After the successful launch of Bitcoin, it was little wonder that other digital cryptocurrencies would want to get in on the act. The very first alternative cryptocurrency to Bitcoin came in April 2011 when Namecoin was introduced, aiming to nail the concept of proof-of-work mining. Wind the clock forward eight years and there are now hundreds of smaller and newer cryptocurrencies available to buy and sell, which have all been placed under the umbrella of ‘altcoins’ – short for ‘alternatives to Bitcoin’.
Altcoins differ to Bitcoin in a plethora of ways. They may have an alternative coin distribution method, or they may have an entirely different economic model. Some may rely on the proof-of-work mining algorithms, while others might not depend on proof-of-work whatsoever. Today, there are altcoins out there to suit all your cryptocurrency needs. Fortunately, at Coinlist, we are the home of altcoins, dedicated to offering all you need to know about over 50 different altcoins in the crypto space.
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What are the main differences between altcoins?
Although there are said to be over 4,000 different altcoins in circulation in 2019, some of these altcoins are just alternate versions of Bitcoin with only minor changes to their make-up. However, there are some altcoins that are significantly different to Bitcoin in terms of their goals and purposes.
There are some altcoins that operate with totally different algorithms to that of Bitcoin. There are altcoins that use proof-of-stake algorithms, with no requirement for miners, only stakers. The latter are rewarded for working to verify transactions on blockchains. The difference between stakers and miners is that the former work individually, verifying separate blocks and thereby saving energy.
Some altcoins aren’t even designed to work as a digital currency like Bitcoin. The likes of NEO and Ethereum were founded to power applications built on their respective blockchains.
What is the difference between altcoin and cryptocurrency?
There is some confusion surrounding this question. In actual fact, altcoins are just as much cryptocurrency as Bitcoin is. Any altcoin cryptocurrency can be used as a tool or resource on a blockchain network and can be bought, sold or traded using their native blockchain tokens. These tokens may serve different purposes based on the blockchain network.
Table of leading altcoins
Bitcoin Cash
Bitcoin Gold
Ripple
Litecoin
Stellar
Total coins
21,000,000
21,000,000
100,000,000,000
84,000,000
103,800,000
Mining algorithm
SHA256
Equihash
N/A
Scrypt
N/A
Mining devices
ASIC
GPU
N/A
ASIC
N/A
Value (as of 1st Jan 2019)
£123
£10
£0.27
£23.77
£0.08
Block time
10 minutes
10 minutes
3.5 seconds
2.5 minutes
5 seconds
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What are hard and soft forks?
If you are unclear on the difference between a hard fork and a soft fork of a cryptocurrency, don’t panic. In general crypto terms, a fork is deemed a modification of existing open-source code, sometimes conducted as a test and sometimes as a fundamental change to an existing cryptocurrency.
Hard forks
A coding change to an existing protocol that renders the original or previous version invalid. The only real solution is for users of the original or previous fork to abandon it in favour of the latest hard fork.
Soft forks
A coding change that sees a protocol altered in a cosmetic way rather than a fundamental change to the previous or original protocol. The new version blocks will continue to be accepted by the previous or original nodes.
Why can some altcoins be created by mining and others can’t?
The advent of complex ASIC miners and proof-of-work algorithms has meant that some of the latest altcoins are designed so that they strictly cannot be mined. This decision was taken to reduce the reliance on energy and the fact that some altcoin founders believed the mining process to be unfair, with only those with the most powerful processing units capable of mining cryptocurrency fast enough.
How can you buy altcoins?
The best way to buy and invest in altcoins in 2019 is to use the leading cryptocurrency exchanges that allow you to trade fiat currencies and other cryptocurrencies in exchange for other crypto assets. There are some cryptocurrency exchanges that have integrated cryptocurrency wallets to help you store your altcoins securely from the moment you buy them. Alternatively, you may need a cold storage wallet to house your new altcoins offline away from the prying eyes of cyber-criminals.
Alternatively, you may consider trading the value of burgeoning altcoins via CFD brokers that offer markets to trade the underlying price of specified crypto assets without the need to physically store altcoins in a wallet.
What is the relation between an ICO and an altcoin?
An initial coin offering (ICO) is an exciting time for any new altcoin. It’s a chance to offer savvy crypto investors a chance to invest in some units of a new cryptocurrency or token in exchange for well-established crypto assets like Bitcoin and Ethereum. An ICO can be used to fund the development of an altcoin and provide a marketing platform to pique the interest of potential users. We’ve documented the history of ICOs in a page to give you more information.
Ethereum: Altcoin or cryptocurrency?
Many people forget that although Ethereum is rapidly gaining ground on Bitcoin as the second most valuable cryptocurrency, it is still an altcoin. In fact, any alternative to Bitcoin should be considered an altcoin. The Ethereum Foundation was established in June 2014 in Switzerland and although it has gained global appeal, it still retains its offices there.
Conclusion: Why invest in altcoins as an alternative to Bitcoin?
If you are prepared to play the long game and invest in a range of altcoins, you could make significant returns on your investment. It’s never a safe bet to invest in just one cryptocurrency like Bitcoin. By spreading your risk and investing in the top ten altcoins for 2019 you can enjoy cumulative growth across an entire portfolio of new and exciting cryptocurrencies.
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