What are Altcoins?
Altcoins refer to all the alternative cryptocurrency coins or tokens besides Bitcoin. Altcoins aim to improve on Bitcoin’s perceived limitations. Cryptocurrencies are valuable based on their utility and what they can solve. Many altcoins exist on different Blockchain networks, competing with one another to gain market share, trying to be cheaper, better and faster at what they aim to do. There are thousands of cryptocurrencies, just like there are hundreds of foreign currencies and tech projects.
There are two types of cryptocurrencies:
Coins: are the native currency from Blockchain networks with original code. Coins are given as a reward to computers which process transactions.
Tokens: do not have their own Blockchain, rather they operate on other Blockchains. They require Smart Contracts to facilitate trades or payments between users.
Ways to Categorize Altcoins
Utility Tokens: used to provide services within a network
Security Tokens: promise equity in the form of ownership or a dividend payout
Governance Tokens: allow holders to have voting power in the decision making process
Stablecoins: aim to reduce volatility by pegging their value to fiat currencies, precious metals, or other currencies
Memecoins: inspired by a joke or pop culture and gain popularity online in a short period of time
Forks: when a group decides it wants to change the rules that govern a Blockchain, resulting in a new coin or token
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