You might have heard about cryptocurrencies and the latest buzzing cryptocurrencies, Bitcoin. But do you know about the alternatives to Bitcoin? Yes, there are alternatives to Bitcoin, known as Altcoins. Altcoins are also the cryptocurrencies that are designed with an aim to provide a medium of exchange like Bitcoin but have their own rules. By learning about altcoins, you can decide whether altcoins are worth investing in or not. You can trade bitcoin and other various cryptocurrencies by visiting Bitcoin Trading as it is a world-class trading platform.
What are Altcoins?
Altcoins are cryptocurrencies built on blockchain technology like bitcoin and are developed to provide people a medium of exchange to carry out person-to-person transactions. After the success of the very first cryptocurrency, Bitcoin, developers were encouraged to develop altcoins with slight changes in their code.
Many of the altcoins are similar to Bitcoin as they have followed the footsteps of Bitcoin and are based on the same underlying technology. Like transactions are completed in bitcoin, altcoins are also stored in digital wallets and require a private key to access and transfer altcoins. Bitcoins and altcoins are entirely based on Blockchain that is a shared public ledger that records all transactions in a ledger and makes the history of transactions transparent to users. Blockchain uses cryptography to secure the network of all cryptocurrencies, and no one can alter the transactions that are initiated or completed already.
What is the difference between Altcoins and Bitcoins?
Altcoins are only somewhat similar to Bitcoin, and no all altcoins follow the footsteps of Bitcoin. For instance, bitcoins are mined, and each block of transactions is given a time of 10 minutes to solve the block and record it on the ledger; there are some altcoins like Litecoin that take only 2.5 minutes to mine Litecoins, which means that payments are processed faster.
Like there is a limited supply of Bitcoin as there are only 21 million bitcoins that can ever be mined, Litecoin is 84 million in number. All altcoins and Bitcoin have different rules for mining, and the mining process has different requirements and requires different hardware to mine coins. Let us learn a few examples of altcoins that are Monero, Ethereum, Dash, Ripple, NEM, Litecoin, and more.
What are the pros and cons of altcoins?
The creation of different altcoins has given great competition to Bitcoin as altcoins provide new and better methods of transferring money. Earlier, people used to only invest in Bitcoin, but now there are some ultimate altcoins developed that have attracted bitcoin users.
Improve or overcome flaws of Bitcoin
Altcoins were developed after the success of Bitcoin, but as Bitcoin was the first cryptocurrency introduced, there were many negative factors that were required to be overcome. Altcoins are designed to improve and overcome the flaws of Bitcoin, whether it is in terms of mining cost, the processing speed of transactions, or other factors.
Minimal transaction fees
One of the major pros that cryptocurrency users get is that altcoins take less time to process the transactions and charge minimal transaction fees compared to Bitcoin.
Altcoins also serves as an investment purpose like Bitcoin, but as compared to Bitcoin, Altcoins are new, and therefore, people consider that their market is more volatile than Bitcoin. It has been observed that altcoin’s value change dramatically, and they need to spend few years like Bitcoin to gain a bit of stability in the market.
Risk of fraud and scams
All the cryptocurrencies, whether Bitcoin or Altcoins, are subject to hacks, fraud, and scams. Cybercriminals have sharp minds searching for attacking crypto exchanges and private keys of digital wallets.
Some popular types of Altcoins
There are some types of altcoins that work and function, like digital tokens that are based on blockchain technology. Tether is one of the main examples of digital tokens as it is built on the Ethereum blockchain.
Another type of altcoins is stablecoins designed to overcome the highly volatile nature of cryptocurrencies. This is done by tying the value of altcoins to either a commodity or an index. Libra and Tether are the most popular types of Stablecoins.