What are altcoins?

Modified on Sun, 23 Feb at 6:16 AM

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Altcoins, short for "alternative coins," refer to any cryptocurrency that is not Bitcoin. While Bitcoin is the first and most well-known cryptocurrency, altcoins represent a wide range of other digital currencies created after Bitcoin’s success. Altcoins aim to improve upon Bitcoin’s limitations or introduce new features and use cases.

Common Types of Altcoins:

Ethereum (ETH) – A decentralized platform for building smart contracts and decentralized applications (DApps).
Litecoin (LTC) – Created as a “lighter” version of Bitcoin, designed to offer faster transaction times and a different hashing algorithm.
Ripple (XRP) – A digital payment protocol and cryptocurrency, designed for fast and low-cost cross-border transactions.
Cardano (ADA) – A blockchain platform focused on security, scalability, and sustainability, using a proof-of-stake model.
Polkadot (DOT) – Aims to enable different blockchains to interoperate, facilitating cross-chain communication and collaboration.

Categories of Altcoins:

Coins: Altcoins like Ethereum, Litecoin, and Ripple are often considered coins, as they have their own independent blockchains.
Tokens: Tokens are built on top of existing blockchains (like Ethereum) and can represent anything from assets to rights within decentralized applications.

Why Do People Invest in Altcoins?

Innovation: Altcoins often introduce new technologies or solve specific problems that Bitcoin doesn’t address.
Potential for High Returns: Due to their relatively smaller market capitalization compared to Bitcoin, altcoins may have higher growth potential (but also come with higher risks).
Diversification: Investors might diversify their portfolios by holding different types of cryptocurrencies to spread risk.

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