What are altcoins
In the modern world, there are practically no people who have not heard anything about Bitcoin. The idea of developing this cryptocurrency was the creation of an independent digital currency, which would allow paying for goods and services on the Internet. However, many do not realize that besides it there are many alternative cryptocurrencies that have great potential.
All cryptocurrencies that appeared after bitcoin were called ‘altcoins’, which means ‘alternative to bitcoin coins.’
The first altcoin appeared in 2011 under the name Namecoin, its main idea and functionality were no different from Bitcoin. Soon, many enthusiasts began their own cryptocurrency projects.
Why do you need altcoins
Altcoin developers wanted to improve and eliminate the technical limitations of the first cryptocurrency, as well as create new options for electronic payments for every area of people’s lives, so today the list of altcoins has more than one and a half thousand different coins.
The main disadvantages of bitcoin are:
- Long transactions. To speed up transaction time, other algorithms must be used. At the same time, bitcoin has a large volume of blocks, which rather slowly calculates the necessary operations;
- Low level of anonymity. Cryptocurrency developers really tried and encrypted their transactions well, however, it is possible to track the sender and receiver. Many new altcoins use additional encryption methods;
- Complicated and expensive mining process. Bitcoin mining is constantly becoming more complicated, so each time it is necessary to use more resources in order to form new blocks in Blockchain. Altcoins, in turn, use other protocols that significantly simplify the mining process and do not require serious equipment;
- Lack of functionality. The main task of bitcoin is to act as a tool for calculating. Altcoins have other functionalities, for example, the creation of a smart contract.
Another reason for the need for altcoins is technological innovation. Each new project sets itself the goal of introducing a technological innovation that is capable of solving specific problems.
In the modern world, cryptocurrency trading has become an integral part of the financial world, so the more options for altcoins, the more opportunities to diversify your investments.
And finally, most developers need access to the blockchain. First of all, they are interested in a reliable data transfer system and the secure storage of important business information. To access this technology, you need to use altcoins.
How to create altcoin
If you set out to create your own altcoin, then it is not as difficult as it might seem at first glance. There are two main ways to create altcoins:
- Creating a token on Ethereum;
- Creating a simple fork.
How to mine altcoins
If you decide to start mining altcoins, then you should know that this is a rather difficult process, which is regularly complicated and requires the use of sophisticated computing equipment and facilities. Today it’s almost impossible for one to mine altcoins if you really want to earn decent money.
Before starting mining, you need to figure out what equipment and programs are needed to mine a particular cryptocurrency.
Where to store altcoins
If you decide to invest your money in altcoins, you should take care of the safe storage of your investments in advance. Here are the main storage methods:
- Storage of altcoins on an exchange wallet. This opportunity is available on almost all exchanges. We do not recommend this option, as it may be unsafe, because the exchange may suddenly close or undergo a hacker attack. In this case, it will be almost impossible to return the funds. The exchange is more suitable for short-term storage or trading.
- Storage of altcoins in a cryptocurrency wallet. At the moment, there is a large selection of wallets for the most popular cryptocurrencies. For your convenience, you can choose one of the options: web wallets, mobile, desktop, browser extensions and hardware (cold) wallets.
See also our section “Wallets”, which contains options and instructions for installing wallets for the most popular cryptocurrencies.
This article should help novice cryptocurrency enthusiasts to figure out what altcoin is and what it is eaten with, how to create your own altcoin, as well as identify promising areas of investment. Do not forget that despite the fact that Bitcoin is still considered the most popular cryptocurrency, many altcoins should not be underestimated. This article should not be construed as investment advice; all decisions you make are at your own risk.