An Altcoin is derived from two words, “alternative” and coin. It stands for all cryptocurrencies except for Bitcoin (and Ethereum in certain cases).
An Altcoin is used in several industries, including automotive, banking, government, healthcare, and insurance. Its importance in the gambling world is also significant.
That’s because, during NFL and other sports events, many wagerers prefer Altcoin to gamble in online casinos. They also look for the best college football picks for success.
Moreover, Altcoin is also called an alternative to the digital currency bitcoin. Let’s learn more about the cryptocurrency:
Definition of Altcoin
As mentioned earlier, the cryptocurrency that isn’t Bitcoin or Ethereum is an Altcoin. Some other cryptocurrencies like Litecoin and Dogecoin are also being excluded from the list of Altcoin.
Each Altcoin has different roles and features. Some may be useful and functional in nature, while others might be related to scams. These cryptocurrencies belong to the blockchain for which they were created.
Altcoins are created to fulfil a purpose. As in the case of Ethereum, it involves ether which is used for paying the transaction fees. The first Altcoin was called “Litecoin”, upgraded/forked from the Bitcoin blockchain (2011).
How Does Altcoin Work?
Altcoin works through blockchain technology, a decentralized and digitally distributed public ledger existing across any network. It has a database that is managed by thousands of computers around the world. The new transactions are stored in the blockchain as blocks of transactions and cannot be reversed after broadcasting.
Note that the features of Altcoin may differ from other cryptocurrencies. Makers add new and innovative features to differentiate between them.
Types of Altcoin
Altcoins can be of several types. This includes:
Stablecoins are another Altcoin whose value is associated with a fiat currency. It could be associated with the value of the US dollar, British Pound, Japanese Yen, and many more. It is an alternative to Bitcoin, as investors can enjoy them without worrying about volatility.
Utility tokens are designed to offer services within an ecosystem. These tokens come with a decentralized finance platform that helps people to perform Defi activities in the protocol. Utility tokens can be used for paying network fees, redeeming rewards, or getting services.
Meme coins are a type of Altcoin that’s intended as a joke. They are popularly called comic coins, and they do not have any value. These Altcoins have gained recognition in a short time, thanks to online influencers, content creators, and investors.
Security tokens are digitized forms of traditional investments like bonds, stocks, or other assets. These digital assets hold the transferred ownership rights or asset value in a blockchain token.
The tokens are created through tokenization, where all the details/information are mentioned in the blockchain. It’s also where the investment criteria are chosen.
Governance tokens are designed for blockchain-based voting systems. It’s where users are given the right to talk about the future of a decentralized protocol. If a member has many tokens, they will have more say in the community-based voting system. These tokens are ideal for shaping the future of the protocol.
Payment tokens are the tokens used for buying and selling any asset on digital platforms without any third-party source (as in the case of banks). A common example of payment tokens is Bitcoin.
Pros of Altcoins
- Role in technology
- Improves the flaw of other cryptocurrencies
- Multiple choices of Altcoins
- Good persistence
- Crypto-specific uses
Cons of Altcoins
- Less popularity and more complexity (for using)
- Less liquidity than bitcoin
That’s it. We hope now you know everything about Altcoins.