Altcoins are cryptocurrencies that are not Bitcoin. They are the alternative currency to Bitcoin and they have been seeing a rise in popularity since about 2016.
Altcoins were originally created to circumvent Bitcoin's limitations. Many in the early crypto community believed that Bitcoin would hit a wall and only the blockchain technology with its transparent nature would remain. That is why alternative cryptocurrencies were created.
Many of the early altcoins have been created to try out new features or solve problems that Bitcoin was not able to solve on its own (e.g., Monero’s full transaction privacy was a response to Bitcoin’s pseudonymous blockchain).
Throughout the history of cryptocurrency, there has been lots of volatility in price of altcoins. This is a beginner article, hence a quick risk note:
Altcoins, just like Bitcoin, do not come with central banking authority backing it like dollar or euro through governments and central banks. The value of altcoins can be based fully on speculation. There is no regulatory body taking care of that and it is your own responsibility to do your due diligence.
What is an Altcoin?
An Altcoin is a digital currency without any central authority or issuing bank. It runs on a decentralized peer-to-peer network and uses cryptographic techniques such as mining, encryption, and hashing to manage its transactions.
An altcoin is also referred to as an alternative cryptocurrency or a cryptocurrency alternative.
Types of Cryptocurrencies& Their Differences
Cryptocurrencies have different uses. Some are more anonymous than others, some have very limited use cases while others are more general. We go more into the different types of cryptocurrencies in our article about fundamental value in crypto.
Blockchain technology is what makes cryptocurrencies possible. Cryptocurrencies do not have a centralized form nor a physical manifestation, they exist only digitally on a blockchain with all transactions recorded in the same ledger.
The first cryptocurrency was Bitcoin, but it's not the only one out there; there are hundreds of other cryptocurrencies such as Ethereum, Ripple, Litecoin, Monero etc.
How Do I Buy Cryptocurrency?
If you want to know how to buy cryptocurrency, there are quite a few different options out there.
- You can buy crypto through an exchange such as Kraken and Poloniex.
- Another way is to use your credit card and purchase the cryptocurrency at the market rate.
- There are P2P markets for anonymous no-KYC purchases too.
If you're interested in buying crypto with your credit card, then you might check out Abra or TenXs services which let you purchase digital currency with your debit card and spend it on Visa/Mastercard credit cards respectively.
How Do I Store Cryptocurrency?
Cryptocurrency is not just a new form of payment anymore. It has now evolved to a whole new level and became a hotbed of activity that has been increasing every day.
Thanks to blockchain technology, it is now possible for anyone with an internet connection to freely exchange currency. No real need to depend on financial institutions such as banks or PayPal. And the use of cryptocurrency as digital assets has grown exponentially over the years.
No central regulation also means lots of individual responsibility, though. One should be cautious when choosing where to store their crypto holdings.
Most exchanges are vulnerable to cyber attacks, most personal computers to viruses. The best solution would be storing your digital assets in hardware wallets which will provide an extra layer of security.
Those are the so-called offline/cold storage wallets that come with higher levels of encryption.
The Pros & Cons of Using Altcoins Over Fiat Currencies
As the final words, in case you are still on the fence about whether to buy cryptocurrency or not, let’s look at the pros and cons of using cryptocurrencies over fiat currencies.
- Pros: Cryptocurrencies are decentralized, anonymous, and have no centralized issuer or government to control them. No central authority can take your cryptomoney away from you due to a ‘law’ or a policy.
- Cons: Cryptocurrency transactions can be difficult due to their complexity and lack of trustworthiness. The storage asnd security of your cryptocurrency stash is your own personal responsibility.