Bitcoin, the king of cryptocurrencies, maintains its status as the first established cryptocurrency and the most expensive coin of its kind on the market. It has become synonymous with the term cryptocurrency, but alternative cryptocurrencies known as altcoins, of which there are currently over 5,000, also add something interesting to the table. Each altcoin has its own unique offering, ranging from faster payment terms to more efficient cross-border transactions, offering a wide range of benefits that could be better suited to people's needs than the popular head of household, Bitcoin, according to what you seek. Alternative payment methods outside of traditional currencies, including altcoins, are generally on the rise. Altcoins (and Bitcoin) combine the properties of modern money and gold into a new type of asset that makes it rare (like gold) and easily transferable (like fiat currencies). They can be easily stored, cannot be removed from the owner without the owner's consent, and are accessible to anyone, anywhere. About the Author Sam Kopleman is UK Country Manager at Luno
The different categories of altcoins
Altcoins generally fall into a number of categories including mining-based cryptocurrencies, stablecoins, security tokens, and utility tokens. stablecoinsStablecoins are currencies tied to an existing asset, such as the US dollar or the euro. One of the most popular examples of this can be seen in Facebook's Libra, which is pegged to the USD. The idea behind pegging a coin to an existing asset is to reduce the price volatility commonly seen with Bitcoin. Mining Based Parts
While the coins can be purchased as traditional currency, they can also be mined. In short, mining requires the user (or miner) to validate a transaction, guarantee its authenticity, and update the blockchain accordingly; the reward for this is cryptocurrency. An example of a mining-based altcoin is Ethereum, more on that below. security tokens
Security tokens are a form of investment contract, promising consumers equity in a company, profit sharing, or even voting rights, to name a few examples. As such, they are usually tied to a company and governed by security laws, which means there are stricter guidelines around buying and transferring security tokens. utility tokens
Utility tokens allow a user to access a service. For example, Filecoin token owners can spend the cryptocurrency to access the Filecoin network, a decentralized peer-to-peer network that stores files online.
Which altcoin is right for you?
While exploring the 5,000+ existing altcoins is an impossible task, it is worth examining and understanding the defining characteristics of four leading Bitcoin alternatives, namely: Ethereum, Litecoin, Ripple (XRP) and Bitcoin Cash. ethereumDespite the altcoin market having been around for about a decade and Bitcoin coming into play in 2009, the only cryptocurrency player mentioned in their league is Ethereum. Ethereum is a public peer-to-peer network, with its own cryptocurrency called Ether. The biggest difference with Bitcoin is that while Bitcoin aims to become a globally adopted currency that could replace conventional money, Ethereum is a global computer on which smart contracts (digital contracts that are automatically executed when their obligations are met) are made. conditions) and decentralized applications can work. In 2016, there was a lot of buzz around Ethereum in the sense that people predicted that it might even overtake Bitcoin as the most popular crypto asset. Since then, the Ethereum price has fallen significantly against Bitcoin, but it still plays a very important role as a popular altcoin. Litecoin
Also known as "Silver to Gold Bitcoin" due to its similar functions, Litecoin was launched in 2011 with the intention of being a global digital payment system. Like any online payment system, from PayPal to a bank transfer, users transfer litecoins to each other when they make payments. However, despite the obvious comparisons to Bitcoin, Litecoin is a cheaper and faster alternative, thanks to the fact that it can process payments four times faster. Its goal is to process a block (containing many valid transactions) every two and a half minutes, compared to 10 minutes for Bitcoin. It is also cheaper, as it costs only a thousandth of a litecoin to process a transaction of any size. Compare that to the transaction fees found with services like PayPal, which charges 3%, and it's easy to see why Litecoin is considered the most viable option for everyday transactions and purchases. XRP
Despite its common association with the American company Ripple, XRP is an independent digital currency, not owned or controlled by a single entity or person. It is an open source cryptocurrency, whose main advantage is the ability to allow cheaper and faster cross-border transactions than other payment networks. Running on its own blockchain ledger, XRP transactions can take as little as 3-5 seconds to process, and the cryptocurrency serves as a bridge between different currencies. bitcoin cash
In a nutshell, Bitcoin Cash (BCH) is a cryptocurrency that branched out of Bitcoin. It is not the same coin and runs on its own blockchain, but they share many of the same properties. The main difference between the two currencies is that Bitcoin Cash was born out of a desire to improve Bitcoin as a medium of exchange, rather than a medium of investment. With that in mind, Bitcoin Cash is designed to make everyday transactions easier, cheaper, and faster, and aims to become a global digital currency that would compete with payment giants like PayPal and Visa. Cross-border payments with traditional banks can be slow and expensive. In many cases, it's easier to take cash on a plane and deliver it to the recipient than to make a bank transfer. Bitcoin Cash offers a safe, instant and cheap option for cross-border financial transactions.