What is Altcoins?

What is Altcoins?

Using our handy guide, you may have already familiarized yourself with the details of Bitcoin. But in addition to Bitcoin, there are hundreds of other Cryptocurrencies floating around. These are known as “altcoins” or alternatives to Bitcoin; eg ether, ripple, zcash, monero and dash, to name just a few.

Altcoins can differ from Bitcoin in a number of ways. Some have a different economic model or a different method of distributing coins, such as altcoins that were donated to all citizens of a country. Others employ proof mining algorithms from different jobs, perhaps to resist hardware mining specialists – or maybe they don't even trust evidence of work.

Several altcoins offer a more versatile programming language for creating apps, while others offer more privacy compared to Bitcoin. And there are also altcoins that cater to very specific non-monetary use cases like domain name registrations or data storage indicators.

However, there are also many Cryptocurrencies that are not very interesting. The vast majority of altcoins simply tweak a few parameters that don't matter much, or provide something that might seem useful but isn't.

If, for example, an altcoin has a larger total amount of coins, it means that each individual coin is worth less. If an altcoin finds blocks more quickly, it just means that a transaction requires more commits for a similar level of security.

As such, most altcoins do not offer any benefits over Bitcoin. In addition, they have less hash power to protect them, involve fewer developers tweaking them, and are generally less useful due to minor network effects. And while many altcoins promise useful features, upon closer inspection, many of those promises are just that: promises.

It also means that altcoins are typically riskier than Bitcoin. Their exchange rates are often more volatile and, over the years, virtually no altcoin has held its value against Bitcoin; most have come and gone. Also, many altcoins can be considered scams, mainly created to enrich their inventors and early adopters.

While some altcoins can and do perform useful tasks (eg acting in a testnet capability or offering greater anonymity than Bitcoin) and may have a future, many others are driven solely by speculation or worse. So be sure to do your research and the buyer should be on the lookout!

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