Among all cryptocurrencies, it is Bitcoin that gets most of the limelight, partly because it was the first digital currency to blaze this trail for a thousand others, or because of its sheer dominance in value of the cryptocurrency industry. But this universe is indeed a very vast one, and like the Milky Way it keeps expanding with every passing moment. Despite Its dominance, Bitcoin is just one among over 1200 distinct cryptocurrencies, each with its own features, mode of creation and problems it seeks to solve. This is piece about Altcoins, what are they and what purposes they serve.
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What is an Altcoin?
The word altcoin or alternative coin stands to represent all other cryptocurrencies that came after the creation of Bitcoin in 2009, which mostly serve the same basic purpose of being a decentralized peer-to-peer means of making payments, but which are also mostly made to solve some of the various problems that arose from the use of Bitcoin. Altcoins were made to provide users with an alternative to the use of Bitcoin, while avoiding a lot of its perceived deviation from the main goal of a stateless, borderless monetary system that was to be created, banked transacted solely by the people.
There are over 1200 distinct products that make up the cryptocurrency industry apart from Bitcoin that make up the altcoin legion. They offer uses and features that they claim you cannot get by using Bitcoin. Some of the main differentiating features that stands altcoins apart from Bitcoin include:
Speed of Transaction
One of the recurring themes that come with altcoins is that they bring the user a chance to conduct cryptocurrency transactions at speeds that are a multiple times of what you can ever get with Bitcoin. The first cryptocurrency has been under endless criticism right from its on-set as being too cumbersome to transact with, this is because a typical transaction could take as much as 12 minutes before it gets confirmed on the Bitcoin blockchain. This meant that business and individuals were exposed to all kinds of inconveniences when it comes to sending and receiving money. The idea of the cryptocurrency was made with speed of transaction being one its prime objectives, as the maker of Bitcoin Satoshi Nakamoto outlined in his whitepaper, that the cryptocurrency should offer the fastest mode of making payment known to man, even faster than Western Union. This has not always been the case with Bitcoin, as the harder it gets to mine it, the longer transactions take before they are fully confirmed on the blockchain.
With the advent of altcoins, they almost universally offer users the alternate route of making their purchase payments that are faster than Bitcoin. Speed varies among them from the instantaneous to those that are a few times faster than Bitcoin.
Transaction Fees
Another key point of contention among cryptocurrency users is that Bitcoin was made in such a way that the miners or participating computers that confirm transactions can set their own fees for an expedited confirmation. This meant that with time, and as competition became tougher for new blocks on the Bitcoin blockchain, these transaction fees became ever higher, as miners hiked their fees for a quick confirmation. Bitcoin transactions take much longer to confirm if you attach a small fee to it as the miners find it unattractive to attend to with haste. Businesses and people, especially those making micropayments now face fees that are often bigger than the actual amount being sent, creating a problem that forced many businesses move away from using Bitcoin as a means of payment after earlier adopting it.
With altcoins, transaction fees are mostly much lower than what you have to pay when making a Bitcoin transaction. Most altcoins impose very tiny transaction fees on every payment, with some as close to zero as possible, making them more economical to use than Bitcoin.
Anonymity
One of the great misconceptions about Bitcoin is that it is completely anonymous. While transaction made on the Bitcoin blockchain do not carry the name or email of the sender or recipient, it still carry the wallet addresses of the transacting parties, and the amount involved which is easily accessible for anyone with a computer and an internet connection. Altcoins found that to be a disturbing trend and offer users the alternative of having fully anonymous transactions, with some like Monero going as far as clouding any previous places a cryptocurrency has been to, making them extremely fungible.
Buyer-Seller Protection
Bitcoin in the way it is made is a very slippery cryptocurrency, in that once a transaction is initiated, it can never be reversed. This meant the sender has to blindly trust the recipient to hold up their own end of the bargain when paying with Bitcoin. A lot of people have been scammed by fraudsters who leverage on this feature of Bitcoin to cheat the unsuspecting public by posing as providers of one service or the other.
Altcoins, and especially Ethereum and other cryptocurrencies built on its blockchain offer users a safer environment to make and receive payments by incorporating what is known as Smart Contracts. These are set conditions for the finalization of payments that protects both buyer and seller, who both know they will not be cheated as long as they hold up their own end of the bargain as set on the said Smart Contract.
Mining Method
Apart from the initial stages where it was easily mined with the use of CPUs on everyday computer systems, Bitcoin mining has been a largely capital-intensive endeavor, with huge costs in specialized hardware and electricity needed to run them. As of 2017, every small mining rig running on its own is unprofitable as huge industrial mining outfits take almost all of the Bitcoin reward on a daily basis.
Most altcoins view this huge waste of energy as a pointless procedure, and as such are built on protocols such as the Proof-of-Stake which does not require the huge electricity or the specialized hardware before they are mined. A lot of the altcoins today can still be mined by an old laptop, or a few GPUs making them more economical and profitable for small-scale miners.
Overall, altcoins have been a force for good in the cryptocurrency industry. This is because with its wide adoption, Bitcoin moves ever closer to being centralized in the hands of a few big time monopolies while more and more businesses move away from using it. It is considered that Bitcoin is now more of a store of value like Gold than an everyday means of making transactions which makes the altcoins a convenient and often effective alternative for lovers of cryptocurrency all over the world.