What is Altcoin?
Altcoins are cryptocurrencies other than Bitcoin. The majority of Altcoins are forks of Bitcoin with small uninteresting changes. Altcoins are the later alternative cryptocurrencies launched after the immense success Bitcoin had after its release in 2009.
In General, Altcoins are alternatives to bitcoin because they tend to improve and solve the Bitcoin protocol limitations and features. Alternative currencies aim to be better substitutes to Bitcoin.
The success of Bitcoin as the first peer-to-peer digital currency facilitated the introduction of other similar digital currencies that followed.
Altcoin is a combination of two words: “alt” and “coin”; alt is short for alternative and coin as to do with currency; together they imply a category of cryptocurrency that is alternative to Bitcoin itself. Many of the altcoins are built up on the basic framework provided by Bitcoin. Most altcoins are peer-to-peer, involve a mining process and offer more efficient and cheaper ways to carry out network transactions. Even with many overlapping features, Altcoins have very distinct features and vary widely from each other.
Many Altcoins are trying to target any perceived limitations that Bitcoin has and have presented newer versions with competitive advantages, and therefore the competition is intense and is giving grounds to a great variety of Altcoins.
After the success story of Bitcoin, many other peer-to-peer digital currencies have emerged in an attempt to imitate that success.
The Reason Why Altcoins Started To Emerge
The main reason for Altcoins to emerge was to improve Bitcoin’s flaws and to somewhat, try to compete with bitcoin by innovating and developing new features as to improve and surpass bitcoin limitations.
Another important factor was the transaction time. Many Altcoins like Litecoin (LTC) and Fastcoin (FST) have blockchain update times of one minute or under, which is a lot faster than bitcoin. So, in a way, these alternatives to bitcoin, can definitely speed up commerce by offering faster transaction confirmations. However, we must always take in account that some coins are really great at one thing and probably not so good at another.
Best Altcoins to trade in 2017
What’s so exciting about altcoins is that you don’t ever know which altcoin is going be a winner. There is no finish line in this race, only a competition that can best meet the various needs of the users. Litecoin was the third digital currency to emerge after Namecoin. It gained immense popularity and so far is still seen as the closest competitor to Bitcoin.
Perhaps the least intuitive aspect of the Bitcoin network is the proof-of-work concept it uses to define the requirement for the generation of a new set of transactions block to be added to the distributed transaction database Blockchain.
Mining is the term used for running a series of calculations on a computer to verify the transactions that take place in the Bitcoin or altcoin network. In the bitcoin network, about every ten minutes, a new block of transaction data is created and the miners who created the block are awarded a few bitcoins. This serves the Bitcoin network both as a system to verify transactions and as a system for fairly distributing new bitcoins. This is the same for Altcoins, miners verify transactions and secure the network and are rewarded with some coins.
While bitcoin mining relies on SHA256 mining algorithm newer and more innovative versions are getting launched that offer innovation in areas like transaction speed, privacy, proof-of-stake, DNS resolution and more. A few of them have gained popularity; the rest are lesser-known. Examples of different mining algorithms are: Scrypt, X11, X12, X13, Lira2RE, Keccak, Quark, Groestl, etc.
Developers tend to introduce new trading algorithms in an attempt to tackle ASICs (special designed trading equipment) while trying to introducing more efficient solutions to the trading proof of work.