What is an Altcoin?

Altcoins or alternate coins is a name given to any cryptocurrency other than Bitcoin.1 Bitcoin was the first crypto to be recognized, and this paved the way for other blockchain technologies to issue their own coins. The term altcoin was a way to differentiate between the market leader and other cryptos existing.

What was the need for Altcoins?

Bitcoin was primarily used as a decentralized payment system. However, blockchain technology could be used for multiple purposes, as demonstrated by altcoins like Ethereum. Today thousands of altcoins serve multiple purposes. From powering decentralized finance to creating decentralized finance applications, altcoins have expanded the scope of blockchain technology to a wide range of industries.1

Another problem with Bitcoin was its scalability. The number of bitcoins that can be in circulation has been capped to 21 million.2 This may pose a problem once the usage of cryptos becomes widespread. Altcoins play an important role in generating enough cryptos for investors worldwide. While Bitcoin continues to be the market leader, altcoins have been picking up steam as far as popularity is concerned.

Due to the decentralized nature of the crypto world, the number of altcoins has grown exponentially, and it is difficult to monitor each coin. Many of these coins are extremely volatile and may not meet investors' risk appetite.

Example

Ethereum is the most popular altcoin that has been used to power other blockchain platforms. It is the parent technology for several other altcoins.

References

1 What are Altcoins Investopedia.

2 Can Bitcoin's Hard Cap of 21 Million Be Changed? River.

Please note that this article is for informational purposes only. Actual crypto prices may vary depending on the market price at that particular time. Alpaca Crypto LLC does not recommend any specific cryptocurrencies.

Cryptocurrency is highly speculative in nature, involves a high degree of risks, such as volatile market price swings, market manipulation, flash crashes, and cybersecurity risks. Cryptocurrency is not regulated or is lightly regulated in most countries. Cryptocurrency trading can lead to large, immediate and permanent loss of financial value. You should have appropriate knowledge and experience before engaging in cryptocurrency trading. For additional information please click here.

Cryptocurrency services are made available by Alpaca Crypto LLC ("Alpaca Crypto"), a FinCEN registered money services business (NMLS # 2160858), and a wholly-owned subsidiary of AlpacaDB, Inc. Alpaca Crypto is not a member of SIPC or FINRA. Cryptocurrencies are not stocks and your cryptocurrency investments are not protected by either FDIC or SIPC. Please see the Disclosure Library for more information.

This is not an offer, solicitation of an offer, or advice to buy or sell cryptocurrencies, or open a cryptocurrency account in any jurisdiction where Alpaca Crypto is not registered or licensed, as applicable.