If you have already heard of bitcoin, then you might have also heard of altcoins. The altcoins are also cryptocurrencies like the bitcoin. We can consider some altcoins as bitcoin forks. The term fork is a trading jargon that refers to variations of something.
Why was altcoin named as such?
If you look at your computer, you will find a button that says “ALT,” which means alternative. The same is valid with altcoins. The altcoin is the combination of the words “ALT” and “COIN.” ALT means alternative, while COIN means money or currency. Now, why did it arrive with such a name? We can say that Bitcoin is the original cryptocurrency making the others an alternative only. In short, altcoins are just alternative cryptocurrencies of the initial cryptocurrency, which is the bitcoin.
What is a bitcoin, anyway?
We consider bitcoin the most famous and enormous cryptocurrency among the others, including the rest of the altcoins. As famous as bitcoin sounds, the creator of this technology remains a mystery to everyone. The pseudonym of the mysterious creator is Satoshi Nakamoto.
People are drawn to bitcoin because of lesser transaction fees than the online payment mechanisms that we are used to. They also have lesser transaction fees than the government’s currencies that operate on a decentralized authority.
Bitcoins are not tangible. They are balances that a public ledger holds. Everyone can be able to access them. The computers are the ones that verify massive transactions. Bitcoin is different from the rest because it does not depend on any other institutions like the government or banks. Bitcoins’ values are also not equal to a commodity. Bitcoin remains popular and widely used even though it is not yet a legal tender and all other facts mentioned, hence the birth of other cryptocurrencies such as altcoins.
Now, tell me more about altcoins!
People would refer to altcoins as tokens and not money or currency because they are not legal tenders. They are digital assets. One of the most popular altcoins is the ERC-20 token that sits on the highest throne of the Ethereum blockchain.
In 2008, the world saw Bitcoin’s birth. As of March 2021, there are more or less 9,000 other alternative cryptocurrencies that came out. Some people went to extreme extents when they created modified Bitcoin copies through a “hard fork.” Some altcoins are similar to what Bitcoin does, but they sure are different in terms of function. For example, an altcoin may have another consensus mechanism to make blocks and validate transactions compared to Bitcoin. Some altcoins are more advanced since they have new and fresh abilities like less price volatility and intelligent contracts.
As of March 2021, altcoins already make up more than 40% of the cryptocurrency market. Altcoins indeed tend to copy Bitcoin’s price movement. However, some analysts say that altcoins’ price movements can become independent someday when cryptocurrency investing ecosystems become more mature and new markets develop.