The rapid popularity of cryptocurrency has led to thousands of them coming into existence. While they offer options to investors, they also make them nervous. Given the relatively new nature of the industry, it is wise to be able to distinguish between them. Broadly, there are two categories: Bitcoin and Altcoins. Given its dominant appeal, Bitcoin is the largest crypto. As the blockchain technology, on which cryptocurrency is based, matured, it led to the emergence of a number of new crypto coins – like Ethereum. These new coins were dubbed “altcoins”, short for alternative coins.
These altcoins are based on the same principle as Bitcoin but take things a step further with some additions and unique features.
What Is Bitcoin?
Bitcoin is the first cryptocurrency, proposed in October 2008 and launched in January next year. It was invented by a pseudonymous person or group of persons known as “Satoshi Nakamoto.” Bitcoin is a decentralised peer-to-peer digital currency and all transactions are entered into an online public ledger that is available to everyone. It does not require any intermediary, say a bank or any other financial institution, to facilitate transactions.
What Is Altcoin?
Except for Bitcoin, all other crypto coins are generically called “Altcoins”, which basically mean alternative to Bitcoin. There are more than 11,000 crypto coins listed on CoinMarketCap, a market research organisation. All these are altcoins.
How Are They Different From Bitcoin?
Altcoins were built on the success of Bitcoin by slightly changing the rules to appeal to specific users. For example, Ethereum, the second-largest cryptocurrency by market capitalisation, introduced the idea of “smart contracts”. These smart contracts are basically codes that run only when predetermined conditions are met. They execute agreements between two parties using blockchain technology, opening possibilities for the development of new applications for crypto.
Altcoins have improved functionality, transaction, and scaling to meet the rapidly expanding demand. As the market for altcoins continues to expand, many wonder if the original cryptocurrency’s lead will end with any of the coins that came after it. Simply put, Bitcoin is the first cryptocurrency and all others are “Altcoins.”