What is an Altcoin – Bitcoin Alternatives

What is an Altcoin – All You Need to Know About Bitcoin Alternatives from Coding compiler.

What is Altcoin?

The world’s first cryptocurrency is Bitcoin – it was created in 2009 based on the blockchain technology. The purpose of the development was to create an independent, decentralized digital payment system and electronic currency.

By the way, Bitcoin was originally called simply digital currency, the term “cryptocurrency” appeared only in 2011 with the filing of the magazine Forbes.

At the same time, the idea of ​​creating electronic payment systems based on the blockchain was picked up by other enthusiasts. They identified a number of technical flaws in Bitcoin and set the goal of improving this technology.

As a result, alternative projects to Bitcoin with similar ideas and functionality began to appear. The very first such coin is Namecoin, which is used to create alternative root DNS addresses. Such projects were secretly called Altcoins, based on a play on words (Alternative – alternative, and Coin – coin). Subsequently, the name stuck and spread widely. Sometimes also used the abbreviation – viola (viola cryptocurrency).

In this way: Altcoin is any existing cryptocurrency, with the exception of Bitcoin.

Altcoin – Everything you need to know before buying them

Table of Contents:

  • What is Altcoin?
  • How many Altcoins are there?
  • How do Alt-cryptocurrencies appear?
  • Advantages of Altcoin
  • Types of Altcoins
  • Perspective Altcoins
  • How to buy Altcoins?
  • How to learn the course of Altcoins?
  • Is it profitable to invest in Altcoins?

How many Altcoins are there?

To date, the total number of all available for use alternative cryptocurrency is approaching one thousand items. According to other data at the beginning of 2018 there are already about 2000.

Not all of them have any value for users. Most often, such projects are created solely for the benefit of their creators.

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How do alt-cryptocurrencies appear?

There are many sources of alternative cryptocurrency. One common method is a bitcoin fork.

As mentioned above, the main goal of the vast majority of altcoins is to enrich the creators of the project. In addition, most of these projects actually duplicate Bitcoin, because it has open source. Copying it with minor changes is enough to organize an advertising campaign of a new alternative cryptocurrency and capitalize it with very impressive amounts. Such electronic currencies disappear from the view of miners and traders a maximum of a month.

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However, there are positive examples of using open source Bitcoin to create altcoins, when developers radically change this code, creating a fundamentally new cryptocurrency. Such projects become the basis for experimentation in the field of creating cryptocurrencies with unique properties, stimulate the process of decentralization of the entire system and constitute a serious competition to Bitcoin.

There are also projects only in general terms similar to Bitcoin, that is, also based on the blockchain, but in essence being separate breakthrough technologies. A vivid example is Ethereum. A great future is tipped to him, it is not just a means for making payments, but a serious platform on the basis of which, in particular, new altcoins are being developed. Moreover, Ethereum substantially pressed Bitcoin in this respect: today, a huge number of altcoins are being developed on the basis of this technology.

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However, loyal fans of Bitcoin are not too happy about the emergence of another alternative cryptocurrency, and some of them have a very negative attitude to everything new.

Why it happens? Many members of the BTC community believe that the Altcoins, in principle, are not able to compete with Bitcoin. Including because they do not differ in reliability and durability.

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Nevertheless, many experts argue that altcoins have a future. Like Bitcoin, alternative currencies are based on blockchain technology. However, their creators are trying to eliminate the various disadvantages inherent to Bitcoin.

Advantages of altcoin

The following advantages of altcoins can be distinguished:

  1. Higher transaction speeds due to the use of improved algorithms. In addition, the reduced number of blocks in the chain affects the speed of transfers.
  2. Increased anonymity. Alternative cryptocurrencies often use more advanced data encryption methods, thereby increasing the confidentiality of transactions.
  3. More profitable mining. Mining altcoins through special equipment is a much simpler task than mining Bitcoins.
  4. Increased number of functions. On the basis of some alternative technologies, for example, Ethereum, it is possible to create smart contacts, i.e. algorithms that make the process of executing contracts in the blockchain chain automatic. Altcoins can also serve as the basis for the production of tokens – analogues of securities and assets in the cryptocurrency market.

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Types of altcoins

Depending on the hashing algorithm used in the system, altcoins are divided into several types:

SPA-256

  • BTC – Bitcoin
  • NMC – Namecoin
  • PPC – Peercoin
  • BTE – Bytecoin
  • DVC – Devcoin
  • FRC – Freicoin
  • DEM – German eMark
  • ZET – Zetacoin
  • ASC – AsicCoin
  • BLC – Blakecoin

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Scrypt

  • LTC – Litecoin
  • NVC – Novacoin
  • ELC – Elacoin
  • FTC – FeatherCoin
  • GC – DigitalCoin
  • WDC – WorldCoin
  • BTM – Битмаркт
  • YEARS – Latium
  • MID – MidasCoin

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X11, X13, X15, NIST5

  • ETH – Ethereum
  • DASH – Dashcoin
  • QRK – Quark
  • XPM – Primecoin
  • NHZ – NeXT Horizon
  • SKN – Skeincoin
  • MED – MediterraneanCoin
  • PTS – Protoshares
  • MYR – MyriadCoin
  • DRK – DarkCoin
  • SWIFT – BitSwift
  • MCZ – Mangocoinz

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Perspective of Altcoins

The following are the most popular altcoins among users.

  • Ethereum – if Bitcoin is No. 1 cryptocurrency, then Ether takes an honorable second place. The vast majority of tokens are based on Ethereum. In addition, the world’s largest financial institutions and software developers are actively interested in Aether. Currently, the cost of one Ethereum coin is about $ 900.
  • Bitcoin Cash is a Bitcoin fork that appeared in the summer of 2017. Although this cryptocurrency was created quite recently, it costs ahead of many long-existing altcoins. One Bitcoin Cash coin costs about $ 1600.
  • Litecoin is an alternative cryptocurrency released in 2011, i.e. just three years after bitcoin. Litecoin is practically no different from Bitcoin, except that transactions are performed much faster, and the cost of one coin is much less – about $ 250.
  • Monero – this digital currency differs from other altcoins by a high level of encryption. For this reason, reviews of Monero are often negative, because thanks to enhanced anonymity, this cryptocurrency can be used for calculations in illegal schemes. At the moment, the cost of one Monero coin is about $ 300.
  • Dash is a more expensive analogue of Monero, with a high level of anonymity. One Dash coin costs about $ 750.
  • Ripple is an alternative cryptocurrency of 2012, created for the introduction of payment systems and currency exchange operations. Rippl is very popular in the banking sector, while the cost of one coin is extremely low – about one dollar.
  • IOTA is a digital currency based on the Tangel structure, not the blockchain. The main direction of Iota is the so-called Internet of Things. The cost of one Iota coin is slightly higher than Rippl – about two dollars.

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How to buy altcoins?

  1. Mining – the most common method of mining kryptomonet. Which, however, requires special and often expensive equipment, as well as a certain amount of specialized knowledge. Therefore, not everyone who is interested in this topic can afford to cry out for cryptocurrency. In addition, some cryptocurrencies cannot be mined with the help of mining, because the developers have foreseen the full emission for them .
  2. Getting cryptomonet on “advertising” shares. For some time, the creators of free distribute their cryptocurrency in order to increase the popularity of their project.
  3. Acquisition of coins on cryptocurrency exchanges for “real” money is another popular way among earners. Today, there are quite a few such trading platforms, so anyone can choose the exchange with the most favorable conditions.
  4. Acceptance of cryptocurrency as payment for any product or service. Thus, the earner can not only receive the coveted digital money, but also make his own contribution to the development of cryptocurrency as a means of payment.
  5. In addition, operations with Altcoins are made in cryptocurrency exchange offices, but the size of the commission for these operations is much higher than on exchanges.

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Is it profitable to invest in altcoins?

Many people ask: “Is it profitable to invest in altcoins?” Of course, all the altcoins known today are a rather risky tool for investment. In this they do not differ from Bitcoin and all other cryptocurrencies, whose value is directly dependent on the interest and actions of investors, and not on factors of a fundamental nature.

It is for these reasons that exchange rate fluctuations, which can lower and lower the price in the blink of an eye, have such a strong influence on the cost of altcoins and other cryptocurrencies. So, in the Altcoins most often invest only those who are ready for losses, but sincerely hopes to receive huge profits. Almost all altcoins are characterized by greater instability and a floating rate compared to the same Bitcoin.

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The largest cryptocurrency investors buy altcoins in large quantities immediately after they appear on the market, thereby provoking a stir among other players and an active increase in the cost of cryptocurrency. When the price reaches the highest value, investors sell their existing cryptomonet, providing themselves a fabulous profit. After that, the rate of cryptocurrency rapidly flies down, from which small investors suffer. This method of earning on the stock exchanges is called Pump & Dump.

To reduce risks when investing in Altcoins, you should opt for those cryptocurrencies that have high capitalization, serious turnover and positive price dynamics for a long time. In general, it should be a reliable cryptocurrency, has long proven itself in the market.

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Naturally, a novice investor must have deep knowledge in the field of cryptocurrency and strong nerves, otherwise this activity is not for him. In addition, you can not invest in Altcoins or any other cryptocurrency all the available funds, especially borrowed. You can only invest a small part of the total capital. In the most pessimistic scenario, the investor will lose a small amount, which does not harm his overall financial situation.

In any case, when performing any actions with these assets, it is strongly recommended to carefully study all the necessary information and make calculations on a cold head. Investing in cryptocurrency is a very risky way to make a profit, so be careful!

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