What are altcoins? All information about altcoins
This article discusses altcoins. What are altcoins and what can you do with them? Which altcoins have done well in 2021 and which are expected to do well in 2022? These questions are all answered below.
The term altcoins stands for alternative coins or tokens that are not Bitcoin. These coins are therefore simply an alternative to Bitcoin. Bitcoin is in this case seen as the original cryptocurrency, the altcoin is a name for the alternative coins. This can also be deduced from the name: Alt stands for alternative and coin stands for coin. Altcoins try to distinguish themselves from Bitcoin by offering new or additional possibilities.
Altcoins can be divided into two main categories, namely: Coins & Tokens. Below is a brief description per main category.
- Coins are digital assets that are specific to their blockchain. Examples of coins are Bitcoin, Ether, XRP and Litecoin. Of these, Ether, XRP and Litecoin fall under the term altcoins and Bitcoin under the term original coins. Most of these coins serve as digital currency to transfer value, store value or price services.
- Tokens are created on existing blockchain. Examples include the tokens built on an Ethereum platform using smart contracts, also known as ERC-20 tokens. The reason developers choose to build on top of existing blockchains rather than their own is because building them takes a lot of time. Building a robust blockchain that is not susceptible to a 51% attack is very difficult and complicated. For this reason, for most projects it makes much more sense to work on a shared blockchain rather than build one yourself.
What are tokens?
Tokens do differ from altcoins. Altcoins, or coins, operate via their own blockchain and can serve as a means of payment. Tokens, on the other hand, operate on top of an existing blockchain and represent small pieces of a particular company or product. Tokens can be divided into the following categories:
A security token is a security that is issued by a stock exchange as a token, on top of the blockchain. Security tokens will include stocks, options, bonds, futures and warrants. In that sense, security tokens can be seen as securities, except that they are not issued as a paper certificate.
An equity token represents a tradable piece on the blockchain. An equity token is very similar to a security token, the only difference is that an equity token is a proof of value of a company, just like a share or a debt instrument. With an equity token you become co-owner of a specific project or company.
Utility tokens are tokens that have the function of using a specific product or service. A utility token is issued to fund the development of acryptocurrency, which can later be used to purchase a good or service offered by the cryptocurrency’s issuer. This is also called an ICO (Initial Coin Offering).
A payment token is used as an alternative to payment or exchange. The main purpose of a payment token is to serve as a decentralized instrument for buying and selling goods and services without traditional intermediaries.
The best altcoins of 2021 and possibly 2022
There are currently over 8,000 different altcoins in circulation. Most altcoins are designed as a copy of Bitcoin, with the hope of becoming an improved version of Bitcoin. Although many altcoins have similarities, each altcoin has its own unique functionalities. Most of these coins have the ultimate goal of becoming the best altcoin.
It is of course always nice to have in mind which altcoins have really done well. It is also very nice to have in mind which altcoins are expected to do very well in 2022. Below are a few examples.
- Ethereum:This is in our opinion the most valuable currency after Bitcoin. This is a currency that is developing very well and has a very good chance of consistent and positive growth.
- Solana: This is a coin that has increased in value over 100 times in one year.
- Cardano:Sustainability is also becoming more important every day, and this coin certainly stands for that. In addition, this is a currency that has gained a lot of value in 2021 if you express it in euros.
While each altcoin is unique and has its own purpose, most altcoins are only used for trading. Trading takes place on so-called exchanges where altcoins can be traded against the Bitcoin, fiat or altcoins.
A lot of people find altcoin trading difficult and time-consuming. For these reasons, we have developed an algorithm for Ethereum which automates altcoin trading. The trading strategy for Ethereum is 24/7 and acts without emotion to avoid human errors.
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