The world of cryptocurrency is full of jargon. And one of the most often-seen terms in this sphere is altcoins. If you’re wondering what exactly altcoins are, you’ve come to the right place. In this quick definition, we’ll explain what you need to know.
What Are Altcoins?
Believe it or not, the basic definition of altcoins is pretty simple.
In a nutshell, an altcoin is any cryptocurrency that is not Bitcoin. Yes, that includes Ether, the second most popular cryptocurrency.
See, back in the day, Bitcoin was the only cryptocurrency available. When other cryptos came onto the scene, they were viewed mostly (and some would say, dismissively) as alternatives to Bitcoin.
But now altcoins have started to come into their own. As of February 2022, there were more than 17,000 of them.
And while Bitcoin is still the largest cryptocurrency by market value, it’s possible — and even likely — that these altcoins will replace it in the top spot. But it won’t happen today.
As I write, one Bitcoin (BTC) is valued at just north of $44,000. Its market cap is more than $816 billion.
By comparison, Ether’s (ETH) price is currently just over $3,110, and its market cap is just over $373 billion.
Together, Bitcoin and Ether account for roughly 60% of the total crypto market.
Because most altcoins are derived from Bitcoin, their prices tend to move in tandem with Bitcoin’s. However, analysts expect that future developments in the crypto market as it matures will cause altcoin’s prices to break away from the fluctuations of the larger coin.
What Are the Most Popular Altcoins?
Here’s a rundown of five top altcoins:
1. Ether (ETH): Ether can be a little confusing, because the coin is sometimes referred to as Ethereum. However, Ethereum is the decentralized software platform the Ether exists on. Ether facilitates transactions on the Ethereum network. The Ethereum platform operates with a proof-of-stake (PoS) algorithm. This allows the network to run more efficiently and use far less energy than Bitcoin.
2. Litecoin (LTC): Litecoin was among the first altcoins. It was created by Charlie Lee, a former engineer at Google. Litecoin’s transaction confirmation system is faster than Bitcoin’s, making it a favorite among a growing number of online retailers.
3. Dogecoin (DOGE): Dogecoin was the first of what have come to be known as “memecoins.” It was created as a joke and was originally intended to tip Reddit users for amusing posts. Now the coin, which has a Shiba Inu dog as its mascot, has come to be accepted as a form of payment by a handful of major companies. Elon Musk, CEO of Tesla, is DOGE’s most vocal fan.
4. Cardano (ADA): Like Ether, Cardano operates with an efficient and more environmentally friendly PoS algorithm. It was designed by a team of academics and has the goal of becoming the globally accepted financial operating system (sort of like SWIFT).
5. Polkadot (DOT): DOT is a cryptocurrency that was developed to connect other blockains. It allows different crypto platforms to work together. Developers can use DOT to create their own blockchains while using Polkadot’s security protocols. This makes DOT especially safe from hacking.
Should You Invest in Altcoins?
Altcoins are like the penny stocks of the crypto world. With the exception of Ether, they haven’t established themselves quite as well as Bitcoin and are therefore a bit more volatile.
Still, a lot of investors are buying altcoins that they believe will be the next top cryptocurrency. And because some of them are quite cheap, they might be a fun speculation. However, never bet any money you can’t afford to lose into risky plays like altcoins (or crypto as a whole, for that matter).
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