You must have heard about Altcoin in the cryptocurrency world very often. An altcoin is a crypto coin that is an alternative to Bitcoin. This blog will further shed light upon the pros and cons of Altcoin and how they differ from Bitcoin.
As we all know Bitcoin is the first-ever cryptocurrency that came into existence in 2008 and is now worth millions of dollars. The coin was invented by a group of people with the alias Satoshi Nakamoto. In technical terms, Bitcoin is a decentralised peer-to-peer digitised currency. All the transactions take place equally and independently between network participants without any intermediary to facilitate it. Bitcoin was actually developed to enable a digital online payment system from where funds could be sent from one party to the other without taking help from financial institutions
What are Altcoins?
All the coins listed in the crypto exchanges other than Bitcoin are usually called Altcoins. The full form of Altcoin is Alternative Coin that means an alternative to Bitcoin. They too are cryptocurrencies and use blockchain technology like Bitcoins that allow peer-to-peer transactions securely.
Altcoins have been built after Bitcoin become successful. They have however made a slight change in the coin rules to appeal to users differently. Although altcoins use the decentralised concept just like Bitcoin, they take a step further through different and unique features. For instance, Ethereum is the second cryptocurrency in the market according to its rank and market capitalization.
The altcoin was introduced to enable smart contacts that are codes that execute agreements automatically between two or more parties using blockchain technology. This new technology opened a new room for blockchain technology development along with new applications and cases for cryptocurrency.
Overall, altcoins have introduced new and functional technology with transaction processing rates that can scale to meet the demand for services. The new Altcoin market is expanding alarmingly and it is feasible that Altcoins may join the bullish run of Bitcoin in future since Bitcoin use case is limited to date.
Altcoin vs. Bitcoin
One of the major differences between altcoin and bitcoin is that altcoin does not follow the exact rules like bitcoin. For instance, bitcoin will stop mining after a certain time or can produce a bitcoin every 10 minutes but altcoins such as Litecoin can produce a crypto coin every 2.5 minutes. Moreover, Litecoin produces 84 million coins while Bitcoin will produce only 21 million coins. To mine a bitcoin, you have to install costly mining machines but Litecoin can be mined with simple computer hardware.
Some of the altcoins are as popular as Bitcoin although they have not reached even close to Bitcoin price. Some of the popular altcoins are Ethereum, Litecoin, Ripple, NEM and Dash that have a large market capitalization.
- Altcoin undoubtedly brings competition to the market by removing the monopoly of popular coins. By breaking Bitcoin rules, altcoins make new space in the market to facilitate competition besides Bitcoin.
- They are improvised versions of bitcoin. The coins are usually designed in a way to address shortcomings faced by the bitcoin framework such as mining cost, speed and other factors.
- They usually charge low transaction fees as compared to bitcoin. In addition to secured blockchain technology, the altcoins charge relatively low transaction fees from the users.
- Since altcoins are mined in large numbers with massive blockchain, it is highly potential to get scammed.
- The altcoin value is highly volatile. Since altcoins are new to the market, their value keeps changing drastically.