An altcoin is an alternative cryptocurrency to Bitcoin, which itself was the only crypto coin at one point in time. Know more about what are altcoins.

1. What are Altcoins? A Guide to Cryptocurrencies
Beyond Bitcoin

2. “The world is gradually waking up to the fact that every form of money that
exists at the moment, except blockchain-based Bitcoin and other altcoins,
can be manipulated and weaponized.” – Olawale Daniel
After the great recession of 2008, Bitcoin established its reputation at the
top well before any other types of coins in the ‘wild west’ of cryptocurrency.
Following its success, ‘altcoins’ came in line. With the increasing popularity
of cryptocurrencies, some top altcoins are showing the potential to throw the
throne-holder BTC out of its place. But what are altcoins? What are the
types of altcoins? How altcoins work? We got all your queries covered!

3. What Are Altcoins?
Before we jump to how altcoins work, let’s learn first ‘what are altcoins?’ Any
cryptocurrency that is not Bitcoin falls in the category of altcoins. The term
altcoin is a combination of the words ‘alternative’ and ‘coin.’ Bitcoin dominated
the field so thoroughly in its early years that other competitors were defined in
relation to the original cryptocurrency. As of 2021, there are over 13,000
altcoins in circulation worldwide. The majority of altcoins are based on the basic
structure provided by Bitcoin.
Litecoin was the first altcoin. In 2011, it was forked from the Bitcoin blockchain.
Unlike Bitcoin, Litecoin employs a different proof-of-work (PoW) consensus
mechanism. It’s known as Scrypt. Scrypt uses less energy and is faster than
Bitcoin’s SHA-256 PoW consensus mechanism. Ethereum is the most popular
altcoin. It makes up around a quarter of the crypto market share. The rest of the
altcoins make up around 40% of the market.

4. How Do Altcoins Work?
Now that you know ‘what are altcoins,’ let’s focus on how altcoins work. Most altcoins are
created and released by developers who have a distinct vision or applied use case for their
cryptocurrency. Altcoins operate on the same principles as Bitcoin. However, how these altcoins
use blockchain may differ significantly from how Bitcoin does.
Many of them are forks. A fork is the separation of a blockchain that is incompatible with the
original chain. For example, Litecoin is a Bitcoin fork. It began as a clone of the source code for
the Bitcoin blockchain. However, it included changes to improve transaction times and storage
efficiency.
Meanwhile, there are some altcoins that are not forks. These altcoins offer developers a toolkit
and programming language for creating decentralized applications on the blockchain. Ethereum,
for example, extended Bitcoin’s blockchain technology beyond just recording financial
transactions. The Ethereum blockchain also stores agreements in the form of ‘smart contracts.’
These contracts execute an agreement automatically if certain conditions are met.

5. Altcoins vs. Bitcoin Difference
The cryptocurrency market is divided into two sections: Bitcoin and altcoins.
The first cryptocurrency was Bitcoin. Altcoins work on the same principles
as Bitcoin. However, it goes a step further with some additions and unique
features. Mining altcoins can be mined using any computer. As a result,
mining altcoins is more convenient than mining Bitcoin. For instance,
Dogecoin is a mining-based altcoin that takes only a minute to create a new
DOGE. Whereas mining Bitcoin takes around 10 minutes.
Bitcoin, on the other hand, has better investing fundamentals than the vast
majority of altcoins. Bitcoin is the most popular cryptocurrency, having been
purchased, held, and traded the most. In order to survive as a viable
alternative to Bitcoin, an altcoin must have compelling use cases.