In the beginning there was only Bitcoin. But virtual currencies are now abound in the internet.
New to virtual currencies? Just think of money, but you don’t actually feel them with your hands. They are now circulating in the web and all you need is to trade or invest in them if you don’t want to get left behind. Also called cryptocurrencies, it still has a long way to go before it can take over the fiat currencies. Others see that it will be the norm for people to use when purchasing goods and services.
Bitcoin is undeniably the most popular cryptocurrency in the market, but ever since they have become widely known for being a decentralized system, alternative cryptocurrencies surfaced.
What are alternative cryptocurrencies?
Alternative cryptocurrencies (often called altcoins) is just like any other digital currency and is most often compared with Bitcoin They share the same principle in cryptography however, altcoins were introduced to the public after Bitcoin’s success. In a general sense, altcoins project themselves as a better substitute to Bitcoin. The latter’s success being the first blockchain-based digital currency that has paved its way for a lot of followers. Many altcoins today are trying to prey on any perceived limitations that Bitcoin possess and even come up with a brand new versions that has competitive advantages.
Why altcoins matters?
Altcoin was orginally an abbreviation for “Bitcoin alternative”, wherein it described every cryptocurrency that wasn’t Bitcoin. The altcoins are referred to as the alterntaive to Bitcoins because they are hoping to improve or replace at least a single component of Bitcoin.
Recently, the term “altcoin” has evolved into every cryptocurrency except Bitcoin, Ethereum, and Litecoin which are considered the “Big 3” of crypto. Litecoin, which was the very first of the altcoins, added to the utilization of a different hashing algorithm that Bitcoin uses. Because of this reason, Litecoin has marked itself as being the silver to what Bitcoin is to gold.
You can find a lot of altcoins and more will appear every day. As of this writing, CoinMarketCap has listed 867 coins. Most of the altcoins add little value and are similar to Bitcoin, only changing minor characteristics like distribution method, transactions speed or the hashing algorithm. Most altcoins don’t make it that long in the market and quickly die out and are forgotten.
Yet some of the altcoins have innovated themselves by experimenting with various features that you cannot find with Bitcoin. Take for example with Darkcoin where it hopes to provide the right platform for anonymous transactions, BitShares on the other hand defines itself as being the alternative to a stock exchange. Ripple also serves as a protocol wherein users are able to employ in making inter-currency payments easily. Some of the altcoin ecosystems like the Mastercoin and CounterParty even make use of the Bitcoin blockchain in order to secure the platform.
What is a shitcoin?
Shitcoins are a term for altcoins that are deemed to be worthless through time and then in the end turn out to be a scam. There are an abundance of badly designed shitcoins in the cryptocurrency world. Any new altcoin that does not reveal any significant innovation could be considered shitcoins. The developers of these coins are in it for nothing but greed.
Making a long-lasting altcoin is actually quite difficult to pull it off. There are a lot of requirements that must be met and it should be of the same qualities that you see in many successful businesses. Great leadership, community engagement, marketing, transparency and communication.
Altcoins vs tokens
Altcoins and tokens are often compared with each other because of their almost similar characteristics. But if you take a look at it, altcoins are distinct currencies that comes with its own wallets and blockchains. Tokens, which can also be referred to as colored coins or digital assets exists in the same blockchain where its parent is, which usually is represented a part of something. To make it simpler, they are representation of a single asset at the top of the blockchain wherein it uses another layer of the same blockchain.
ERC-20 tokens and its connection with Ethereum
There are various tokens that can be used together with Ethereum, and they differ from Ether. How tokens are associated here is that they represent the digital assets wherein a variety of values can be attached. They can be represented as assets with much diversity like IOUs, vouchers or even real objects. The tokens, in this way, are by essence smart contracts wherein the Ethereum blockchan is being used. These tokens are often referred to as ERC-20 token standard.
ERC-20 describes as a common list filled with rules for all the tokens of Ethereum to follow. This means that this specific token powers up the developers of every type in accurately predicting on how the new tokens are going to function within the bigger system in Ethereum. The impact that this ERC-20 has on the developers is very massive, since projects do not really need to be done again every time a new token gets released. Instead, they are designed to become compatible with the new tokens, provided that such tokens are adhering to the rules.