When Bitcoin was introduced more than a decade ago, no one knew that it would turn out to be a trendsetter for other cryptocurrencies. Although it started out on a low note, Bitcoin has turned out to be the most valuable cryptocurrency in terms of market value. It has also laid the foundation on where other cryptocurrencies continue to build.
What are cryptocurrencies?
Before diving deeper into altcoins, it would be important to understand the meaning of cryptocurrency and altcoin. Simply put, cryptocurrency is a digital or virtual currency that is represented by “coins” or tokens. Despite the fact that some cryptocurrencies have gone physical in form of credit cards and other projects, a huge number remains virtual.
Many people are still skeptical about the viability of cryptocurrency. However, the growth in value of Bitcoin and the emergence of other cryptocurrencies have clearly demonstrated digital currency is here to stay. It is good to learn crypto in order to understand which ones have great potential. The problem is that some people are often carried by the wave and end up investing in the wrong cryptocurrencies.
Types of altcoins
Cryptocurrencies are generally meant for payments and transmitting value throughout a decentralized network of users. Most altcoins are placed under this category and are often referred to as value tokens.
1. Ethereum (ETH)
This is the second most popular cryptocurrency after Bitcoin. Ethereum is a decentralized software that allows smart contracts as well as decentralized applications to be created and run without any form of fraud, downtime, interference, or control from a third party. The main objective of Ethereum is to have a decentralized platform of financial products that anyone in the world can access for free irrespective of their ethnicity, nationality, or faith.
As mentioned earlier it is important to learn crypto before you invest in it. Since it was founded in 2015, Ethereum has proved to be a force to reckon with in the cryptocurrency world. It is true that its value has plummeted a number of times but it still remains to be the second most valuable cryptocurrency.
2. Litecoin (LTC)
Litecoin was started back in 2011 by Charlie Lee, a former engineer at Google and MIT graduate. It was among the initial cryptocurrencies that were ushered in by Bitcoin. Litecoin has widely been accepted as a value of exchange.
Litecoin operates on an open-source global payment network that’s free from ant control or interference from third parties. Litecoin works almost the same way as Bitcoin but the only difference comes because of its faster block generation rate. This means it can confirm transactions much faster than Bitcoin and other cryptocurrencies.
3. Polkadot (DOT)
Polkadot is a distinct PoS cryptocurrency designed to offer interoperability between different blockchains. Its protocol is aimed at connecting permissioned and permissionless blockchains together with oracles so that systems can operate together in a single place. The core component of Polkadot is a relay chain that enables the interoperability of various networks.
Polkadot differs from Ethereum in the sense that instead of creating dApps on Polkadot a developer is able to create his or her own blockchain while at the same time using a security chain that already exists in Polkadot. This altcoin was created by Gavin Woodmone of the founding members of Ethereum.
4. Bitcoin Cash (BCH)
Bitcoin Cash is another popular altcoin. This is because it is one of the earliest and most successful alternatives of Bitcoin. In the world of cryptocurrency, this altcoin is often the source of arguments and debates between miners and developers.
BCH came into the limelight in August 2017 due to the issue of scalability in Bitcoin. The network where Bitcoin operates has a limit size of I megabyte (MB) but BCH has the ability to increase that size up to 8 MBs. The market capitalization of Bitcoin Cash was approximately $7.1 billion as of January 2022.
5. Dogecoin (DOGE)
Dogecoin became suddenly popular in 2021. This is after some celebrities and popular investors such as Elon Musk and Mark Cuban touted it as the future of cryptocurrency. Elon Musk went ahead to inform his Twitter followers that his Telsa would start accepting Dogecoin as a payment method.
Dogecoin was created by two software engineers, Jackson Palmer and Billy Markus in 2013. It began as a joke when Markus and Palmer posted a joke that ridiculed cryptocurrency enthusiasts. But what began as a joke later turned out to be the fifth-largest cryptocurrency in the work.
Dogecoin had a market capitalization of approximately $20 billion as of December 2021. However, one of the setbacks of this is the fact that it is highly inflationary. This means there’s no limit as to the amount of Dogecoins that can be mined.
In general, there are several altcoins available today. The most important thing is to learn crypto and understand which one is viable in terms of investment.
