Altcoins
Today we will talk about altcoins. What are they, what is the difference between them and what are they for? Let's get to the bottom of it.
Let us begin, perhaps, with a definition:
Altcoin is an "alternative coin. Alternative to Bitcoin. Why relative to Bitcoin? Because Bitcoin is the world's first cryptocurrency, in every sense.
There are thousands of types of altcoins, but why so many?
Bitcoin is not perfect and has some problems. The technology behind some altcoins aims to solve them, while others are just empty shells created for price speculation.
Since we are talking about altcoins, we should immediately clarify and distinguish between the concept of "token" and "coin.
Coin - "digital money" - is a means of payment for maintaining one's own blockchain.
Token. They do not have their own blockchain and are usually issued by separate projects for different purposes. They are created using smart contracts.
There is "blockchain" technology, thanks to which you are now reading this article. Bitcoin appears with its not perfect blockchain protocol. Then, in an attempt to improve this technology, other protocols began to appear, with their own coins: Ethereum (ETH), Ripple (XRP), Solana (SOL), etc.
I think it is important to digress here and clarify that the names of coins and the networks on which they are based sometimes differ greatly. Below are examples of the names of the most popular coins and their networks:
ETH (Ether) - Ethereum (ERC20)
BNB - BNB Smart Chain (BEP20)
MATIC - Polygon
SOL - Solana (SOL)
XRP - Ripple
ADA - Cardano
TRX - TRON (TRC20)
And now, tokens based on off-the-shelf blockchains are entering the scene. There are tons of them, and each has its own function.
Next, we'll look at the use of some altcoins
Breakthrough Technology.
In its time, the Ethereum blockchain, which has the first ETH altcoin in terms of capitalization, has greatly expanded the functionality of cryptocurrencies with smart contracts. New blockchains are constantly appearing, bringing their ideas to the crypto market.
Ecosystem
Another example is the BNB coin, which is widely used in the entire CEX ecosystem of the Binance exchange. For example, if you keep an N number of coins on the balance of the exchange, you get discounts on commissions when trading, or you can use them to participate in Launchpad's.
Or, for example, a CAKE token from PancakeSwap's DEX exchange is used to reward members of its ecosystem.
Launchpad is a platform for launching initial token offerings among startups. It gives a project an opportunity to demonstrate its idea to several million exchange users and attract potential investors.[
DEX is a decentralized exchange. It allows to trade without intermediaries, i.e. directly through own cryptocurrency wallet (PancakeSwap, UniSwap, SushiSwap, etc.).
CEX is a centralized exchange. Simpler in functionality than DEX, but all your transactions already go through an intermediary, trading is done through an internal wallet exchange (Binance, FTX, Huobi, etc.).
Voting Also, many altcoins allow their holders to directly influence the development of the project by voting for changes in the project. The network with such a way of control is Cosmos with its ATOM coin.
Stablecoin
Stablecoin USDT, which is tied to the exchange rate of the dollar, serves as a kind of "safe" asset, insured against the rapid fluctuations of the crypto market.
Stablecoin is a token whose price is pegged to the dollar or another fiat currency. It is a kind of "safe haven" in the storm of the cryptocurrency market.
Don't think of it as a network coin because of the "koin" in the name. It is essentially a token.
Speculation
I am sure you heard more than once about SHIB shitcoin when it tripled in value in just a few days. The price of such assets is driven only by market manipulation, because there is no real value behind them.
Games
There are many games where players are paid project tokens for various actions, thus giving everyone an opportunity to earn money. For example, such is the GMT token, which is used in the game STEPN
These are just some of the uses of altcoins. There are many more uses for altcoins today, and many more to come.
Altcoins are everything that is not Bitcoin. And this "everything" has an amazing variety of functionality and applications!
- Altcoins are divided into two types: coins and tokens.
- Each network uses a different coin to function.
- Each network has conditional tokens. The network is the "home" for the tokens, and the tokens are its "tenants.
- If you want to use a particular network to transfer tokens, you need both the tokens you intend to transfer and the coins of that network to pay the transfer fee.
- Altcoins have many uses