What is an Altcoin?
A guide to what an altcoin is, and how they differ from Bitcoin
If you’re getting to grips with the complex world of cryptocurrency, you’ve probably started with Bitcoin. You might have then moved on to Ethereum, and if you’ve read our article on blockchain, you probably know what that is too. This post is going to explain what an altcoin is.
The Basic Meaning
Altcoin is short for “alternative coin”. An altcoin is a currency that has been set up as an alternative to Bitcoin. Bitcoin was the first cryptocurrency around, so altcoins often use a similar starting point to Bitcoin, and then try and implement what they see as improvements.
However, now that Ethereum has established itself as a fixed number two in the market, altcoins often present themselves as alternatives to Ethereum.
What Differences do Altcoins Typically Offer?
Bitcoin is huge, and its size and growth have not come without problems. Transaction fees are very high and the process is slow. To put it simply, there is an almost constant backlog of transactions, and Bitcoin is not very scalable. This means that it can only process small “blocks” at a time – 1 megabyte maximum. Other coins offer better scalability. For example, Bitcoin Cash, a spin-off (or hard fork) from Bitcoin, can process up to 8mb at a time. Meanwhile, Ethereum has its own scalability issues, although the owner, Vitalik Buterin, has announced a three-step plan to resolve this in 2018.
The second problem is with speed. Bitcoin transactions take place “on ledger”. This means that the units representing the transaction are tracked on the blockchain in real-time. This takes up a lot of network. However, companies are now developing “off ledger” transactions, which means the work is done off the blockchain and multiple transactions can be summarized in one communication. Bitcoin’s upcoming off-ledger system is called “The Lightning Network”. Again though, altcoins are typically faster, due in part to their lower status as globally-traded currencies. For example, the Ripple Consensus Ledger can sustain 1000-1500 transactions per second, where Bitcoin can process 7.
What Are the Top Altcoins?
There are many altcoins that have established themselves in the 2017 market. These are the top ten coins by market cap:
- Bitcoin – $291,071,809,582
- Ethereum – $59,176,296,111
- Bitcoin Cash – $26,137,712,956
- Litecoin – $17,659,672,050
- IOTA – $12,802,433,098
- Ripple – $11,159,507,978
- Dash – $6,987,072,965
- NEM – $5,099,246,999
- Monero – $4,892,679,046
- Bitcoin Gold – $4,566,425,137
You can see that Bitcoin is a long way out in front – more in fact than the other currencies put together. That doesn’t mean that it’s the only viable investment opportunity though. Remember, its own price was $1000 less than twelve months ago, and is now pushing $20,000.