Since its released last 2014, 6 years has passed and Bitcoin was considered the superior in cryptocurrency universe compared to it's rival Crypto. Bitcoin reigns as the King of cryptocurrencies through it's first decade.
But for the last 2 years, there's a new and fresh challenge to it's dominance to it's strong market.
Lately, Altcoins are gaining ground and momentum against their bigger cousins. For the past 2 years altcoins attract and gathered users, communities and developers who are confident altcoins have much more potential.
What is Altcoins:
What Are Altcoins?
Altcoins are the other cryptocurrencies launched after the success of Bitcoin . Generally, they sell themselves as better alternatives to Bitcoin. The term "altcoins" refers to all cryptocurrencies other than Bitcoin. As of early 2020, there were more than 5,000 cryptocurrencies by some estimates. According to CoinMarketCap, altcoins accounted for over 34% of the total cryptocurrency market in February 2020.(Source Credit: investopedia.com)
Key Terms for Altcoins:
The term "altcoins" refers to all cryptocurrencies other than Bitcoin.
Some of the main types of altcoins include mining-based cryptocurrencies, stablecoins, security tokens, and utility tokens.
Altcoins might include only mining-based cryptocurrencies other than Bitcoin in the future as usage continues to develop with technology.
Ethereum and Ripple were the largest altcoins by market capitalization in February 2020.
Understanding Altcoins:
Understanding Altcoins
The word altcoin was formed from two words first three letters: alt and coin thus represents as following as Alternative to Bitcoin. Always remember that Altcoins are the other cryptocurrencies launched after the success of Bitcoin. The success of Bitcoin as the first peer-to-peer digital currency paved the way. Many altcoins in the market target and challenges the perceived dominance of Bitcoin. An altcoin must have a competitive advantage to succeed against Bitcoin.
Mostly of the altcoins in the market are built in the basic framework provided and used by Bitcoin. We noticed that most of the altcoins are peer to peer. Their main goal and maming it their advantage was offering efficient and inexpensive ways to carry out transactions virtually. Even having them with similar and overlapping features and framework, each altcoins vaey widely from each other.
Types of Altcoins:
As time passed altcoins was gone through development and evolved thus distinct categories was created and emerged in the market.
There is also some movement toward separating most of these concepts from altcoins. If that trend continues, altcoins might refer only to mining-based cryptocurrencies other than Bitcoin in the future.
No single Altcoin that fall into more than one category, its impossible.
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Source Credit: investopedia.com
Mining-Based
These altcoins have a mining process by which new coins are generated by solving challenging problems to unlock blocks. They are more similar to Bitcoin than other altcoins. Most of the top altcoins in early 2020 fell into this category. Ethereum was the best known mining-based altcoin as of February 2020.
Stablecoins
Stablecoins seek to improve on Bitcoin by reducing volatility . In actual practice, this is achieved by tying the value of the coins to existing currencies. Popular choices for backing altcoins include the U.S. dollar, the euro, and gold. Facebook's Libra is by far the most famous stablecoin, even though it had not launched yet as of January 2020.
Security Tokens
These altcoins are linked to a business, and they often launch in an initial coin offering . Security tokens resemble traditional stocks, and they often promise some type of dividend like payout or ownership in a business.
Utility Tokens
Utility tokens provide a claim on services, and they are sometimes sold as part of an ICO. Filecoin is an excellent example of a utility token offered in an ICO. Filecoins are designed to be exchangeable for decentralized file storage space.
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Bitcoin faces threat from altcoins
We know that the growth and trajectory of altcoins is mostly if not entirely depends and determined by Bitcoin itself because most altcoins if not all are built similar to Bitcoins framework. Recently, it is evident that altcoins are outdoing Bitcoin gradually. This year most altcoins are gaining momentum.
According to CoinMarketCap, an online crypto platform, altcoins accounted for over 34% of the total cryptocurrency market in February 2020. This is contrary to 2009 and later days where bitcoin claimed almost 90% of the total market capitalization.
Most altcoins have been tested and evaluated to present much more convenience than Bitcoin in many aspects.
Bitcoin blocks take up to 60 minutes to confirm and this is a long waiting time and inconvenience to many users wanting to crack quick transactions. However, some altcoins have been found to solve this challenge.
Thanks for Reading!
Competition will lead to more features and development that could help for better security between cryptocurrency transaction.