What Is An "Altcoin"?
If you are new to Steemit and the crypto world you have likely heard the word "Altcoin" tossed around quite a bit.
However, many new comers don't actually know what that is.
At this point, most people signing up for Steemit.com know what a Bitcoin is, even if they might not fully understand exactly how it works.
However, many of these new users might be surprised to know that there are literally hundreds of other virtual currencies out there.
In fact, as of writing this, Coinmarketcap shows 747 of them with a total market cap of $107 Billion. Due to the enormous popularity right now, there are even more appearing seemingly every week.
The entire list can be seen here:
http://coinmarketcap.com/currencies/views/all/
Let's start from the beginning, what is an "Altcoin"?
The word "alt" literally means alternative and "coin", well coin just means coin. In this instance "coin" refers to Bitcoin, so "Altcoin" refers to every other coin on the planet outside of Bitcoin.
Altcoins are referred to as alternatives to Bitcoin because each one was created with the purpose of replacing or improving upon Bitcion's technology in one way or another.
In most cases, Altcoins are basically no more than Bitcoin clones, at least they were at first. They only offered minor changes to Bitcoin such as transaction speed, hashing algorithm, or possibly the distribution method.
However, now there are several that offer very distinct differences and advantages.
From ones that hope to provide completely anonymous transactions, to ones that help facilitate inter-currency payments, to ones that mine their coins via a social media blogging site (Steem and Steemit.com), to ones that offer lightning fast transaction times.
There is some real competition out there to Bitcoin.
The top couple cryptocurrencies by market cap can be seen here:
(I made sure to include just enough of them to see how our beloved Steem stacks up)
What was the first Altcoin?
Namecoin was the world's first altcoin, created in early 2011. It's primary purpose was to decentralize domain-name registration, which would make internet censorship much more difficult.
It was once a very popular coin, but now sits around number 46 on the list of coin market caps. It is actually truly a testament to how good it was that it is even still around to this day. Not many altcoins that were created over 5 years ago are still around today...
How does one invest in Altcoins?
Currently most Altcoin purchases have to go through Bitcoin. Bitcoin has established itself as the gate keeper to just about all other cryptocurrencies. Some exchanges are just now starting to allow Ether to altcoin transactions, which would place Ether as the first real challenger to Bitcoin's thrown.
In most cases in order to perform the transaction, fiat currency would be used to buy Bitcoin and then that Bitcoin could then be used to buy one of many different altcoins the exchange might offer.
There are several exchanges that have created gateways from fiat straight into their altcoin, and as the technology and space continues to gain in popularity, I would imagine we will see much more of that.
In general, Bitcoin is a very volatile asset, but Altcoins are exponentially more volatile due to their lower market caps. It doesn't take much money to really move the prices around. Keep that in mind when you are deciding on whether you should make your next altcoin purchase or not.
Do Altcoins have a future?
There are many Bitcoin maximalists that think that every other coin besides Bitcoin is a waste of time and not worthy of investment. In their eyes any other coin cannot succeed because it doesn't have the infrastructure that Bitcoin currently boasts.
However, Ethereum is proving that might not be the case for long as it has jumped up to become far and away the second most valuable cryptocurrency. It has plans of eventually overtaking Bitcoin as the top dog.
In reality, any coin could theoretically supplant Bitcoin as the top dog if enough people started using it.
That is precisely what makes Steem so interesting. Taking all the technology advantages and setting them aside, if Steem gets millions upon millions of people transacting in Steem via the exposure gained from a social media site like Steemit.com, it could make a real case for challenging and eventually replacing Bitcoin as the alpha dog of cryptocurrency some day.
Now, all of that is a long shot, but if enough people start using a Steem backed social media site, Bitcoin could be in trouble.
Hope you were able to learn something new from this post.
Stay informed my friends!
Sources:
http://coinmarketcap.com/currencies/views/all/
https://www.cryptocoinsnews.com/altcoin/
Image Sources:
https://bitbillions.com/cryptocurrency/
http://coinmarketcap.com/currencies/views/all/
http://www.coindesk.com/need-altcoins-can-get/
Follow me: @jrcornel
Great article and I'm sure this will help many.
I've been reading so many different views about the future of bitcoin, some talking about a split, and some people writing that the main problem with bitcoin is the time it takes to transfer, but just the thought of it going in the hundreds of thousands or even million is eye opening and bitcoin vs eterium which is much faster and is moving from its current platform of PoW to PoS. Which is making it very attractive at low prices, it's fun just sitting back and thinking we are sitting at the time when people were buying Microsoft or ibm shares for peanuts and were rewarded very well, here's our chance.
Follows, Resteem and upvote
very good explanation of alt coins.
When it comes to altcoins diversification is key since I don't expect all of them to survive. Etherum looks well established now though, and I have hope for a few others like Steem, Zcash, Golem etc...
@erlik 100% Agreed. Most of the coins will not be surviving in the long term. Most of them are kinda copy cat coins and do not have any real innovation behind them. Right now a lot of the altcoins are on bull runs this is due to more and more investment being made in the market as the market matures a lot of them will just die.
I think Steem , Golem , Voxels , Stratis , Monero and Ehtereum have a really bright future.
Brillant explained, the huge wave of new steemians requires such educational content, once soon we might have an even better pool for such Info, great post smd Thanks @jrcornel
It seems that every altcoin has its difficulties to scaling up, mostly the solution is POS.But it is hard to control the speed of the inflation in POS, so lastly a new altcoin will come to the market for alleviating the problem. It is just a vicious cycle....
Great post and thank you for your sharing. This is a very informative post that I can know more about altcoins. I think altcoins have high potential and the price will be even higher and higher.I would invest more altcoins in the future.
Bitcoin is currently pulling all altcoins up @jrcornel We should thank it. It's popularity means more popularity for the whole blockchain project. And when blockchain goes mainstream all altcoins along with bitcoin will prosper from it.
BTC dominance is shrinking rapidly, however it is solid. I believe a lot of altcoins wont be around for that long when the dust settles down...
Great unbiased article. I really appreciate the time and effort you put in to show many sides of the argument people seem to be on about. I think it's a true testament to the cryptosphere in general how we see less and less people use the word shitcoin as a comparison to non bitcoin coins. Again, well done article!