At the time of its creation in 2009, Bitcoin stood alone among cryptocurrencies built on the blockchain. Had Satoshi Nakamoto called his virtual currency "rocks" instead of "coins," BurjX would have been dedicated to helping you buy, sell, and store digital marbles rather than tokens.
Additional cryptocurrencies emerged shortly after the debut of Bitcoin. The new coins have lower user bases and market capitalizations. That is when the word "altcoin" first surfaced!
Altcoins have emerged as a significant player in the cryptocurrency world, providing alternatives to Bitcoin with unique features and purposes. In this blog, we’ll explore what altcoins are, how they differ from Bitcoin, and why they matter in the growing world of cryptocurrencies.
What Are Altcoins?
Altcoins (alternative coins) refer to any cryptocurrency other than Bitcoin. While Bitcoin was the first and still the most well-known cryptocurrency, several developers saw the potential to create digital assets with capabilities that Bitcoin lacked. Consequently, thousands of alternative coins have been created, each representing a distinct use case or objective.
Some altcoins seek to increase Bitcoin's scalability or transaction speed, whereas others offer entirely new technology, such as smart contracts or privacy features. Ethereum, Litecoin, Ripple (XRP), and Cardano are some of the most popular alternative cryptocurrencies.
Altcoins vs. Bitcoin: How Do Altcoins Differ from Bitcoin?
Although altcoins and Bitcoin share some similarities, such as being digital currencies that use blockchain technology, there are several key differences:
Purpose: Bitcoin is primarily seen as a store of value or a form of digital gold. Many altcoins have additional purposes. For example, Ethereum allows developers to create decentralized applications (dApps) through its smart contract functionality.
Transaction Speed: Some altcoins, such as Litecoin, are designed to process transactions faster than Bitcoin, which makes them more efficient for daily payments.
Consensus Mechanisms: While Bitcoin uses a proof-of-work (PoW) system for verifying transactions, other altcoins may use different methods. Ethereum, for instance, is transitioning to a proof-of-stake (PoS) model, which is more energy-efficient.
Types of Altcoins
There are many categories of altcoins, each designed to solve different problems in the cryptocurrency space:
Stablecoins: These altcoins are pegged to a stable asset, such as the US dollar, to reduce volatility. Examples include Tether (USDT) and USD Coin (USDC).
Utility Tokens: These altcoins are used to power specific applications. Ethereum's Ether (ETH) is a utility token that powers the Ethereum network and its decentralized applications.
Privacy Coins: These altcoins focus on anonymity and privacy. Monero and Zcash are examples of privacy coins that offer untraceable transactions.
Governance Tokens: These tokens give holders voting rights in the governance of a blockchain project, such as MakerDAO’s MKR token, which allows users to vote on protocol changes.
Can altcoins “end”?
Yes. Actually, following Bitcoin's launch, there were a plethora of altcoins that either didn't survive or weren't meant to. This is often due to the fact that these coins were introduced as scam ventures or pump-and-dump schemes.
However, altcoins typically fail due to a lack of utility. This means that the use case of one altcoin overlaps with that of another, more prevalent altcoin, as they both provide users with services and features that are pretty similar. In 2018 alone, over 1,000 cryptocurrencies collapsed, trading for less than US$ 0.01.
Why Do Altcoins Matter?
Altcoins play an important role in broadening the applications of blockchain technology beyond what Bitcoin provides. They enable developers and innovators to experiment with a variety of models, such as decentralized finance (DeFi), non-fungible tokens (NFTs), and other applications that require more than a basic payment network.
Altcoins also allow investors to diversify their portfolios and experiment with new technologies that may become popular in the future.
At BurjX, we offer a secure and intuitive platform to explore, trade, and invest in a wide range of altcoins. Whether you’re interested in Ethereum, Litecoin, or the latest DeFi tokens, BurjX has you covered with a user-friendly interface and advanced security features to help you trade confidently.
Ready to Get Started with altcoins?
With the growing number of altcoins offering different features and benefits, now is the perfect time to explore the world beyond Bitcoin. Sign up on BurjX today and start trading altcoins with ease!
Download the BurjX app or visit the BurjX Academy to continue learning and stay ahead in the fast-evolving cryptocurrency space.
Disclaimer and Risk Warning:
This content is provided "as is" for general information and educational purposes only and should not be considered financial, legal, or professional advice. It does not constitute a recommendation to purchase any specific product or service. Views expressed by third-party contributors are their own and do not necessarily reflect those of BurjX.
Trading cryptocurrencies involves significant risk and may not be suitable for all investors. Cryptocurrency prices can be highly volatile, leading to potential financial losses. Before engaging in cryptocurrency trading, ensure you fully understand the associated risks and consult with a qualified financial advisor. BurjX, licensed to operate under the name BurjX MENA LTD with license number 19058, does not provide financial advice. Any decision to trade cryptocurrencies is solely at the discretion of the user. Please note that past performance is not a reliable indicator of future results. For further details, please review our Terms of Service and Privacy Policy.