The term Altcoin is shorthand for “Alternative Coin”, and is used to refer to any cryptocurrency that is not Bitcoin. Altcoins are digital assets which are created to serve a similar purpose as Bitcoin - a medium for digital payments, and a store of value.
Altcoins have many of the same features as Bitcoin, such as blockchain technology, distributed decentralized consensus, and cryptography, but differ in other ways such as the hash algorithm used, how the coin is mined, transaction fees and the features available to users.
Altcoins vs Bitcoin
Although Bitcoin and Altcoins all share the same basic purpose of providing a means to transfer money or store value, there are key differences between them. Altcoins are usually created with the intention of improving on Bitcoin or filling another void in the world of digital currency. As such, most Altcoins focus on solving specific issues such as improving scalability, increasing anonymity, allowing for faster transactions, or introducing other new features.
In addition, there are different mining methods for each coin. Whereas Bitcoin is mined by a “Proof of Work” (PoW) system, in which miners must use computing power to solve numerical puzzles, most Altcoins are mined by “Proof of Stake” (PoS) systems. PoS rewards holders of the coins who “stake” their coins as opposed to miners who use computing power to mine coins.
There are many different Altcoins available on the market. Some of the most popular Altcoins are Litecoin and Ethereum.
Litecoin is an open source cryptocurrency created in 2011. One of the main advantages of Litecoin is that it is able to process more transactions per second than Bitcoin, making it a faster and more efficient way to transfer money. It also has lower transaction costs associated with it.
Ethereum is an open source platform for distributed applications that has its own cryptocurrency called Ether. Ethereum is designed to be a “smart contract” platform, enabling software applications to be built that can facilitate transactions or interactions between users.
Altcoins are a type of digital currency that have the same basic purpose as Bitcoin - a medium for digital payments, and a store of value. They differ in how they are mined, the features available to users, and how they solve specific issues. Popular Altcoins include Litecoin, Ethereum, and Dash.
Whether you prefer to use cryptocurrencies such as Bitcoin, or Altcoins such as Litecoin and Ethereum, it’s important that you understand the differences and make an informed decision about which digital currency is right for you.