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Knowing the meaning of alt-coins: What are alternative coins?
Coins, coins, coins... who doesn't want to earn , right? If we didn't considered bitcoin before its mainstream popularity, other coins are there that will help you grow financially, big time!
If ever you have read my first "The Cryptocurrency Wiz" article, I hope that you have learned something about cryptocurrencies. For today, let's jive right into it — a look at the world of alternative coins.
I will be discussing out the basics of alternative coins. From its meaning down to its uses — I'll unravel everything and anything that you needed to know about these rising stars.
Alternative coins better known as alt-coins are a type of cryptocurrency with a different protocol against its major competitor, Bitcoin. It can be coins that runs in another blockchain or with the same prototype as the other cryptocurrencies available now.
Derived from the word "alternative" and "coin" for cryptocurrency, these are references for the coins different from Bitcoin. As I mentioned on my first "The Cryptocurrency Wiz" article I thought that Bitcoin was the whole cryptocurrency. Without knowing the real context of cryptos, I never thought how powerful and convenient cyrptocurrencies could be.
Blockchain comprises the chains of blocks that holds the data of a coin. It is the technology that enables the crypto world by providing a secure, transparent and decentralized way to send and receive payments all over the world. In other words, the Blockchain technology is the database of cryptocurrencies that records important information in the whole system.
Though, it is worth noting that database, unlike how bigger institutions uses such — the data was controlled. Meanwhile the blockchain technology uses a decentralized way with no entity nor person has control of existing data in the blockchain with which makes data unchangeable — all data encrypted is irreversible once entered in blockchain.
Bitcoin, the OG crypto, runs on its own blockchain interface. The Bitcoin blockchain is the coin's database that holds the record of existing coins, sent & received coins, and the addresses (or Bitcoin addresses). Actually, there are different types of information that can be stored on a blockchain but the most common use so far has been as a ledger for transactions. Bitcoin, as a decentralized blockchain, uses peer to peer nodes giving a collective control from its users.
Alternative coins are cryptocurrencies other than Bitcoin. Thus, these coins are altered, having different protocols that can appeal to other users. In such case, they use other means to record, store and run the authority of these coins.
There are different blockchain technologies for each type of coin. Alternatively, blockchain is not just for coins but also there are companies that used the fashion for enterprises. Nonetheless, the blockchain of alternative coins somehow differs to the way how it works but the common point of this is the fact that the blockchain technology enables the creation and flow of these coins may it be a Bitcoin or Alt-coin.
Entities, programmers, and enthusiasts are often the creator of these coins. It's either a basis for a new business (the creation of coins as a utility) or an innovation for the existing demand of our society (plus the interests of people that will use it) such as stable coins and other coin prototypes.
There are different kind of Alternative coins for each types and uses. We have stable coins, utility coins, and other mass created projects made available to help people use today's technology for ergonomic functionalities.
These are the stable assets in the cryptoworld. It can be tied to a certain asset like gold or has a value closely relative to a dollar. These assets works as a collateral for these issued digital coins so that it would retain a value approximately closer to the asset that it is backed up.
One example can be the Tether (USDt) coin with which has a value of a dollar. The value of the coin is backed up by a fiat (US dollar in a centralized, third party custodial institution). For every tether circulated in the market, a US dollar was also reserved for the coin.
Using stablecoins for trading can be a good pair for your cryptocurrency choice. With its stable value, though there will always be a risk, still, its minimal unlike trading with a much more volatile crypto coin. Today, there are more than 200 stablecoins available in the market. Yet, always make sure to check what stablecoin you'll choose for like any other money, it can lose its value whenever there are lapses that occurred.
Even heard of security assets? Then, you are now seeing one.
These coins are linked to businesses and often launched in the STO of a certain coin project. It resembles how traditional stocks work wherein by holding such coin, you can earn an ownership or a dividend payout with your coins.
An example of a security token is NEXO's very own NEXO token. By holding coins in your NEXO account, you are eligible to get NEXO tokens (when you're verified) as a payout interest and you can even earn dividends by holding such coin.
Utility coins are blockchain-based assets that are intended to use for future purposes. It provides users with products and services in their company per se. A utility coin's main function is to be used rather than appreciating its value over time. One example of this token is BAT by Brave Browser which distributes the advertisement money between its advertisers, publishers, and other users that generates the traffic for advertisements and online marketing content.
As a miner, or in some terms, the validator of coin distribution, you will likely work in the Proof of Work consensus through hashing data function to confirm transactions that will, in return, has a block reward.
Have you ever heard of Initial Coin Offering, abbreviated as ICOs — these are coins which has predetermined value offered to crowdfund investment for the coin. These coins has a finite supply and determined value before the actual public release to support its investors and developers.
Since there are coins running in a Proof-of-Work consensus system, premining starts the mining process to a group of insiders such as early adopters and developers before the blockchain's official launch.
There are 5,000 alt-coins available in the market that you can access through buying to different trading platforms. However, you should take consideration on what to buy and what's not. With the vast choices available online, the inception of these coins are somehow used and manipulated so do your own research before investing.
This is the cryptocurrency wiz by @francescawrites, I hope that you'll learn more about cryptocurrencies. Let's all hodl and hustle!
Read more about alternative coins on my next The Cryptocurrency Wiz blog and the unruly world of sh*tcoins.
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