What are altcoins in the world of cryptocurrencies and what are they for?

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2019-08-02 00:00:00:

The sphere of virtual money is rapidly developing and gaining momentum. And today there are more than a thousand varieties of digital coins in the world. In general, the main goal of the development of cryptocurrencies was the desire to create an independent monetary resource that would make it possible to pay for goods and services on the network. Of course, Bitcoin is still considered the most popular and famous among users, but in fact, everything is a little more complicated.

It is difficult for people who do not have rich experience in handling such financial instruments to understand all the nuances. Therefore, they are not aware of the existence of an abundance of other digital coins with great potential. Studying this progressive industry in detail, you can understand that there are many alternative options, each of which is called the concept of "altcoin".

Before deciding to invest your own funds in any resource, it is advisable to understand what virtual currency is, how it appeared and what is remarkable. We tried to tell you more about all the characteristic features of violas and their history in this article.

What are altcoins?

To understand what an altcoin is, one should delve into the earlier history of the emergence of this branch of the industry. As everyone knows, the first digital coin Bitcoin was created by a Japanese (rumored) named Satoshi Nakamoto back in 2008. Although this mysterious entrepreneur decided to leave his personality in the shadows, he nevertheless created an innovative sensation. This man invented and developed the worlds first cryptocurrency - Bitcoin. For some time, this financial instrument remained unique and unrepeatable in its kind, but progress does not stand still and experts in the specifics of the cryptographic business began to create alternative options for virtual money.

This is how new advanced cryptocurrencies with a mass of variations in use and application began to enter the market, which are called altcoins today. Such innovative tools use their own unique blockchain in their work and do not represent copies of the first Bitcoin, as many believe (although there are a lot of copies, similarities or forks, there are also a lot of them, but we are talking about the niche of real progress and true altcoins). These are completely new resources created on an individual basis. That is, alt is all the abundance of virtual money with the exception of Bitcoin. In translation, the concept means "alternative coin".

This market instrument does not represent a specific virtual currency, but is a generalized term for a number of coins (coins), the number of which has already exceeded several thousand and continues to grow steadily. At the same time, the rate of altcoins, as a rule, does not depend on the position of the first cryptocurrency, but varies depending on the progressiveness of the proposal and its alternative. This rule (law) does not apply to all altcoins, but only to those who have really shown significant results in the development and application, including the platforms for which their majority was created. Those who turn out to be useless or underdeveloped react rigidly to fluctuations in the rate of the main digital gold - Bitcoin.

In addition, against the background of fiat money or stamped Bitcoin, such coins also have a number of undeniable positive characteristics:

Simplicity and availability of use when conducting payment transactions.
High level of liquidity.
High speed of transactions.
Accessible mining of most coins for almost everyone.
Confidentiality and retention of confidential personal data.
Decentralized work of the majority with resources.
Constant and stable access to financial instruments from anywhere in the world (provided there is an uninterrupted connection to the Internet).
New upgraded features and improved source code to minimize flaws. In addition, this allows you to expand opportunities in the cryptocurrency market.

Also, this group of cryptocurrencies, used as means of payment, has a number of disadvantages. In particular, users of crypto resources note the following characteristic indicators:

High volatility. Strong relationship between the price of altcoins in the cryptographic market and the relevance of demand. Digital currencies are very sensitive to fluctuations and events in the field (in the cryptocurrency industry in general). That is, fluctuations in quotations and prices can be caused by even minor changes and innovations in the market. Almost any news concerning the world of virtual money can decide the fate of the viola.
High probability of loss of confidence of depositors. At the moment, there is an increased interest of foreign investors in this group of coins. This contributes to the constant growth of the price of quotes. However, the position of currencies is very unstable and with the slightest error, depositors may doubt the financial resources and the feasibility of investments. Usually, during such periods, a panic drain of coins of a particular cryptocurrency begins in the market. Such a course of events will lead to the devaluation of the alt and its "destruction" in the cryptocurrency market.
Substantial danger to coin holders. The one who has the coins is also the owner of the encryption code. In this regard, the risk of loss of funds due to illegal actions of fraudsters is very high. If the wallet key is lost, it is impossible to return the money.

These list items are the main disadvantages of this group of digital assets. Therefore, it is advisable to take these factors into account when choosing a resource for investment and a general understanding of affairs in the cryptocurrency market.

What is the first altcoin?

After the successful appearance on the Bitcoin market, many wanted to repeat the breakthrough and tried to create something new, namely a financial instrument superior in capabilities. This is how Namecoin entered the world. The first mention of him was in a post on Bitcointalk, published on April 18, 2011. This digital currency was a Bitcoin-based system with some modifications. Satoshi Nakamoto himself did not take part in the development, however, he became one of those who inspired and pushed for the formation of the resource. Today it is already a closed project, although digital coins are found on several platforms. The main thing that Namecoin was able to achieve is to show a clear example of the fact that not only the famous Bitcoin can be the embodiment of the idea of decentralization.

The first altcoin that was truly independent and successful was the Litecoin cryptocurrency . This virtual coin was introduced to the market in the fall of 2011. It was launched by Charlie Lee, a former Google employee. This development was very different from the project of Satoshi Nakamoto. So, if Bitcoin was based on a mining algorithm, then this new alt is based on a script. There were also differences in the block generation speed.

The new financial instrument of the market positioned itself as cryptocurrency silver, which is designed to conduct transactions with a small amount of commission on a daily basis. After the release of this innovation in the world of cryptography, by the spring of 2013, more than a dozen alts had already been activated, most of which are forks of a bitcoin coin.

Whats the difference between altcoins and bitcoin? Why are altcoins needed?

There is practically no fundamental difference between these virtual currencies, but this is only practically. Altcoins are essentially the same coins as bitcoins. The main difference lies in the period of their appearance on the market and the use cases. Specific differences can only be highlighted when comparing a certain alt cryptocurrency and the first such financial instrument Bitcoin. The algorithm of operation, as well as the type of blockchain encryption, should be taken into account. In addition, the difference will be seen in the price and the possibility of mining by mining. The main task of most altcoins, as we said earlier, is the use of the coin on a platform or project. Most of you have already heard about utility tokens.

Many novice users of the crypto market are concerned about what an altcoin is for? After all, in fact, there is a well-known Bitcoin that has already been tested by time. But new alts are created to replace, upgrade, or improve the original coin. And Bitcoin does not have most of the qualities of the variety of altcoins today. Their physical and technical properties significantly change the world and perception of Blockchain.

But it is worth taking into account the fact that not all the abundance of projects is successful. So, analyzing the history of changes in the cryptocurrency market, it becomes clear that only unique, truly original developments are in demand and popularity in the field and among users. All attempts to create a resource based on BTC, but with minimal changes (that is, copying) do not bring results. This is why alts are needed in the crypto market. These resources are attracting more and more people who want to become a participant in the process of extraction, exchange, purchase, trade, investment and the like.

It is also worth noting that the first crypto coin is not perfect. The currency has several disadvantages, which are listed below:

Duration of monetary manipulations - transactions are carried out for a very long time, therefore, to speed them up, it is necessary to apply other algorithms. But bitcoin is endowed with an insufficient number of blocks, which explains the slow calculation of operations and tasks. During periods of high network load, transfers took a very long time. Mining amplification on farms in the provinces of China did not improve the situation at all, and there, believe me, there were serious capacities.
Low privacy score - Compared to more modern designs, the Bitcoin system does not encrypt transactions as well. New projects are created with confidentiality in mind, that is, it is extremely difficult to track the sender and recipient. This is due to the use of additional encryption techniques that were not used in BTC. It seems that the first is the first, then no one thought how to remake the already existing history, since the history itself (cryptocurrency) did not yet exist in any form.
Expensive and Difficult Coin Mining - Bitcoin mining tends to get harder (halving). This requires a constant increase in the amount of resources used to form new blocks. Altcoins in this regard are much simpler, since they are developed on the basis of other types of protocols, which provide for a more simplified version of mining that does not require such large computing power. Plus, for a long time, many have been creating environments that can be easily scaled.
Low level of functionality - the first cryptographic coin was created with the aim of developing a progressive financial instrument for online settlement. In this regard, the altos went much further, since they are endowed with a rich functional foundation. Some coins have 2-3 or more possible use cases; now it is not just a piece of code that has value.

That is, based on these shortcomings of the original project, the developers form new foreign exchange funds. Their main task is to eliminate the disadvantages of bitcoin and improve the system as a whole. This is how innovative resources appear on the market, which are many times superior to the analogue of Satoshi Nakamoto.

But do not forget that most of the alternatives are simply forks - complete copies of the original product with minor edits. Therefore, not all alts are valuable in market conditions and are of interest to investors. They now and then appear, then disappear altogether. But even with this lack of guarantees, the demand for virtual funds is huge.

This can be explained quite simply. User interest is generated by the difference between supply and demand, which sets the price trend. It is because of this that the price tends to change so often in short periods of time. Such "slides" are used to make money, because to predict growth and decline means to think through all the scenarios and all transactions in advance.

The main factors by which the demand for new alternative money is assessed are:

simple application;
the speed of manipulation;
cost for a specific time period;
trends in quotations;
encryption algorithms;
ease of mining coins;
availability on exchanges and presentation on well-known sites;
project team;
road map;
cooperation with well-known companies and foundations;
market capitalization.

Such parameters, although not characteristic of all representatives of the alternative currency, are still considered important for users. That is why altcoins are of interest in the financial market. It also explains the reason for such an active process of forming new funds.

Lets summarize how alternative coins differ from the renowned leader of the Bitcoin industry. Distinctive characteristics lie in several parameters:

The speed of transactions is one of the most vulnerable factors in the entire cryptocurrency sphere. The Bitcoin network is sometimes capable of conducting a minimum of transactions per second, which causes two or three hour delays. But there are already alternative currencies on the market, which are formed taking into account the large capacity. This arouses the interest of fund participants and attracts new users.
Hash function algorithms - absolutely all cryptocurrency projects operate on the blockchain. In order for such a system to work as it should, it is required to hash information about the manipulations and enclose them in blocks. If Bitcoin runs on an algorithm with a generation speed of up to 10 minutes, then other alternative coins are much more efficient. That is, they spend less time creating a new block and, accordingly, speed up the timing of transactions.
Mining algorithms - in principle, they are identical for both types of foreign exchange funds. However, alts are less promoted, and therefore do not have such an extensive network. There are also some alternative coins, the system of which does not provide for mining at all.

To create a wider variety of instruments on the market and to solve the shortcomings of the original versions, improved altos are created.

TOP - 5 popular altcoins

Before presenting some of the most common and successful projects in the crypto business, you should understand how the list of TOP altcoins is compiled . That is, it is important to understand by what parameters the list of the most profitable cryptocurrencies is determined.

This factor regarding coinage is similar to how real money works. Like every state currency, the viola has a value in comparison with the American dollar, euro, ruble, hryvnia and similar monetary units of different countries. The ratings are based on this course. This list immediately shows which of the coins is more popular and in demand, and which is declining. Evaluation of cryptocurrency market projects is very important, since on its basis it is possible to decide which alts it is advisable to invest in. It also provides a more competitive environment for developers.

The TOP list is constantly changing. When compiling it, a whole list of characteristics is taken into account:

attractiveness to customers (ease of use, speed of manipulation and other technical nuances);
cost on the market on the day the TOP is compiled;
trends in the dynamics of growth or decline in value over the last period of time;
market capitalization (calculated by multiplying the price per unit by the total number of coins).

In the process of functioning and constant fluctuations in the market (price growth and depreciation), cryptographic tools will compete on the list, that is, the leaders will constantly change. But after analyzing the last years of the sphere, we can summarize the list of the five most successful projects that have established themselves as popular altcoins.

Today, users most often want to buy these types of alternative money:

Ethereum;
Ripple;
Monero;
EOS;
WAVES.

Lets take a closer look at each of the top five coins.

Ethereum

The cryptocurrency was formed by Vitalik Buterin in 2013. The first launch of the platform took place in 2015. After three years of operation, the cost of the coin was $ 1000 (at its peak, the price for Ethereum reached $ 1300). The currency has become the second in terms of capitalization after Bitcoin.

Ethereum or Ether is a popular resource among users and contributors. The coin is based on the blockchain system. Such a financial market instrument is one of the very first in the field, which offered clients to draw up "smart" agreements of varying degrees of complexity and allows them to control the fulfillment of conditions (smart contracts).

Ether is a decentralized resource equipped with a smart contract function. These applications operate on the basis of the embedded software, which guarantees the absence of fraud attempts, since the program itself monitors compliance with the terms of the agreement. Also, this function allows you not only to settle accounts with people, but also to exchange resources and assets. To store funds, a user can use the exchange storage or register his own electronic wallet.

Benefits of an alternative coin:

smart contracts (save money and ensure the reliability of the transaction by excluding intermediaries);
prompt payments (a fast indicator of the speed of transactions);
there are no additional payments (no commission for money transfers, except for blockchain);
high level of protection (progressive security system);
data privacy (copies of documents are not needed, that is, complete confidentiality and confidentiality of personal information);
available exchange in cash equivalent on many exchanges.

This project provides for the possibility of passive earnings or on ethereum faucets without investment. It is also available to purchase coins on cryptocurrency platforms for various monetary units (dollars, rubles, hryvnia, euros). Mining Ethereum is generally a separate conversation, we will definitely tell you about it.

Ripple

Cryptocurrency is a major currency transfer system, thanks to which instant transactions of any type are available. In the future, the platform plans to establish cooperation with banks. This step is necessary to introduce an economical and efficient way to conduct monetary manipulation anywhere in the world. The main goal of the crypto project is to develop a system in which instant currency tranches are available. The difference from other altos is the absence of a network of blocks during operations.

You can invest in the coin directly or in the XRP currency (Ripple, Ripple) . The latter is a very promising idea, as the relationship with the US dollar has increased. Also, with the participation of XRP in transactions, the price of the currency and the overall level of liquidity increase.

The advantages of this coin:

cooperation with corporations (the project is aimed at joint work with the banking system);
high speed of transactions (on average, in four seconds, each user of the platform performs one operation with finances, and the entire system processes up to 1000 foreign exchange transactions in one second);
stable value (price trends practically do not change, since the XRP rate does not tolerate sharp changes);
privacy and confidentiality (confidentiality and protection of personal data are guaranteed, because the transfer of personal information is not required, and all tranches pass incognito);
reversibility of transfers (another unique difference of the platform is that the transactions performed are reversible);
focus on decentralization in the future.

At the moment, the currency platform is quite successful and, according to the forecasts of experts, will become even more popular, especially when it reaches all its goals.

Monero

The Monero (XMR) project was created in 2014. This type of cryptographic money is intended for making confidential transfers. They have no attachment to other currency units and are issued by cryptograms. Tranches pass without the intervention and participation of banks, but the commission is low. The main feature is that the Bitcoin code does not participate in the project, as is often the case in other financial alternative instruments. This system design guarantees a high degree of confidentiality and security.

Cryptocurrency capitalization in relation to Bitcoin is 1 to 100. This means that this platform is potentially very promising. But today there is still a small drawback - a small number of clients. However, despite the active plan of market advancements, it is quite possible that in a year or a year and a half this coin will become one of the most promising and successful in the world. Analysts are confident that it is necessary to purchase currency in advance, since it will become profitable in the near future.

Financial instrument advantages:

the platform is not threatened by inflation (the currency is independent of other monetary units);
the issue of coins is limited (this gives a constant stable demand);
the platform is reliable (the security level is high enough);
confidentiality and confidentiality (no need to transfer personal information);
protection from fraud (copying is impossible);
high liquidity ratio.

Thanks to these characteristics, this cryptographic coin is among the five most popular currencies on the exchanges.

EOS

The platform was created and developed by Dan Larrimer. The main goal of forming a project is to systematize the turnover of transactions. Due to this step, it was planned to significantly speed up the processing procedure. However, this task is still in progress. At the same time, despite the incompleteness of the system, it is among the most capitalized foreign exchange funds. You can buy altcoins on any specialized web resource, but before that you need to exchange them for Bitcoins.

The main advantages of cryptocurrency include:

accessible level of cryptographic tasks;
easy-to-use technical basis;
stable exchange rate.

The platforms advanced technologies provide it with a promising future. That is why users are increasingly attracted to this project.

WAVES

The project was launched by Alexander Ivanov in 2016. This platform is based on the blockchain system and issues its tokens to conduct crowdfunding of companies. The resource device provides for clients with the opportunity to lease their funds to receive a percentage of the profit from mining. Transactions are protected with a cryptographic encryption type and key.

Also, customers can exchange tokens for other units of account, coin and fiat currency. In addition, users have the right to create their own tokens and give them to the exchange or sell them to investors. Their price is formed based on their project value and trading on the stock market.

Experts refer to the list of advantages of a virtual coin:

easy-to-manage site interface;
fast execution of financial transactions;
payment of commission at the expense of tokens;
available exchange of tokens;
the ability to develop your own foreign exchange project;
decentralization of the exchange;
availability of "smart" agreements.

Due to such characteristics, the currency project is quite promising and popular among market participants.

Where to buy or sell altcoins?

Many users of the sphere are also concerned about the question " Where to buy altcoins ?" The answer is quite simple - the simplest and most time-tested method is based on cooperation with exchanges. The most common of them are:

Binance is a decentralized platform with good liquidity and a modern functional part. Founded in 2017, it is one of the worlds largest online projects.
Bitfinex is a popular service with one of the best liquidity levels. Opened in 2012 and is based in Hong Kong. Owned and operated by iFinex Inc.
Okex is a cryptocurrency market company founded in 2014. Offers clients tools for trading on the platform and minimal transaction fees.
Bittrex is also one of the first platforms in the industry. Has been operating since 2014. Offers over 200 altcoins for purchase.
Bibox is a new Chinese firm, known since 2017.

Most of the popular altcoins are always available on our exchanger. So you can buy popular altcoins in the following directions (we have selected the TOP):

They sell altcoins in approximately the same directions as they buy:

Difficulties with where to sell or buy altcoins may arise with coins that have just entered the market. Newly developed currencies are gaining popularity and are often in demand far from immediately. Therefore, you will have to search a little to find a resource that has innovations. It is also advisable to find out in advance all the nuances of cooperation with an exchange or exchanger. This will help avoid complications and unnecessary waste of money. And with cryptocurrency exchanges, it is certainly important to study the Terms of Use, otherwise you can get banned or at least a long freeze.

How to choose an altcoin for investment?

The world of cryptocurrencies is so diverse that many novice users are simply lost in the abundance of altcoin options. In order to determine which coin you can invest in, you should pay attention not only to the capitalization indicator, but also to several other points:

Liquidity - or simply popularity among customers. The more transactions the platform conducts, the more people are interested in this resource (cryptocurrency). As a rule, this is a signal that the project is a promising financial instrument.
Technical parameters are an indicator of how meticulously the developers think over the details. A modernized modern system shows itself better in operation than outdated software.
The growth of altcoins or their depreciation - in this matter, stability is better. Small fluctuations in value are safer than constant roller coasters.
Social networks - the main thing here is to pay attention to discussions on the Internet (forums, pages, blogs, etc.). It is necessary not only to study the opinions of others, but also to assess the popularity of the currency among ordinary traders.
Analysts say that what reputable experts think is important, because they have a wealth of experience and knowledge in this area. Of course, you should not blindly believe everything that is said, but you need to analyze.

The choice of a coin for investment may also include a decision to purchase mining capacity or merge with partners. In general, investing your own funds is advisable in resources that are well researched and have a clean reputation. The risks are high, so its worth getting down to business wisely. In this case, one should take into account the prospects of the currency. This forward-looking move will serve as a lucrative investment for the future.

The most promising altcoins should be selected taking into account all the details:

general indicator of capitalization;
the number and quality of the platforms on which they are hosted;
dynamics of the course;
the practical side of the project, its advantages;
area of use, scale, target audience;
developer activity;
plans for the future and development strategy;
technological basis;

Only after analyzing all the nuances can you make an informed decision.

Attention! This material cannot be regarded as investment advice. We do not give recommendations, do not advise investing or not. You must independently assess all the risks and consult an appropriate specialist before any waste. This article is for informational purposes only.

Why do we need altcoins if there is Bitcoin?

Altcoin (Altcoin) is a great alternative to the popular Bitcoin. The developers of the sphere are actively developing this market direction in order to improve and eliminate the technical flaws of the first exemplary coin. They also managed to create new innovative methods of instant transfers in many areas of human activity. This is a new stage in the development of the entire digital world, and although Bitcoin is still the leader, it is not perfect.

Thanks to the viola, the market has gained a variety of projects worthy of the attention of investors. Moreover, the competitive environment is the key to further development. And it is quite possible that in the near future we will be able to observe progressive developments of a new generation.

And of course, do not forget that alternative digital money is an excellent way to make money both in passive mode and on active transactions. The main thing in this is to successfully choose a project for investment and predict the details in advance. But remember - this is a RISK!