What are Altcoins and How they are different from Bitcoin?

Altcoin is a currency which is different from Bitcoin. Each altcoin operates under its own set of rules. The name Altcoin comes from the merger of two words, i.e. Alternative and Bitcoins.

The technology behind the Altcoins is known as “Blockchains”. It allows safe and secure peer to peer transactions. Blockchain technology is responsible for the success of Bitcoin. However, the rules are modified in altcoin to ensure less power consumption. As of December 2021, there are more than 70K altcoins are in existence.

Understand Altcoins and its Technology?

Just like Bitcoin, Altcoin works on the same line of action. A user can make transactions using a private key. Once can send a payment from a digital wallet to another user’s digital wallet. The transactions record are kept in the recording ledger. These recording ledgers are permanent, and they can be seen publicly.

Although, Altcoin, like Ethereum, has “proof-of-stake” technology. It allows you to verify transactions through other accounts within the network. This makes the overall transaction process faster, smarter and more efficient as compared to Bitcoin.

However, Bitcoin is still regarded as the king of all cryptocurrencies. It has been rallying up more than 110% as of Nov. 15.

Many altcoins have skyrocketed this year. Ethreum is the top competitor for Bitcoin, and it has witnessed 500% up to date. On the other hand, new coins like the Shiba Inu coin has seen a meteoric rise of 380,000% in a year.

While altcoins and Bitcoin use blockchain technology, these digital currencies can vary in purpose, features, and usability. There are thousands of altcoins out there, but some of the frequent trending are:

Ethereum.

Ripple (XRP).

Litecoin (LTC).

Cardano (ADA).

Solana (SOL).

Dogecoin (DOGE).

Shiba Inu Coin.

The purpose behind creating an alternative coin is to create a better version of Bitcoin and promote less energy consumption while mining these coins.

For example, Cardano offers peer-to-peer transactions, enabling developers to build applications on the networks. However, it will require extensive research to create and build its blockchain network.

Also read: How does Crypto Trading Works

Difference between Bitcoin and Alternative Coins

1. Altcoins are the better version of Bitcoin. They are designed to rectify the loopholes and perceived shortcomings within the Bitcoin framework.
2. Altcoins are also presented as a better option against Bitcoin as the price of Bitcoin touches the sky. Altcoin is an affordable option because its prices are still within the limits of the purchasing power of the users.
3. One of the most highlighting differences between the two is their transaction fees. Altcoin offers low transaction fees, as well as its blockchain technology is secure.
4. In terms of Volatility, Altcoins are new, so their prices can be changed drastically. However, Bitcoin is less volatile. But in general, the entire crypto market is volatile in nature.
5. Bitcoin is prone to scams and frauds to reduce the potential theft; Altcoins are developing a model that offers a safer and secure passage of transactions.
6. Although some investors consider Altcoin, a good option for trading cryptocurrencies, some see Bitcoin as a way to store wealth to use it as wealth once the global acceptance of Bitcoin increases.
7. Bitcoin has a strong track record now, posing it as the strongest contender to withstand the market crashes.

Takeaway

Volatility with speculative assets like cryptocurrency will always be an issue, so investing in fundamentals leads to a more successful long-term strategy. All these digital currencies are quite volatile for investors to use. The market for bitcoins and altcoins is getting stronger, sustaining its durability through withstanding the fluctuations. Some coins are even driven through the community and have a solid support base.  It is the best place for anyone to invest and trade cryptocurrency for becoming wealthy.