future. Bitcoin only cost a few dollars when it was first released but look at its price now! You can find out an Altcoin that you think will grow popular in the future and invest some pennies in it now and you will probably make considerable profits in the future. But beware! Make sure you do proper research before you go forward and start small.
Now that you know a few things about Altcoins,
let us take a look at a popular example –
Ethereum. Ethereum is a distributed public blockchain network similar to Bitcoin but there are some significant differences between the two of them. While Bitcoin blockchain is used to track ownership of Bitcoins, the Ethereum blockchain puts more focus on running the programming code of any decentralized application. Unlike mining as is done for Bitcoin, Ethereum miners work to earn Ether, which is a type of crypto token that fuels the newtwork. Ether can be used as a tradable cryptocurrency, or it can also be used by the developers to pay transaction fees and services on the Ethereum network.
Bitcoin and other cryptocurrencies were developed exclusively to operate as peer-to-peer digital currencies. But Ethereum also enables developers to build and deploy decentralized applications. A decentralized application (or Dapp) provides specific services to its users. Because Dapps are made up of code that runs on a blockchain network, they are not controlled by any individual or central entity.
Ethereum can also be used to build Decentralized Autonomous Organizations (DAO). A DAO is fully self-governing, decentralized organization with no single leader. It can also be used as a platform to launch other cryptocurrencies and for tracking digital assets. This example shows how useful and how different Altcoins can be from Bitcoins.