Bitcoin developed its reputation as the “wild west” of cryptocurrencies long before any other forms of coins were produced on the blockchain. Other coins, dubbed “altcoins,” had to wait in line.
Thousands of other altcoins (alternative coins) have been produced and added to the cryptocurrency ecosystem since then. Any cryptocurrency that isn’t Bitcoin is referred to as an “altcoin.” Ethereum is the most popular altcoin, and while the whole word (Ethereum) is used to refer to the entire blockchain network, the currency is referred to as Ether (ETH).
According to the price-tracking website CoinMarketCap, there are approximately 17,000 different varieti8es of cryptocurrencies as of February 2022. Bitcoin accounts for about half of the total cryptocurrency market capitalization, while Ethereum accounts for nearly a quarter.
The remaining market share is occupied by altcoins (roughly 40 per cent).
That means there are tens of thousands of more coins being traded in the metaverse. Let’s take a deeper look at what altcoins are and do an analysis of the altcoin with the most potential.
What Are Altcoins?
An altcoin is a cryptocurrency that competes with Bitcoin, which was once the only cryptocurrency available. During its early years, Bitcoin dominated the market to the point where other cryptocurrencies were compared to it. It was all about Bitcoin – and nothing else. So anything that wasn’t Bitcoin was mockingly dubbed altcoins or, even less charitably, shitcoins, about the original digital money.
Any cryptocurrency that isn’t Bitcoin is referred to as an altcoin. This kind of categorization made a lot of sense in the early days of cryptocurrency when Bitcoin commanded the majority of the market’s attention and competitors numbered in the dozens, if not hundreds.
The number of individual cryptocurrencies is now estimated to reach over 10,000, according to experts. As a result, defining the crypto industry as “Bitcoin and everything else” makes less sense than ever.
The term “altcoin” stands for “alternative coins” and simply refers to cryptocurrencies that are not Bitcoin. The nine most popular cryptocurrencies after Bitcoin are as follows:
- Ethereum
- XRP
- Tether
- Cardano
- Polkadot
- Stellar
- USD Coin
- Dogecoin
- Chain link
- Uni swap
Related: Top 10 Altcoins To Buy in 2022
The Altcoin With Most Potential
It’s hard to imagine the crypto space without Ethereum. Since Ethereum was released in 2015, the majority of cryptocurrencies were created using Ethereum smart contracts. Smart contracts are also a misnomer, as they do not need to be smart or contracts at all. In reality, a smart contract is a simple term for any piece of code that runs on a blockchain.
The difference between Bitcoin and Ethereum is simple, Bitcoin is a ledger and Ethereum is a ledger plus a computer. By adding a computer to a blockchain, you can create blockchain-based applications like new tokens, NFTs, lending markets, exchanges and more.
The amount of space on Ethereum’s computer is limited so that all miners may keep a complete record without having to buy their own data centre. This makes the blockchain decentralized (and hence secure) by making it more difficult to take control. The market places a great value on Ethereum’s security, as evidenced by its hefty fees. The fees are purely determined by the current availability and demand for space on Ethereum’s computer (blockchain). High fees do not indicate a lack of strength, but rather a high level of demand. However, for many regular traders, who are priced out of utilizing Ethereum, this is a problem.
Types Of Altcoins
Speculators seeking altcoins have a lot of options, thanks to the thousands of cryptocurrencies available. However, much of the trade revolves around the biggest players and those with the finest technological specifications, such as quick transaction speeds. Here are some of the current key categories into which altcoins may be classified:
1. StableCoins:
Stablecoins are a type of cryptocurrency whose value is tied to another asset, most often the US dollar. Stablecoins track the underlying asset, attempting to keep the coin’s price as close to the currency as possible. Stablecoins are frequently backed by assets such as actual dollars (but bonds and other assets are also used), giving them a real-world basis. Tether is credited with being the first stablecoin. It’s also a popular altcoin for expert crypto traders to use when trading crypto on an exchange because it allows them to save money on fees by avoiding the need to swap US dollars for each transaction.
Tether and USD Coin are two examples of stablecoins.
2. Security Tokens:
Security tokens are a type of coin that reflects a fractional ownership stake in another asset. A piece of art, for example, might have security tokens that partition ownership and authenticate ownership of the asset. Alternatively, a company’s ownership could be represented via security tokens. As a result, this type of token might be used to securitize more traditional assets.
3. Memecoins:
Memecoins are a type of cryptocurrency that has piqued the public’s interest, maybe due to celebrity tweets such as Tesla CEO Elon Musk. Memecoins typically have a lottery-like quality to them, with prices rising swiftly and then plummeting. Dogecoin and Shiba Inu are two popular memecoins.
4. Utility Tokens:
Experts from a variety of fields have emphasized the enormous potential of Blockchain technology, which serves as the foundation for all cryptos. Blockchain, according to industry experts in the crypto realm and beyond, might one day be as widespread as the internet, with some even referring to it as “Web 3.”
With all of this added capability, users will need the means to pay for transactions, such as fees for publishing art, minting tokens, trading services, and gaining access to select areas of a blockchain network. Enter utility tokens, a type of altcoin created specifically for this purpose.
Ether is the most adaptable utility currency, allowing users to pay for digital art, create currencies, and more on the Ethereum network.
5. Forks:
A fork is a type of cryptocurrency created when coders make a significant change to a blockchain’s protocol, which changes how cryptocurrencies are recorded, traded, and received. There are two types of forks: “soft forks” and “hard forks.” Forks can either make minor changes to the currency, branch off into a new type or improve the blockchain system to the point that old transactions are no longer legitimate. Any blockchain can fork, which may necessitate upgrades across all computer systems (nodes) that keep it running.
Bitcoin Cash is an example of a Bitcoin fork or spin-off. It was formed when a significant enough group of Bitcoin supporters wanted to create a new version of Bitcoin that was better suited for everyday transactions.
Related: Best 5 Sites To Buy Top Altcoins in Nigeria 2022
Conclusion
Altcoins continue to grow in popularity, with thousands of them in existence. While no single coin, including the most potential of them “Ethereum”, will be able to dislodge Bitcoin as the leading cryptocurrency (for the time being), altcoins as a whole should continue to eat into the leader’s market share, even as the total “cryptocurrency pie” grows.
Related: How To Flip Altcoin On Binance
