What is altcoin? Why are they made?
Altcoin is a compound word by: Alternative "and"Coin”Refers to coins that are not Bitcoin. Bitcoin is the original cryptocurrency and all the other followed cryptocurrencies are meant to replace Bitcoin or at least improve somewhat of Bitcoin. There are currently nearly 2,000 altcoins in existence today. It should be understood simply that Altcoin is a generic term for only all coins that are selected instead of Bitcoin.
In fact, after a while, Bitcoin seems to have shown itself to be a coin with old and outdated technology. Therefore, less energy-friendly and environment-friendly alternatives are needed, which can be exploited using ASIC mining tools. This promotes the creation of other currencies so that everyone can actively participate in the mining process.
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Not only that, Bitcoin is slow and sometimes, there are many unconfirmed transactions online. This results in high transaction fees. Additionally, bitcoin cannot be expanded. It only allows 7 transactions per second (TPS) which cannot compete with payment solutions like Visa supporting up to 24 transactions per second. Therefore, the creation of altcoins is understandable, mainly to improve the inadequacies that Bitcoin is suffering from.
How is altcoin different from Bitcoin?
Bitcoin is open source, meaning it is public and accessible to anyone. Many altcoins, especially the first altcoins, use the same mechanism as Bitcoin. Called peer-to-peer mechanisms, use computing power to solve mining algorithms or unlock new coins. A cheaper and more efficient alternative to using traditional fiat currency to complete payment transactions.
Although they use the same mechanism, they differ in the protocol including block size, mining speed of each block, different algorithms (determining which type of hardware is required to exploit). and consensus mechanism (how miners determine the next block / miner solution).
Should we invest in Altcoin?
There are currently 2000 altcoins in existence, and of course there are many worthless junk coins. So choosing good coins to invest is also quite a difficult job.
Different altcoins will serve a different purpose. Like Ethereum through its smart contracts, it made it easy for people to create and issue their own cryptocurrencies through a crowdfunding campaign called initial coin offerings. This is a great way to raise funds and keep innovation alive in the cryptocurrency industry.
However, not all coins are as good as ETH, so investing in many altcoins can bring high risks. With a lot of controversy nowadays, especially not really considered as a legal currency, Bitcoin in general and altcoins in particular are greatly inflated, their value is sometimes unpredictable, and are all decided by the shark. So investing in altcoins you need to have a basic knowledge in the market, it is best to invest in the top coins, otherwise you will be subject to 10 or even many coins will be delist by the exchange itself. At that time, the coin was really just rubbish and you would be "empty handed" if investing in those coins.
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Author: Tin Nguyen
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