What is an “altcoin”? — Beginner Bitcoin
Ethereum deserves its own entire article; created by a team of high profile experts in the computing space, Ethereum rose to prominence as the second largest cryptocurrency, sitting directly under Bitcoin. In fact, Ethereum is so large, that many don’t consider it an “altcoin” at all, maintaining that ETH should be touted as its own achievement and deserves special recognition.
And all the rest?
Readers are probably wondering…why all the options? Do we really need thousands of other Bitcoin alternatives?
Well, “alternative” is probably a misnomer. Most cryptocurrencies do not solve the same set of problems as Bitcoin, or if they do, they try to do so in a different way or improve where Bitcoin was weak.
Bitcoin is touted as a digital store of value. In that regard, it is like gold, and stands far above its competitors. But altcoins utilize blockchain technology in a similar way in order to achieve other ends.
For example, Polkadot, a cryptocurrency we are quite fond of, aims to accomplish something called “interoperability” between blockchains. The problem they attempt to solve is that different blockchain projects can’t interact with each other. DOT is attempting to become an internet of blockchains, more or less, allowing the different blockchains to communicate with one another.
Other altcoins, such as “stable coins” like USDC, are attempting to provide a cryptocurrency that is pegged to the price of US dollars, in an effort to bridge blockchain and digital spending without the high volatility that is often found in the cryptocurrency space.
Originally published at https://beginner-bitcoin.com on January 22, 2021.