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Altcoin

Altcoin (alternative coin) is a term that refers to any  created after  — the first cryptocurrency (October 2008). The name comes from the fact that it is an alternative to Bitcoin and traditional . [1][3]

History

The first altcoin was introduced in 2011, and many of them have been created since then. Early altcoins sought to improve aspects of such as transaction speed and energy efficiency. Altcoins now serve a variety of functions depending on the developers' objectives. [8]

Here's a brief timeline highlighting key moments in the history of altcoins:

Namecoin (2011)

Launched in April 2011, Namecoin was the first altcoin and aimed to provide a decentralized domain name system (DNS). It introduced the concept of merging mining, allowing miners to mine both Namecoin and Bitcoin simultaneously. [5]

Litecoin (2011)

Created by in October 2011, was designed to be a "lite" version of with faster block generation times and a different hashing algorithm (Scrypt). It gained popularity as a peer-to-peer cryptocurrency and acted as a testbed for implementing new technologies. [12]

Peercoin (2012)

Introduced by Sunny King and Scott Nadal in August 2012, Peercoin was notable for its (PoS) consensus mechanism, which aimed to address environmental concerns associated with Bitcoin . Peercoin combined both proof-of-work (PoW) and PoS. [14]

Ripple (2012)

Originally released in 2012, aimed to provide a decentralized payment protocol, currency exchange, and remittance system. Unlike many other , Ripple's was pre-mined, and the network used a unique consensus algorithm. [2]

Dogecoin (2013)

Based on the popular "Doge" internet meme, was created in December 2013 by and . Initially started as a joke, Dogecoin gained a supportive community and became known for its philanthropic efforts. [19]

Darkcoin (Dash) (2014)

Launched in January 2014 as Xcoin and later rebranded as Darkcoin and then , this cryptocurrency focused on privacy and anonymity features. Dash introduced the concept of a two-tier network with miners and masternodes. [4]

Ethereum (2015)

Launched in July 2015 by , introduced and (DApps). Its native cryptocurrency, (ETH), became widely used in the space and for token creation through (ICOs). [9]

Monero (2014)

Created in April 2014, is a privacy-focused cryptocurrency that uses ring signatures, confidential transactions, and stealth addresses to enhance privacy and fungibility. [10]

EOS, NEO, and Others (2017)

In 2017, a wave of new altcoins and projects emerged, including and . These platforms aimed to address scalability and programmability issues, providing alternatives to Ethereum. [6]

ICO Boom (2017)

The year 2017 saw a significant rise in (ICOs), a fundraising method where new projects issued their tokens. This led to the creation of numerous altcoins, some of which gained widespread attention and investment. [10]

Overview

Altcoins are digital currencies that are used within their own blockchain networks to achieve certain objectives. For instance, is used to pay transaction fees on the network. Some developers have forked the code and introduced new cryptocurrencies to compete with Bitcoin as a payment method, such as . [13]

Others have forked the code to raise funds for specific projects. For example, Bananacoin was created by forking the Ethereum code in 2017 to raise money for a banana plantation in Laos that claimed to grow organic bananas. [15]

Altcoins forked from frequently use a similar mining process that relies on the consensus algorithm. Several other cryptocurrencies, however, are experimenting with alternative methods of reaching consensus within distributed networks. The most common alternative to Proof of Work is the consensus algorithm, but other notable examples include the , Proof of Burn, Proof of Authority, and Delayed Proof of Work consensus algorithms. [15]

Types of Altcoins

Forked Coins

Forked coins are created by the codebase of an existing blockchain, often Bitcoin. Examples include (BCH), (BSV), and (LTC). Forks can be either soft forks, where the new coin remains compatible with the original, or , which result in a new, separate blockchain. [8]

Payment Coins

Altcoins designed for everyday transactions and payments fall into this category. , , and Ripple () are examples of payment-focused altcoins that aim to provide faster and cheaper transactions compared to Bitcoin. [22]

Stablecoins

are pegged to the value of traditional currencies or commodities, providing price stability. , (USDC), and are examples of stablecoins. They are commonly used as a stable store of value and a medium of exchange within the cryptocurrency ecosystem. [23]

Security Tokens

Security tokens are tokenized assets offered on stock markets. Tokenization is converting an asset's value into a token, which is then distributed to investors. Any asset, including stocks and real estate, can be tokenized. The asset needs to be held and secured for this to operate. If not, the tokens wouldn't have any value because they wouldn't stand for anything. Because they are intended to function like securities, security tokens are subject to Securities and Exchange Commission regulation. [15]

Utility Tokens

are native to specific platforms and provide access to certain functionalities or services within that ecosystem. Examples include (BNB) on the and , which facilitates data oracle services for . [15]

Memecoins

are inspired by a joke or a silly interpretation of other well-known cryptocurrencies. They typically gain popularity in a short period, often hyped online by prominent influencers or investors attempting to exploit short-term gains. Many refer to the sharp run-up in this type of altcoins during April and May 2021 as "memecoin season," with hundreds of these cryptos posting large percentage gains based on pure speculation. [15]

Privacy Coins

Privacy-focused altcoins prioritize user anonymity and transaction privacy. Examples include , (ZEC), and (DASH). These coins use advanced cryptographic techniques to obfuscate transaction details and enhance user privacy. [8]

Non-Fungible Tokens (NFTs)

represent unique, indivisible assets on the , often used for digital art, collectibles, and gaming. Ethereum-based tokens like and (MANA) are examples of projects utilizing NFTs. [7][21]

List of Altcoins

Here is a list of some popular altcoins:

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Altcoin

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Edited On

February 9, 2024

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