Altcoins are digital currencies launched following the success of Bitcoin. The term means alternative to bitcoin, and it includes all the cryptocurrencies except bitcoin. There are over 5000 altcoins that account for 34% of the total cryptocurrency market. Each coin offers unique sets of benefits to the traders to help them take an edge over each other. Their characteristics are more or less like Bitcoin.
Altcoins are easily stored and cannot be taken from the holder without consent. They tackle the issues users face with bitcoin but will that be enough to overtake the mighty bitcoin?
Let’s find out what they are and what does the future hold for them.
These coins aim to reduce the volatility of currency by valuing the coins into existing currencies like USD, Euro and gold. A common example is Facebook’s Diem (Formerly known as libra)
There are certain drawbacks of stable coins. The value of stable coins entirely depends on the asset it is dependant. For instance, if it is USD, a rise or fall in the currency would also affect the stable coin value.
Investing can also prove to be risky as the issuers don’t provide transparency where reserves are kept. Without this knowledge, the buyer cannot know whether the stable coin is operating with a licence or not.
Other examples of stable coins include tether, USD coin and Dai.
Mining based Altcoins
Altcoins can be mined, just like they can be purchased. They are also earned by ensuring transaction authenticity to get cryptocurrency. An example of this is the XRP coin. Mining altcoins is a tedious process that requires time and effort.
Security tokens and Utility tokens
These are only two types of tokens in the crypto world. Security token is an asset which they usually give away during ICO (Initial Coin offering) public sale. Tokens that fail to pass the Howey test are utility tokens. Security tokens do the task of stability saught by large investors. Some tokens start as security tokens and later develop into utility tokens.
History of altcoins
At present time, several Altcoins are launched every week.
The first one was launched in April 2011, and it used the same code and proof-of-work algorithm as bitcoin. The maximum supply is 21 million coins like bitcoin. Namecoin allowed and the users to mine and register, done through .bit domains that increased censorship resistance.
Lite coin came later that year and is termed as “silver to bitcoin gold” It is based on the same code and functionality as bitcoin but differs in several ways. Litecoin allows mining transactions more frequently than bitcoin. It also has a greater total of 84 million coins, while bitcoin only has a 21 million limit.
Advantages of using Altcoins
Altcoins have a decentralized system that provides freedom.
It has blockchain technology that brings transparency and reduces the dangers such as data theft or hacking.
There are loads of altcoins to choose from, each providing distinct and component features. It is always nice to have plenty of options.
By comparing ripple and Etherium we can see Ripple offer transactions much more quickly (4 seconds). Compared to Etherium (16 seconds).
Stable coin has seen a drastic rise in investment over the years, so the value may likely match bitcoin soon. The forecast is predicting good things for the future of altcoins amidst bitcoin volatility issues. Social media giants like Facebook have also introduced their stablecoin libra. Everyone knows digital currency is the future, and a stable coin may as well be the perfect universal candidate.