Altcoins – What Are They And Do They Matter?
THE BIRTH OF ALTCOINS
Bitcoin is the mother of all other coins and tokens, since its inception in 2009. Any token or coin that is not Bitcoin is an Altcoin; the breakdown of Altcoin just means alternative coin. According to Coinmarketcap, as of 10/10/2022, there are over 21,000 coins & tokens out there; In October 2017 there were around 2000 coins & tokens. That is a 10x in growth, that is some serious exponential growth in such a short space of time. Please be very careful, 70-90% of them will fail due to them being scams or they have no product market fit or just bad code or management, and will not be around in the long term.
Bitcoin has been on the scene for 13 years now. Cryptocurrency history considers Namecoin to be the first Altcoin to appear in April 2011 and then soon after in October 2011 came Litecoin.
The name Altcoin was apparently first described by Andrew Chow a developer from Namecoin. Its purpose was to decentralize domain registration but to no avail, it failed in that mission, it’s a dead project.
Then the crypto ecosystem birthed XRP in 2012, Feathercoin, Mastercoin, Peercoin.
Developers took Bitcoin’s codebase and made a few adjustments here and there and even more coins began appearing like Monero, Zcash, Dash, Novacoin just to name a few.
2015 Ethereum appears and forks, which simply mean developers adjusting the code and making a few changes here and there. From that came tokens like Wanchain, Ubiq, Ethereum Classic and more.
Forks from other altcoins came about, Stella was a fork from Ripple/XRP, NXT has forks like Ardor, NEM and Burst. This rabbit hole goes very deep my friends. Some forks came to birth by a blockchain diverging into two different chains and others were born from codebase hosted from sites like Github.
You may wonder why all these tokens and coins came about.
The answer is simple, there are many industries and sectors that make up the economy. Bitcoin can’t fill all sectors; therefore, Altcoins exist, and people are free to innovative and of course that is part of decentralization.
In 2017 this was the great ICO era.
ICO means Initial Coin Offering. This was a crazy time in the story of Altcoins.
You must remember, the foundation of crypto was still in the early phase, the infrastructure was just starting to be built and new use cases for crypto were being worked on. A giant experiment it still is.
During the 2017 period, especially in the last half of that year, for a lot of people you could just throw a dart at any crypto and make a quick 5, 10, 20x plus on your money in few weeks / months.
It was an insane period. You had tons projects coming out daily, 10 plus, just with a whitepaper and a website explaining what they plan to do; what problem they were trying to solve, what new innovative idea they had.
Most had no finished product or service and they raised insane amounts of money during their ICO. People were just dumping their money into all sorts, hoping for some crazy gains on their money. For some people they had done well but for the majority they lost their money because they did not sell at the right time and most importantly a lot of these ICO’s were just out right swindles.
Only the developers and founders made money and gave the investors nothing in return. Tons of money was made and lost. This is the risk with getting into an innovative technology in the beginning phases, it takes plenty of figuring out and in that process some people do not mind taking advantage of people who have no true overstanding of what they are getting themselves involved in; sad but true.
THE BITCOIN MAXIMALISM Vs ALTCOINS
If it’s not Bitcoin anything else is a shit coin, all other coins won’t make it. This was the big thinking in 2017 and still is, for some people who we call Bitcoin Maxis. They believe Bitcoin will be the only digital crypto asset that will be needed in the future. What fools these mortals be. How many distinct categories are there in all types of industries. Do you really think Bitcoin can solve issues in every facet of industry? HELL NO! These maxis think ALL Altcoins are inferior to Bitcoin, they say there can only be one. They’ve been watching Highlander the movie a bit too much. LOL.
The ideology they view is that other cryptocurrencies are not in line with the ideals that was established by the pseudonymous Satoshi Nakamoto who created Bitcoin in 2009. Having a maxi point of view whether it’s Bitcoin or any other Altcoin is not helpful to that individual. It limits their mind, which really is not a healthy option.
One of the reasons why we have Altcoins is because Bitcoin has scalability issues, which led to the development of other blockchain networks, that can take on increased volume of transactions. Investments in other blockchains continue to grow and Bitcoin minimalists are still debating Bitcoin’s shortfalls.
We will wait to see what happens, but since I’ve been in this space from late 2017 other Altcoin’s have been growing rapidly.
A MAXIMALISM POINT OF VIEW
Ok Bitcoin was not the first attempt at a decentralized cryptocurrency, but we can say for sure it has been the most successful so far. Some of these Bitcoin maxis got into Bitcoin in the very early days when it was under a dollar so there just protecting their bags, that’s one reason why they are so unapologetic in favour of a Bitcoin only stance. They must give homage to Bitcoin being the mother / grandmother of all Altcoins, she ushered in the age of cryptocurrencies which opened the way to thousands of other digital currencies. We must also overstand the early people that got into Bitcoin, did also invest into Altcoins but lost money, so some just stayed with Bitcoin and shunned everything else.
Another point is Bitcoin’s underlying network is as strong as it is, the thinking goes and because features of any digital currency can be freely co-opted by another digital currency, the network itself is the most key factor.
ALTCOINS TAKING OVER?
In 2022 Bitcoin remains the largest cryptocurrency, measured by its marketcap, with Ethereum chasing closely behind it. Personally, I see Ethereum overtaking Bitcoin’s marketcap one day.
Why? Ethereum has many more use cases going for it, for one with the transition from proof of work to proof of stake, you can now earn a passive income from it just by holding it; to add to that there are so many Dapps built on top of it and the momentum is not slowing down anytime soon, despite the sometimes high gas fees. As for the rest of the market it is speculators dream with thousands of other Altcoins but as stated before it’s still the wild wild west.
It all started with Dogecoin around 2013, the creator designed it as a joke cryptocurrency, he didn’t think it would gain as much traction as it has, but it turns out the market / people love these types of coins for some weird reason; maybe social media or Elon Musk have something to do with it as well, but Dogecoin is a major player in the Memecoin space. Then we have Shiba Inu which launched in 2020. It took the crypto space by storm and made some people obscene amounts of money in such a short space of time. Crazy gains!
Now there are hundreds of others with all sorts of whacky names like Baby Doge Coin, Dogelon Mars, Floki, Kishu Inu and PulseDogeCoin just to name a few.
Looks like Memecoins are here to stay for now.
The way these come into existence is by mining as the title suggest. To produce these coins, a miner uses computational power, from powerful computers or specific machines, to figure out different math problems, so transactions on the network can be verified and authorized by a private key and the coin is released.
Be aware to mine with any efficiency you will need a respectable number of machines, if not you can also join a pool, or try cloud mining to reduce your hardware expense.
Now in saying that the PulseDogecoin ecosystem has a way to mine PulseBitcoin without the need of hardware.
As of March 2022, the top 5 mining altcoins for profit are Monero (XMR), RavenCoin (RVN), LiteCoin (LTC), Zcash (ZEC) and Ethereum Classic (ETC).
Crypto has high volatility, of all the assets on earth it is the most volatile. Prices swing up and down in big percentages, so along came StableCoins. The first was Dai in 2016. Close after was Tether then after a whole lot of others stepped on the scene.
They are pegged to the dollar hence StableCoin, so now people can cash out into dollars without having to leave the ecosphere. They use external references like fiat currencies, precious metals or even another cryptocurrency and chain themselves to them to achieve stability.
Some are asset backed, others are non-asset backed, that use a specific supply regulated seigniorage system to establish their value but it’s not a common thing as a few have failed big time.
These types of tokens have a specific use on the protocol or platform they are connected to, they do not give you a stake in the business itself just to be clear on that, they are not Security tokens.
Utility tokens are like vouchers where you would get some type of discount on services or products to boost interest for that protocol or business.
Please be aware that a protocol has no middleman, it’s you and the code, a business has a middleman just like the old system; crypto was not invented for that, so you must know where you park your money. An example of a Utility token is Chainlink; this token is used as a bonus to users who provide accurate information.
When you own a security token you also own a share in the company, so its like owning a share but in a digital form, and because of this you will get some profit in the future as long at it does well. Being an investment rather than a coin, a company that creates a security token must go through a STO Security Token Offering. This is over seen by whatever financial authority, depending on the county. Key benefits of these type of tokens include-
- Reduced transaction cost
- 24/7 access to markets.
- Automated compliance process.
- Increasing market liquidity.
We will briefly talk about NFTs as we already have a section on just that alone. We are dealing with unique digital assets. Bitcoin is not unique as you can trade it for another Bitcoin that someone else owns. NFTs gives the person who owns it exceptional rights of ownership. Absolutely anything can be an NFT, Art, Music, Fashion, Title Deeds, Videos etc. They really began to gain momentum in 2020, so you are exceedingly early to this game.
THE ALTCOIN MINEFIELD.
There are over 20,000 tokens and coins out there.
It is extremely hard to pick out the good from the bad.
Some of the good ones are
In May 2013 there were 9 Altcoins in the market, Litecoin, Namecoin, Peercoin, Feathercoin, Freicoin, Terracoin, Devcoin, Novacoin, and Mincoin. Did you notice something? All of them have coin in their name which shows that there was not creativity in the names at that time, plus only Litecoin is still has any legs out of all of them.
The other 8 are practically dead. So be very careful where you park your hard-earned money in this game. See profit, take profit and do your due diligence or you may end up at the slaughterhouse.
This article was created by BFAM. He is a crypto enthusiast and the creator of Ether9 TV YouTube Channel.
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I’m expecting Altcoins to be in competition with Bitcoin soon.