Altcoins- Simple Introduction

/Altcoins- Simple Introduction

Alternative coins aka altcoins - are they better than Bitcoin or not? Let's find out!

Altcoins- Simple Introduction 2018-04-20T07:04:47+00:00
Altcoins- Simple Introduction

Altcoins

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  1. What is altcoin?
  2. What distinguishes the best altcoins
  3. The best altcoins to invest in
  4. How to trade altcoins?
  5. The list of altcoins we’ve reviewed

By now most of the people have been introduced to or at least have heard of the world of cryptocurrencies on news, especially since the price of Bitcoins has skyrocketed. This rapid growth has not been limited to Bitcoins alone, many Altcoins have also experienced an upsurge in demand.

What is altcoin?

As the name suggests, Altcoins are alternative (Alt) coins which appear to be alternative to Bitcoins. Bitcoin and altcoins, in general, can have many similarities like- peer to peer transaction, mining process, etc. Various altcoins are trying to target the limitations of Bitcoins, like its long transaction time, lack of anonymity, expensive and difficult mining process and insufficient functionality.

The first altcoin was created in 2011 and it was known as Namecoin. This altcoin was released soon after Bitcoin’s launch and addressed similar issues trying to solve those through a decentralized network.

What distinguishes the best altcoins

Like any other currency, the success of cryptocurrencies to is mainly dependent upon a wide array of parameters like community, hype and more. Let us explain and elaborate the ideas.

  • Partnerships and Investments – New cryptocurrencies are increasingly being used by companies and this has an effect on its value too. For example, Tron announced a partnership with leading gaming platform Game.com, where users can purchase virtual pets via TRX and thus the value of Tron is expected to grow.
  • Protocol – Generally, there are two types of protocols that altcoins make use of:
    1. Proof of Work (POW): Using the proof of work method, miners dedicate their computer’s processing power so as to solve a mathematical function (a hash) so as to verify a block-chain transaction.
    2. Proof of Stake (POS): According to this method, miners verify the block transactions based on the number of coins that they deposit (place on a stake) on the network.

    As every method can have its own unique advantages and disadvantages, the negatives of the proof of work protocol are listed below:

    • It uses up greater electrical power hence raising electricity costs.
    • One requires a high-grade setup to successfully mine the more popular coins.
    • The mining reward reduces as more coins are released.

    On the other hand, the proof of stake protocol removes the above-mentioned challenges of a POW protocol through the following features:

    • Does not consume a lot of electrical energy.
    • Does not require a high-grade setup (A simple laptop would be enough).
    • Validations are faster and the validators are more loyal.

    Hence, altcoins that use the Proof of Stake protocol are likely to gain greater popularity as neither do they require a high-grade setup nor do they consume a high level of electricity. However, the proof of stake protocol also carries certain loopholes. For instance, if the majority of the tokens are owned by a small group of people, then they themselves will be the validators. Learn more about Proof of work vs Proof of stake.

  • Platform – The success of an altcoin depends on the Blockchain technology that which the altcoin uses. Blockchains of different altcoins tend to have varying characteristics, each of which plays a role in determining whether it would make it to the list of the best altcoin or not.
  • The blockchain characteristics that affects altcoins include:
    • The energy required to be put in to secure blockchain.
    • The mining difficulty level of the blockchain.
    • The transaction time.
  • The rewards – The energy required by a blockchain is a pretty important factor since it determines whether the majority of the people will be able to afford to mine the altcoin or not. For instance, POW blockchains tend to require a pretty high amount of electricity and processing power.
  • Similarly, blockchains that carry a high mining difficulty level tend to be more secure and hence, the greater is the price of the altcoin that is associated with it.The time that is taken to validate a transaction on the blockchain is yet another factor that differentiates a top altcoin from a mediocre one. The best altcoin is usually the one that has a low transaction time.
    • In the end, the reward that is received upon a successful transaction is yet again, another factor that determines the initial success of an altcoin. The greater the reward, the more successful the altcoin would initially be. However, as with all blockchains following the POW protocol, the amount of reward reduces as more and more altcoins are released with time.
  • Community – Today millions of people are connected to Altcoin, wish has resulted in the formation of a community around these Altcoins. This hype around new and emerging Altcoins has a great effect on value.
  • Problems that some altcoins try to solve – Despite its popularity around the world Bitcoins are not perfect. Many users of Bitcoin face issues especially in terms of high transaction fees, which can be rather incontinent. Many altcoins have already found solutions to similar problems while much more are trying to come up with even better ideas. The more problem solving the altcoin is, the more it is expected to grow.
  • Team – If you are interested in top altcoins or if you are trying to find the best altcoins to invest in, one of the essential factors you need to pay attention to is the team behind the altcoin. At first this may seem a bit strange, however, as a matter of fact, the team has a lot to do with any altcoin’s success in terms of the in-depth understanding of the currency and the ability to manage possible issues.

The best altcoins to invest in

Steem >> Steem is a platform targeting YouTube creators’ dependency on advertisements for revenue. It does so by paying their creators in cryptocurrency on the basis of the quality of their content. So, it has features similar to Bitcoin like decentralization as well as unique features such as encouraging people to participate in a community. It is also a lot more stable than Bitcoin, which enables users to use it to buy goods and services.

Ardor >> It appears to be a public blockchain platform that aims to provide blockchain technology of NXT, using child chains that are also known as ‘light blockchains’. These child chains can be customized by the end users as well as may be deployed for the individual’s own blockchain. It also aims to provide unlimited scalability and Smart Contracts similar to those of Ethereum. The programing language for Ardor is JavaScript.

Ethereum >> It is a blockchain based platform that has decentralized applications and smart contracts that have no single point of failure and are autonomous. Ethereum is written in Turing complete language, which provides it with a broader base to build on and broader markets to enter. It also has a much shorter block time than Bitcoin.

Stratis >> It aims to create private blockchains for corporations. It allows for complete sidechains that are non-disruptive to the primary blockchain. It also uses proof of stake method. Stratis has used C# language rather than C++ language.

Litecoin >> Its presents itself as a substitute currency of Bitcoin. It has targeted Bitcoin’s problem of slow transaction that normally takes around 10 minutes. On the other hand, Litecoin transaction just takes 2.5 minutes. This fast transaction also helps in preventing double-spending attacks. Also, Litecoin uses a cryptographic algorithm called Scrypt, which is less susceptible to custom hardware solutions like Application-Specific Integrated Circuits which are increasingly being used by bitcoin miners. This makes it more accessible to the users who wish to participate as miners.

Cardano >> It aims to be a decentralized cryptocurrency, which protects user privacy while allowing regulation simultaneously. Cardano is also a technology platform upon which more financial applications can be built.

Monero >> It wants to create a decentralized network where payments can be made completely anonymously. It tries to maintain a public ledger that stores all the transactions. It is a derivative of CryptoNote and thus uses the CryptoNight Proof of Work as the algorithm. To maintain the user’s privacy Monero uses ring signature, which allows the user to hide among other transaction outputs, stealth address to hide the receiver’s address and RingCT to hide the amount of the transaction.

ICO (Initial Coin Offering)>> It is a mean of crowdfunding that is especially centered on cryptocurrencies, which can be a source of capital for startup companies. It is very different from IPO. In an IPO, for instance, when you invest money you are given a certain ownership in the company but in an ICO when you invest, you are given a token of the given company. It may not be worth anything at that time, but in the future, the value can increase exponentially, when it is used a lot and is in high circulation. The token of the company is like a stock, with more money coming in, the token value rises.

How to trade altcoins?

Like any other commodity, altcoins are also traded to yield significant rewards. These appear to be a highly volatile market. Thus, one must be cautious while trading. Altcoin marketplaces are governed by the same forces and rule that govern the traditional investments. You can trade them at Cryptocurrency Exchanges like:

HitBTC >>

This is a Europe based cryptocurrency exchange. It uses 2-factor authentication, advanced encryption technology and cold storage for protection. There is no deposit fee required but withdrawal fees vary from currency to currency. There are no limits on cryptocurrency deposits and withdrawal. An order which is not executed immediately will be granted a 0.1% rebate on execution. Orders executed immediately will incur a 1% execution fee. In early 2015 this site was hacked but they claim that no user funds were affected.

Binance >>

Binance is a multi-language (Chinese, English, Japanese, Korean) exchange platform that focuses on a coin to coin exchange. The platform uses multi-tier and multi-cluster system architecture that provides safety and stability. It is capable of processing 1.4 million orders per second. It also claims to have high liquidity. It even has its own cryptocurrency called Binance Coin. It charges a 0.1% fee for trading and no deposit fee.

Bottom Line

The number of people who exchange altcoin keeps increasing constantly. As a new sphere, both Bitcoins and altcoins are risky and have some flaws. However, day by day, new altcoins or the current ones manage to overcome the current obstacles if the industry. As a result, altocins become more famous and commonly used.

We hope this article about altcoins 2018 was helpful.

please make sure you check out our website to learn more about various altcoins, Bitcoins, ICOs and a lot more. Thank you, for next time!

The list of altcoins we’ve reviewed:

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