Maybe you often hear Bitcoin in cryptocurrency. However, what exactly is an Altcoin and how is it different from Bitcoin? Here’s the explanation below.
What are Altcoins
The altcoin is actually a combination of the words alternative and coin which includes all alternatives to Bitcoin. The altcoin is another cryptocurrency that emerged after the presence of Bitcoin. The birth of Bitcoin did pave the way, so in the early 2000s, there were at least 5000 other coins that appeared.
Many Altcoins try to offer something that Bitcoin does not have. The emergence of this Altcoin has its competitive side. Some are competing to offer more secure privacy or a different method of dispersal of coins.
With so many new Altcoins appearing, finally, there are various types of Altcoins. Here are some types:
Altcoins of this type have a mining process which means that new coins can be generated by solving problems to unlock blocks. Altcoins of this type have similarities with Bitcoin. One of them that falls into this category is Ethereum which is now the second-largest crypto after Bitcoin.
Stablecoins seek to improve Bitcoin by reducing volatility. In practice, this is done by tying the value of the coin to the existing currency. Popular options for supporting this type of altcoin are the US dollar, euro, and gold. One well-known example is Facebook’s Libra which was just launched in January 2020.
These types of altcoins are linked to businesses and are often launched in Initial Coin Offerings (ICOs). These Security Tokens resemble traditional stocks which often promise some type of dividend such as a payout or ownership in the business.
This category provides a claim for services and is sometimes sold as part of an ICO. One example of utility tokens is Filecoin which was offered at the ICO. Filecoin is designed to be exchangeable for decentralized file storage space.
Examples of Famous Altcoins
You must have often heard of this digital currency. Ethereum is the largest crypto after Bitcoin. Not just a digital currency but Ethereum is a blockchain-backed by the cryptocurrency, Ether. Ethereum also has a very well-known smart contract technology.
This coin has a name that 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 in just a few minutes faster than Bitcoin.
Created in 2012, Ripple Labs developed the cryptocurrency XRP. 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 surge in early 2020.
Yearn. finance is an aggregator service for decentralized finance (DeFi) investors. YFI aims to simplify the ever-expanding DeFi space for investors. YFI has a total circulating supply of 30,000.