What are Altcoins?

Altcoins, or alts in short, are cryptocurrencies that are not Bitcoin. The word altcoin is an abbreviation of alternative coins. So Litecoin, Ripple, Dash or any other non-Bitcoin cryptocurrency all fall under the category of altcoins.

Now you may ask yourself, “Why do we even need altcoins in the first place?” The answer is simple: Bitcoin is not perfect. Usually, altcoins will try to create a better or different version of Bitcoin.

For example, Litecoin is an alt that confirms transactions faster than Bitcoin. Dash and Monero are altcoins that focus on the anonymity aspect, making transactions virtually impossible to trace. Each altcoin has its own “unique thing” it does best.

Altcoins can also vary from Bitcoin in the way they are mined. For example, Bitcoin’s mining algorithm is called SHA-256, while Litecoin’s mining algorithm is called Scyrpt. Different mining algorithms require different types of hardware to mine.

Another thing to keep in mind is that if an altcoin is relatively new or not that well known, it will probably be harder to buy and will have fewer wallets that support it.

Until today, thousands of altcoins have been introduced to the market, but only a handful have managed to gain a significant following like Bitcoin. One way to figure out which altcoins are gaining popularity is by measuring their market cap.

A Market cap means how big is a coin’s market in dollar terms. It’s calculated by taking the number of coins in circulation and multiplying it with the dollar exchange rate. If, for example, there are 16 million Bitcoins in circulation and the price of one Bitcoin is $2,500, the market cap for Bitcoin would be 40 billion dollars.

For a long time, Bitcoin’s market cap accounted for 90% of the total cryptocurrency market cap. Today, as more altcoins are gaining attention and appreciating in price, Bitcoin’s market cap makes up less of the total cryptocurrency market cap which has managed to surpass 100 billion dollars in 2017.