From Bitcoin to Altcoins: A Short Guide to the World of Digital Cryptocurrencies
Step into the realm of digital finance as we guide you through the evolution of cryptocurrencies. From Bitcoin to altcoins, gain a fundamental understanding of these virtual assets and their role in shaping the future of global finance.
What is altcoin?
Altcoin refers to cryptocurrencies other than Bitcoin. Many altcoins are essentially modified versions of bitcoin with limited and unremarkable changes. Nevertheless, numerous altcoins promote themselves as superior alternatives to bitcoin. The initial success of bitcoin paved the way for other cryptocurrencies to achieve their own accomplishments.
The term “altcoin” is a combination of “alternative” and “coin.”
Altcoins are primarily marketed by addressing some of bitcoin’s potential limitations while retaining its core functionalities that attract bitcoin users.
Since altcoin encompasses all cryptocurrencies except bitcoin, there is a wide variety of altcoins in existence.
Like bitcoin, most altcoins operate on a decentralized peer-to-peer network and involve the process of block mining, where users solve problems to earn cryptocurrency rewards.
Despite these similarities, Altcoins can differ significantly from Bitcoin. For instance, some altcoins employ different proof-of-work algorithms, alternative methods for users to contribute energy to mining blocks, and enhancements to user anonymity.
Notable examples of well-established altcoins include Litecoin, Ethereum (the second-largest cryptocurrency by market share after bitcoin), and Ripple.
Currently, Litecoin is considered the primary competitor to bitcoin. While its coding closely resembles that of bitcoin, there are notable differences. Litecoin approves a mined block approximately every two and a half minutes, compared to bitcoin’s ten-minute interval. Additionally, bitcoin has a maximum coin limit of twenty-one million, whereas Litecoin allows for a maximum of eighty-four million coins. Moreover, Litecoin employs a distinct proof-of-work method, making it more challenging for small groups to dominate the Litecoin blockchain.
Which 5 altcoins have the potential to achieve a level of success similar to Bitcoin?
At first glance, Ethereum and Bitcoin may appear similar, but they have significant differences under the surface. Originally intended as an enhancement to Bitcoin, Ethereum evolved into a separate project aimed at overcoming the limitations and frustrations of the Bitcoin platform. Ethereum can be seen as the improved version 2.0 of Bitcoin.
While Bitcoin is a cryptocurrency, Ethereum goes beyond that by incorporating smart contract capabilities. This enables Ethereum to serve as a platform for blockchain projects in ways that are not feasible with Bitcoin. With increasing industry support, it is becoming increasingly likely that Ethereum will surpass Bitcoin by a substantial margin. Fundamentally, Ethereum is a superior product and will enjoy greater success than Bitcoin.
Currently, Ethereum is the only altcoin truly challenging Bitcoin’s dominance. Although Bitcoin and Ethereum are safer choices, there are several smaller altcoins showing potential for stronger growth and higher returns.
Ethereum Classic (ETC): Formerly viewed as a questionable coin funded by hackers, ETC has undergone remarkable transformation. Supported by IOHK, a company founded by Charles Hoskinson, one of Ethereum’s creators, ETC has forged its own distinct ideology and development roadmap. Despite its turbulent beginnings, the price of ETC has been on the rise and is projected to continue its upward trajectory.
MobileGo (MGO): In the altcoin market tailored for gaming, MobileGo stands out as a frontrunner. It’s only a matter of time before a cryptocurrency firmly establishes itself within the gaming community. As mainstream adoption progresses, the price of MobileGo is expected to witness significant growth.
ZenCash (ZEN): Among the altcoins employing zero-knowledge encryption, Zcash (ZEC) holds the most prominence. However, ZenCash presents a lesser-known alternative with a smaller market capitalization. Although it faced challenges during its launch and experienced developer controversies leading to a sell-off, ZenCash has ambitious plans and continues to advance in its development. The forthcoming introduction of their inaugural differentiating feature, Secure Nodes, is anticipated to garner attention and propel the price upwards.
Honorable Mention: IOTA (MIOTA): The Internet of Things (IoT) industry is expanding rapidly and holds immense potential. IOTA aims to be a cryptocurrency tailored to meet the specific requirements of IoT. While the concept of IOTA is promising, its implementation raises some doubts. The Tangle technology is intriguing, but the unproven economic incentivization model raises questions.
It’s important to note that investing in altcoins carries risks, and thorough research and analysis should be conducted before making any investment decisions.