What Are Altcoins? Altcoins Simplified 2

Altcoins are cryptocurrencies other than Bitcoin (BTC) and Ethereum (ETH) but are forked from either BTC Blockchain or ETH Blockchain. Here are some of the most prominent Altcoins which has made a name in the Cryptocurrency sector.

Dogecoin is on such popular altcoins which can be labeled as a meme coin and was created as a joke but went on to gain much fame and notoriety. Dogecoin itself was forked from Litecoin which itself forked from Bitcoin in 2011. However all were designed to serve as a model for digital payment.

Altcoins are essentially born to improve upon drawbacks of whichever cryptocurrency or Blockchain from which they had forked. For example Litecoin which forked from Bitcoin in 2011 to use proof-of-work (PoW) consensus mechanism called Scrypt which consumes less energy and is much faster than the Bitcoin’s SHA-256 PoW consensus mechanism.

Another prominent Altcoin is Ether. It was created by Vitalik Buterin, Dr. Gavin Wood, and a few others to support Ethereum, the world’s biggest Blockchain-based scalable virtual machine. Ether(ETH) is used to pay network participants for the transaction validation work their machines accomplish.

Types of Altcoins

Altcoins are classified according to their use, and what they are intended to be used for. It is also possible that an altcoins can come under two categories since it fulfills two uses.

Payment Token

The name makes it pretty clear that it is a token primarily meant for use as a currency i.e. to exchange value between two parties. One prime example of Payment Token is Bitcoin

Stablecoins

Cryptocurrency trading and volatility are synonymous with one another and the birth of Stable coins helped to add some stability to crypto currency. Stablecoin values are pegged to fiat currencies like Dollars, precious metals like Gold Silver, or other cryptocurrencies. The fiat currency or any other reserve is meant to offset holders if the cryptocurrency fails or faces problems. Price fluctuations for stablecoins are not meant to exceed a narrow range. Examples of stable coin include Tether’s USDT, MakerDAO’s DAI, and the USD Coin (USDC).

To Be Continued