Before any other forms of coins were created on the blockchain, Bitcoin earned a reputation for being king. The amazing success of it paved the way for many different cryptocurrencies to follow. These cryptocurrencies are now known as altcoins. Since then, thousands of new altcoins, or alternative currencies, have been developed and integrated into the cryptocurrency world. “Altcoin” refers to any type of cryptocurrency other than Bitcoin. The most popular altcoin is Ethereum, and people typically refer to the entire blockchain network (Ethereum) when discussing it, although they use Ether (ETH) to discuss the currency itself.
According to price-tracking website CoinMarketCap, there are currently over 17,000 different cryptocurrencies. Bitcoin accounts for around 50% of the overall cryptocurrency market cap, with Ethereum making up approximately 25%. The remaining market share is taken up by other altcoins. There are potentially thousands of additional cryptocurrencies in the metaverse and online. Let’s have a closer look at what altcoins are and why experts claim that most investors should be cautious about purchasing other cryptocurrencies than Bitcoin or Ethereum.
So what are altcoins and how do they work?
The term “altcoin,” which is short for “alternative coins,” refers to cryptocurrencies that aren’t Bitcoin. Other well-known cryptocurrencies after Bitcoin are:
- Many others
Because they were designed in the same manner as their mother currency, they were created using a similar blockchain architecture in order to duplicate the success story and utilize a peer-to-peer system. Altcoins, too, need a specific mining approach in order for users to complete safe and secure online transactions.
What are the differences between Bitcoin and altcoins?
While Bitcoin and altcoins are built on the same protocol, they differ in several ways. Bitcoin’s implementation and usage are quite challenging since proof-of-work, the method used to generate crypto blocks, is very energy consuming, time-consuming, and limiting. Altcoins, however, reached beyond this issue.
Now that you know what altcoins are, you should know that they utilize the proof-of-stake method to gain a competitive edge, which reduces energy use and minimizes the time it takes to validate any transaction. In addition, Bitcoin’s smart contract capabilities are severely limited. The two main drawbacks of Bitcoin that have been addressed by altcoins are sustainability and scalability. Ether (ETH) is used in smart contracts on the Ethereum blockchain, as gas or payment for transaction fees. The launch of the long-awaited Ethereum 2.0 is gaining notice for these reasons as they develop a distinct personality.
How do investors evaluate altcoins?
Altcoins are constantly working to free themselves from the Bitcoin architecture in order to establish their own value that is not impacted by the price fluctuations of Bitcoin.
They have also seen a significant increase in value, primarily as a result of their growing popularity in the non-fungible token (NFT) market. In fact, in January 2022, Ethereum had a market capital of more than USD 377 billion. However, altcoins are always met with uncertainty. If you want to invest in cryptocurrency, you should always do it in the two most well-known currencies available.
So is the investment in altcoins a good idea?
The popularization of non-fungible tokens (NFTs) and smart contracts has fueled the growth of Ethereum, the most well-known altcoin.
Since its inception in 2015, Ethereum’s popularity has grown dramatically owing to its smart contract capabilities and the growing appeal of electronically scarce art known as non-fungible tokens. Interested in what are altcoins and how you could use them in our online Bitcoin casino? Join our website for more information!