What are altcoins?
Aside from Bitcoin, the holy grail of cryptocurrencies, there are thousands of other projects that are known as altcoins. These altcoins, or alternative coins, are so named because they represent an alternative to the main coin that is Bitcoin. Since Bitcoin was the first cryptocurrency, everything else that isn’t Bitcoin is an altcoin. And there is more than a thousand of these coins out there. But why are there so many altcoins?
Altcoins offer improvements to Bitcoin’s Blockchain.
Bitcoin was the first cryptocurrency to ever exist and, as a result, has problems that are widely documented. Some altcoins attempt to solve these problems on their platforms. These new altcoins have led to major competition within the market.
In the end, higher competition is good for the entire cryptocurrency space and will lead to greater innovation because altcoins can gain a lot of value and media press if they can one-up Bitcoin’s technology. On the other hand, it is in Bitcoin’s best interest to stay on top. To do that, Bitcoin has to continually improve itself and avoid stagnation. One example of this is the recent development of the “Lightning Network” which is a “second layer” payment protocol that operates on top of Bitcoin. The Lightning Network enables instant transactions between participating nodes and has been touted as a solution to Bitcoin’s scalability problem.
Altcoins cover some blockchain use-cases that aren’t possible with Bitcoin.
Bitcoin and the entire blockchain was created with financial use-cases in mind. However, the use of blockchain isn’t limited to only finances. In fact, the second most popular cryptocurrency, Ethereum, covers a use-case that was completely overlooked by Bitcoin: decentralized applications. Other use cases for blockchain technology include IOTA’s blockchain that powers the Internet of Things, Tron’s blockchain for content distribution, or Golem’s use of idle processing power. These examples illustrate the ability for blockchain to disrupt any and all industries.
The diversity of altcoins help to spread blockchain technology to more industries.
It is no secret that the entire blockchain space is still in its infancy stages. While some large companies have caught on to the usefulness of blockchain technology, many still know little to nothing at all about this disruptive innovation. Altcoins, and their attempts to disrupt a specific industry, help with the adoption of blockchain technology as a whole.
There is no question that cryptocurrency and blockchain technology will one day enter the public sector and be used by everyone on a daily basis. But time will tell if that entrance will be quiet and gradual, or explosive and immediate due to the help of government and big businesses.
Further reading: Top 10 Basic Things to Know About Bitcoin and Other Cryptocurrencies