In this article, We are going to explore the What is an Alt-Coin? and the complete Beginner Guide about Alt-coin in detail.
The altcoin is the term used to describe any cryptocurrency other than Bitcoin, It comes from the combination of alternative and coin, as in alternative to Bitcoin.
Alt-coin is also sometimes referred to as a digital token or crypto-token, as they share many characteristics with traditional tokens like stocks and commodities.
This guide will help you understand altcoins, including why they exist, how they work, what they mean for the future of cryptocurrency, and how you can participate in the altcoin market yourself!
Altcoins are alternative cryptocurrencies launched after Bitcoin, Since 2011, hundreds of new cryptocurrencies have emerged, with several becoming very popular and gaining a significant user base.
For example, Ethereum has become a decentralized platform for applications based on smart contracts (scripting).
Launched in 2015, it was created by Vitalik Buterin and initially sold to early-stage investors for $0.30 per Ether.
What are Altcoins?
Alt-coin is short for alternative coin, It is an umbrella term used to refer to any cryptocurrency alternative to Bitcoin.
If a coin isn’t Bitcoin, it is an alt-coin, Litecoin, Dogecoin, Zcash, etc., are all altcoins.
What sets them apart from one another are things like their use cases, technology, or marketing strategy.
Some people only consider cryptocurrencies with market caps over $100 million USD as altcoins.
Anything that doesn’t meet that criteria (like some of these new ICOs) aren’t altcoins by definition, but people might call these smaller cryptocurrencies altcoins anyway if they feel like it.
Just know that in most conversations, when someone says alt-coin, they are referring to any cryptocurrency besides Bitcoin or Ethereum unless they say otherwise!
What Altcoins exist?
There are hundreds of altcoins on CoinMarketCap, and more are being created each day.
Each altcoin has its own unique characteristics and purposes, so let’s break down a few notable ones.
Ethereum (ETH) is an open-source platform that allows you to create blockchain-based smart contracts, and ETH is the best example of alt-coin.
People will often talk about building DApps, smart contracts, or other products on top of Ethereum instead of just talking about Ethereum itself.
How Altcoins are different from Bitcoin?
Altcoins are different from Bitcoin in many ways, but their most significant difference is that they can be used for different applications.
While Bitcoin is designed primarily as a digital currency (though its value has often been volatile), altcoins offer features specific to certain industries or applications.
For example, Ethereum is Made with smart contracts applications that operate just as programmed without any probability of downtime, fraud, censorship, or third-party interference.
Even though it’s built on top of blockchain technology and acts as a digital currency, Ethereum’s purpose is not to replace the money.
Its goal is more ambitious:
It wants to replace internet third parties (eBay, Amazon, etc.) by creating a new internet made up of hundreds or thousands of distributed apps running on these decentralized networks.
Imagine an Airbnb owned by no one; a DropBox that charges no fees; an Uber without shareholders; you get the idea.
Over time, altcoins may very well change how we store and exchange information today.
And if Ethereum achieves its ultimate vision of becoming programmable money, then altcoins will have already revolutionized data storage and exchange forever!
How does Alt-coin Mining Work?
Mining altcoins is similar to mining bitcoins, You need a computer and specific software, which is free and open source.
What is Mining?
The software connects your computer to a network of other miners at co-op pools or directly to the blockchain (in case of some alternative coins).
Your computer gets its work from these sources and tries to solve mathematical problems.
If your computer solves one of these problems, you get a reward in coins for it. Altcoins are generally easier to mine than Bitcoin because they have fewer digits in their blocks, but that doesn’t mean they’re necessarily easier to earn.
In fact, most altcoins don’t even have a steady stream of rewards; instead, they rely on proof-of-work mechanisms that only issue new coins based on how much processing power you contribute to maintaining their networks.
The upside to altcoin mining is that there are lots of them, many with very active communities around them.
So if you want to dig into altcoins but lack time or expertise in cryptography and programming, it may be possible to just jump into someone else’s pool without too much trouble.
Types of Alt-coin
There are dozens of altcoins that you can invest in, but three are most common: privacy coins, platform coins, and utility tokens.
Privacy Coins:
Dash is among the oldest privacy coins around (originally known as Darkcoin). Others include Monero and Zcash.
Bitcoin also has some anonymizing features built-in through coin tumbling services like JoinMarket or TumbleBit, which use a separate blockchain to do untraceable transactions.
This can help users hide their tracks from companies like Chainalysis which are trying to monitor cryptocurrency activity for governments.
Platform Coins
Platform coins refer to platforms that host smart contracts, ICOs, and decentralized applications (DApps).
Examples include Ethereum, NEO, Waves, and EOS.
Utility Tokens
The vast majority of altcoins out there are utility tokens; they provide access to products or other cryptocurrencies on their network.
One example is Golem Network Token (GNT), and the Ether token used to pay transaction fees on GNT’s underlying network.
Another example is SiaCoin, which lets its holders rent hard drives online and get paid in Siacoin.
For more information on how these different types of altcoins work, check out our page on altcoin functionality.
If you want more general information about all kinds of alternative coins, have a look at our popular guide to all things crypto-related.
Top 10 Popular Altcoins in the Market
As there are so many altcoins available for trade, we decided to take a look at some of what’s available.
- Bitcoin (BTC),
- Ethereum (ETH),
- Bitcoin Cash (BCH),
- Litecoin (LTC),
- Stellar Lumens (XLM),
- Ripple (XRP),
- Monero (XMR),
- Dash,
- NEO,
- Zcash
Related Article: Does India Ban Cryptocurrency in 2022?
How To Buy Altcoins?
In order to buy altcoins, you’ll first need to create an account on a cryptocurrency exchange and then deposit funds into your account. From there, you can trade some of your dollars or other currency for Ether.
There are many different exchanges that offer Ether in exchange for different currencies.
However, Coinbase is one of the most trusted cryptocurrency exchanges out there and offers a secure way to purchase Ethereum (ETH) through your bank account or credit card by connecting it directly with your wallet address.
You can also use Changelly if you want to quickly convert ETH into USD (or any other digital currency).
Once you have your new altcoins, send them over to your personal wallet so they’re stored safely.
It may take a while before they show up due to processing time especially if using a bank transfer! And make sure that whichever exchange you go through has good customer service as well as two-factor authentication set up.
Related Article: Beyond Bitcoin: Ultimate Guide on Blockchain Platforms
Should You Invest In Altcoins?
Many investors choose to invest in altcoins, as they believe that these coins will see a huge rise within a few years.
If you’re an investor and want to start dabbling in altcoins, here are some of the most popular options.
Altcoins are basically any cryptocurrency besides Bitcoin (BTC), There are hundreds of altcoins available on cryptocurrency exchanges today.
There were thousands more created last year alone; however, many of those coins have already lost over half their value.
Despite all of those losses, there are still hundreds that continue to hold strong value at over $1 per coin; Ethereum (ETH) being one such example.
Related Article: Top 16 Decentralized Wallet App | DeFi Wallet
Investment or Trading
When people talk about investing in altcoins, they mean putting your money into other cryptocurrencies besides Bitcoin.
Some people buy Ether (another name for ETH) with dollars, then use it to buy other coins like Ripple (XRP), which can be used by banks to streamline cross-border payments.
People also trade altcoins against each other meaning if ETH increases 10% in value during a day, someone might sell XRP for ETH right after trading begins that day.
Why Do People Invest In Altcoins?
One major reason why so many people opt to put their money into altcoins is that they believe that these alternative currencies are less volatile than Bitcoin.
While they’re certainly trending down over time, altcoins don’t experience even close to as much volatility as BTC does on a daily basis.
Sure, some days BTC will dip up or down 5%, but compare that to an altcoin that can easily dip 20–30% every week.
Conclusion
While altcoins are an exciting development in cryptocurrency, they still represent a very small percentage of people’s portfolios.
Bitcoin will likely always be king (or queen), but there’s no reason you can’t invest in and use more than one cryptocurrency.
At its core, cryptocurrency is about choice giving us more autonomy over our money and how we spend it.
What coin you choose for yourself depends on your needs and what’s interesting or exciting to you; whether that’s privacy-focused coins like Monero or meme-based coins like Dogecoin.
The important thing is that you take control of your future by trying out altcoins today! They may seem confusing at first, but once you get started then you will understand crypto and their exchange.
Meet Nitin, a seasoned professional in the field of data engineering. With a Post Graduation in Data Science and Analytics, Nitin is a key contributor to the healthcare sector, specializing in data analysis, machine learning, AI, blockchain, and various data-related tools and technologies. As the Co-founder and editor of analyticslearn.com, Nitin brings a wealth of knowledge and experience to the realm of analytics. Join us in exploring the exciting intersection of healthcare and data science with Nitin as your guide.
