Friday, March 29, 2024

altcoin

by Hideo Nakamura
altcoin

Altcoin Definition

An altcoin, or alternative coin, is any cryptocurrency other than Bitcoin. Altcoins are often used to describe all cryptocurrencies launched after Bitcoin and can also refer to tokens built on different blockchain protocols such as Ethereum, Ripple, or Litecoin. However, they may differ significantly from each other in terms of features offered by the protocol and its underlying technology.

Types of Altcoins

There are several types of altcoins available in the market today with various characteristics that make them unique:

1) Fork Coins – These coins result from a hard fork (chain split) when an existing blockchain splits into two separate blockchains resulting in one being left behind while the new chain uses updated rules for its transactions. Examples include Bitcoin Cash (BCH), which was created when developers disagreed over how best to scale bitcoin’s transaction throughput capacity; and Ethereum Classic (ETC), which resulted from disagreements about how funds should be used following The DAO hack on Ethereum’s network.

2) Privacy Coins – These privacy-focused coins offer enhanced anonymity compared to traditional cryptocurrencies like Bitcoin since their transactions cannot easily be traced back to a user’s identity due to strong encryption methods employed during transfers between wallets/addresses within these networks. Examples include Monero (XMR); Zcash (ZEC); Dash; Verge; PIVX; etc..

3) Pre-Mined Coins – As opposed to Proof Of Work consensus algorithm based currencies where miners compete against each other for newly generated blocks/tokens via computational power invested towards solving cryptographic puzzles , premined coins come preloaded with predetermined amount of token supply mined ahead of time by creators themselves without need for mining process altogether .Examples include Waves ; BitShares ; Steem ; NEM etc .

4 ) Stable Coin – Stablecoins were designed mainly as hedging tools providing stability along with full liquidity using crypto assets backed up usually by fiat currency reserves held at bank accounts & audited regularly . Example includes Tether(USDT).

5 ) Utility Token – They provide users access rights & certain benefits related usage activities within distributed applications powered through respective native tokens issued either via ICO campaigns or automated smart contracts platforms such as ERC20 standards running atop ethereum platform offering decentralized application development services among others .. Examples includes BAT(Basic Attention Token) , MKR(MakerDAO token ).

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