By In 2009, after the success of Bitcoin, alternative cryptocurrencies, referred to as Altcoins, were released. Bitcoin is known to have protocol limitations and features, which Altcoins are able to solve.
ALTCOINS – ALTERNATIVE CRYPTOCURRENCIES
Altcoin was coined by combining the words “alt” and “coin”, whereby, the “alt” is an abbreviation for the word alternative. The “coin” component refers to currency.
Altcoins, an alternative cryptocurrency, is extremely varied, often cheaper and more efficient than Bitcoin. A focus on Bitcoin weaknesses has resulted in immense competition. Altcoins, such as Litecoin (LTC) and Fastcoin (FST), have blockchain updates with an upper bound of a minute, making them faster than Bitcoin. Litecoin is considered to be Bitcoins most serious competitor.
Different Algorithm
Mining is the term used to describe a series of calculations made on a computer to verify the transactions that take place in the Bitcoin or Altcoin network. The miners who have created the block are compensated with Bitcoins. This serves the Bitcoin network with a system to verify transactions and as a way to fairly distribute new Bitcoins.
Bitcoin mining relies on SHA256, a mining algorithm. Improved versions offer innovation in areas like transaction speed, privacy and proof-of-stake among others.
CPU and GPU mining
Most computers have multi-core CPUs, which is virtually equivalent to having multiple CPU’s in a single physical package. The GPU is used to render 3D graphics that a CPU is unable to produce. A GPU is considered preferential for Altcoin mining.
The Proof of Work (PoW) algorithm used for mining Bitcoin is SHA256, due to its speed. Developing ASICs can be a challenge for a mining algorithm, which implicates its high barrier to entry. A high barrier to entry increases the time that the first group to create ASICs will have to monopolize the market. There have been concerns that the developers could simply change the mining algorithm when an ASIC is developed, however, this defeats the purpose of decentralized consensus.
Companies producing ASICs that are not centralized, are still using algorithms that take longer to verify than SHA256. Cryptocurrencies using a hashing algorithm, are equivalent to a clone of Bitcoin. If the algorithm is slower than that of Bitcoin, risks around “double spend” occur, as it takes longer to validate the block.
Decentralized applications and Tokens
Bitcoin is an application layer protocol, similar to the way in which websites can be built on the HTTP protocol. The counterparty is a peer-to-peer financial platform and a distributed, open-source Internet protocol that has been built on top of the Bitcoin blockchain and network. By encoding data in ordinary Bitcoin transactions, Counterparty is able to extend the functionality of Bitcoin in a new and unprecedented way.
The platform provides users with a functioning decentralized exchange, as well as the ability to create Tokens (virtual assets), issue dividends, and create price feeds, bets, and even smart contracts. Altcoins and Bitcoin itself, have the ability to work as programmable money which has useful applications in areas such as property transaction, notary document validation, and others. Every Altcoin Blockchain can be a basis from which new applications can be developed.
Market cap of Altcoins
When Bitcoin became the first decentralized digital currency, and with the emergence of numerous altcoins, the term “market cap” was invented. Market Cap is used to describing the total dollar market value and the available supply of the total amount of digital currency in circulation. The term is also occasionally used to refer to the estimated market value of the total digital currency amount that will ever be in circulation.
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