In the earliest days of cryptocurrency, there was Bitcoin and only Bitcoin. Between its 2009 launch and April 2011, Bitcoin was the only player in town in the nascent cryptocurrency ecosystem. As interest in the world of digital currencies grew, new coins came onto the scene, first as a trickle, then as a deluge, which ultimately saw thousands of altcoins launch.
What are altcoins?
The term ‘Altcoin’ is a combination of two words: ‘alt’ and ‘coin’ where alt means ‘alternative’ and coin means ‘cryptocurrency’. Together they imply a category of cryptocurrency, which is an alternative to Bitcoin, which was the only crypto coin at one point in time. During its early years, Bitcoin dominated the field so much that other rivals were defined as the original cryptocurrency. It was Bitcoin – and everything else. So whatever was not Bitcoin was, somewhat derisively, called altcoins or perhaps, even less charitably, sh*tcoins, in a rhyme with the original digital currency.
Types of Altcoins
There are several different kinds of altcoins to know about. Out of literally thousands of altcoins, most can be categorized in one of the following buckets:
- Utility tokens
- Governance tokens
- Meme coins
Stablecoins are cryptocurrencies whose value is “pegged” to another asset, typically U.S. dollars. Stablecoins maintain their peg in a variety of ways, usually involving holding a reserve of dollars and other assets equivalent to the amount of the stablecoin in circulation. Examples of stablecoins include USD Coin (USDC) and Binance Dollar (BUSD).
2: Utility tokens
Utility tokens are used to facilitate a specific function or access services within a blockchain network. For instance, paying for network fees, earning rewards or purchasing services. Some examples of utility tokens are Basic Attention Token (BAT) and Funfair (FUN), with the most famous example being Ethereum itself.
3: Governance tokens
Governance tokens give holders of specific cryptocurrencies the right to create and vote on community proposals that shape the project’s future. Votes are typically proportional, with the biggest holders’ votes carrying the most weight in governance proposals. Examples of governance tokens include Maker (MKR) and Uniswap protocol token (UNI).
4: Meme coins
Meme coins are altcoins that for one reason or another have enjoyed a certain degree of viral fame. Because their value is almost always entirely driven by online hype and social media buzz, meme coins are highly speculative and volatile cryptocurrencies. Some noteworthy examples of meme coins include Dogecoin (DOGE) and Shiba Inu (SHIB).
TOP 5 ALTCOINS ON THE BLOCKCHAIN RIGHT NOW
These are the top altcoins at the time of writing this article.
1: Ether (ETH)
Ether is Ethereum’s native token and the world’s second-biggest cryptocurrency. Ethereum is a global software platform that runs decentralised applications, smart contracts and financial transactions, as well as minting and storing Non-Fungible Tokens (NFTs).
2: Binance Coin (BNB)
Launched in 2017, BNB is the native token of the Binance crypto exchange.
With a market cap of roughly £39 billion, Binance Coin can be used to pay trading fees and get discounted trades on the exchange. BNB holders can also invest in new tokens via Binance’s initial coin offering (ICO) Launchpad programme.
3: Ripple (XRP)
XRP is a crypto token that runs on the Ripple XRP Ledger, a blockchain created by Jed McCaleb, Arthur Britto and David Schwartz in 2012.
XRP can be bought as a speculative asset, as a coin to swap for other tokens such as Bitcoin or to make transactions on the Ripple payments system.
4: Cardano (ADA)
ADA is the native token of the Cardano blockchain, which was created in 2017 by one of the co-founders of Ethereum.
The Cardano platform uses a proof of stake consensus mechanism, with holders staking their ADA for the chance to verify a block of transactions and earn more tokens.
5: Solana (SOL)
Solana (SOL) uniquely uses both proofs of work and proof of stake consensus mechanisms for speed and security. Theoretically, Solana can execute over 65,000 transactions per second.
There are other altcoins apart from the five mentioned above, such as Polkadot, Stellar, USD Coin, Dogecoin, Chain link, Uniswap Etc. Any cryptocurrency other than Bitcoin is an altcoin.
Crypto enthusiast|| content writer..