What are altcoins?

7 January, 2015

Altcoins, or alternative coins, have gained increasing notice, yet there is often some level confusion as to exactly what they are and what role they hold in relation to bitcoins.

To put it simply, they are any type of cryptocurrency other than bitcoin. Due to the fact that bitcoin was an open source code, ample room was left for others to build upon that idea and perhaps even correct what they saw as bitcoin's shortcomings. While altcoins have increased in number and have become more well known, bitcoin remains the standard. Due to the large developer community supporting Bitcoin and the significant demand for bitcoin, it remains likely that it will remain the frontrunner in the alternative coin community for some time.

With that said, a number of other alternative coins are coming onto the scene. In total, there are now more than 100 various altcoins in existence, and it is likely that there will be more introduced in the future. Some of those coins may well fail and others will likely grow. Among the features of altcoins that many people find to be attractive is the fact that it is often possible to purchase altcoins at a much lower price than bitcoins. Of course, the demand for altcoins has not been proven and as a result, there is still more risk associated with purchasing altcoins. Among the most popular and well known altcoins are LiteCoin and Dogecoin.

Litecoin holds perhaps the largest segment of the altcoin market. Invented by Charlie Lee, litecoin is actually based on the same code as bitcoin. As a result, in the event that bitcoin should fail, the future of litecoin would appear bright.

Dogecoin has gained a following of its own, but has yet to attain the same status as bitcoin. In terms of use, dogecoin is most frequently used for sending tips online. Within the last few months, this altcoin was made available for trade. The primary drawback to dodgecoin is that it still falls behind bitcoin in terms of value. Furthermore, as bitcoin moves increasingly toward becoming a mainstream standard for digital currency, there will likely be fewer and fewer people who are willing to accept altcoins, including dogecoin.

While altcoins still have a long way to go in terms of catching up with bitcoin's success, it cannot be denied that altcoins do offer some advantages, which is one reason why many of them have been able to gain such large communities of supporters. For instance, transaction speed has proven to be one potential problem with bitcoin in the past. It can frequently take up to an hour for a transaction to receive a sufficient amount of confirmations in order to be irreversible. Both litecoin and dogecoin transactions can be confirmed within just a couple of minutes, a feature that has proven to be popular with many supporters of those altcoins.

Privacy is also another important consideration. Pseudonymity is implemented in the network with bitcoin. Even so, a log of all transactions is retained inside the blockchain. The drawback to this is that it can result in users being tracked. Darkcoin is one altcoin option that was designed specifically to correct this issue by incorporating bitcoin tumblers, which makes it more difficult to determine precisely which wallet sent a specific transaction.

Currently, there is not one cryptocurrency available in the industry that has been able to implement all of the best features successfully. Furthermore, new altcoins continue to emerge onto the scene rapidly. The one thing that is certain is that there remains ample room for innovation within the world of cryptocurrencies.