What is an altcoin? A beginner's guide to cryptocurrencies beyond Bitcoin
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Loading... - Valentina Alvarez
- 19 Jan 2023
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What is an altcoin? Altcoins explained
An altcoin is an amalgamation of “alt,” referring to “alternative” and “coin,” referring to “cryptocurrency,” i.e., all coins that are not Bitcoin (BTC) are altcoins. Bitcoin was the cryptocurrency that introduced blockchain technology to the world after the global financial crisis of 2008–09.
BTC has established itself as the “gold standard” of cryptocurrencies and brought a revolution to the world of finance. It has become the stable equilibrium among cryptocurrencies based on blockchain technology due to its first-mover advantage. Alternative cryptocurrencies have been created to improve on Bitcoin's technical and practical challenges (more on this later). So, is Ethereum an altcoin?
The birth of altcoins was followed by the introduction of second and third-generation blockchain-based cryptocurrencies like Litecoin (LTC) and Ether (ETH). While Bitcoin is frequently quoted in dollars, yuan, euros and other fiat currencies, altcoins (alternative cryptocurrencies) are typically priced in BTC.
This article aims to clarify various questions like how do I buy or sell altcoins? What's the difference between Bitcoin and altcoins? Are altcoins better than Bitcoin?
Types of altcoins
Altcoins can be categorized as proof-of-work (PoW) and proof-of-stake(PoS) altcoins (based on consensus mechanisms), stablecoins and decentralized finance (DeFi) altcoins.
PoW and PoS altcoins
The Bitcoin network follows the PoW consensus method to verify and process transactions. Other PoW altcoins include LTC, Bitcoin Cash (BCH), and Zcash (ZEC). In contrast, validators (instead of miners) verify transactions in the PoS model.
Ethereum is moving to the PoS consensus mechanism due to the energy-intensive nature of the PoW method. Cosmos (ATOM) and Tron (TRX) are other examples of PoS altcoins. Read More…
