Posted Jan 12, 2024
UNDERSTANDING ALTCOINS: A COMPREHENSIVE GUIDE
Understanding Altcoins: A Comprehensive Guide
The term altcoin comes from the English words alternative and coin, which in some of our translations would mean alternatives to bitcoin, which then implies that altcoins are all coins except bitcoin.
If we consider other translations, altcoin would have the meaning “alternative coin” or “alternative token”, however when everything is added up and subtracted, altcoins are all cryptocurrencies that are “alternative” to bitcoin.
The first altcoin was created way back in 2011 and is called Namecoin, followed very quickly by Litecoin, which is still called “digital silver”.
Just as the entire crypto world is developing at a high speed, so has the number of altcoins, which today exceeds the number of 23,000 coins.
The Advantages of Altcoins are:
Decentralization: These coins do not depend on any monetary authority that controls their issuance or circulation.
So they remove central banks from the process and decentralize every aspect imaginable in real life.
Utility: Each altcoin is designed for a different purpose or theme, which is intended to add some value.
Innovation: Every new altcoin wants to include or provide technical details that Bitcoin did not contain in the beginning.
Therefore, they are trying to improve its functionalities.
Just as altcoins have their advantages, they also have their disadvantages or flaws, and these are most often liquidity (which is very often negligible compared to bitcoin) and unfortunately the second disadvantage is the failure of many projects which can happen for many different reasons.
There are several different ways to split altcoins, depending on the criteria that is used.
Some of the most common ways to classify altcoins are:
By market cap: Altcoins can be divided according to their market capitalization, i.e. the total value of all available coins multiplied by the current price.
According to purpose: Altcoins can be divided according to their purpose, i.e. the functionality they provide.
Examples include altcoins that are designed for faster transactions, for smart contracts, for transaction anonymity, for decentralized applications, etc.
By Concept: Altcoins can be divided by the concept behind them.
This can include altcoins based on new technologies, such as blockchain, DAG or Tangle, as well as altcoins based on other concepts, such as artificial intelligence or IoT.
By distribution: Altcoins can be divided according to how they are distributed.
This includes altcoins that were issued through ICO (initial coin offering), as well as those that were issued through mining.
There are also altcoins that are distributed through radiation (airdrops), as well as altcoins that were obtained through some another type of exchange.
By Popularity: Altcoins can be divided by popularity among investors and traders.
This includes altcoins that have become popular due to their performance, as well as altcoins that have become popular due to promotion and marketing efforts.
It is important to note that altcoins can often be divided according to several criteria, so there isn’t just one correct division of altcoins.
As with bitcoin, be sure to do your own research before deciding to invest in any altcoin.