Apart from Bitcoin, there are many other cryptocurrencies. They are usually referred to as altcoins (abbreviation of the phrase ‘alternative Bitcoin’). This generalising name was given because most altcoins were created in attempts to change or improve Bitcoin. Altcoins appeared when the creators of Bitcoin uploaded the open code and allowed other enthusiasts to create their own cryptocurrency on its basis. Sometimes, when creating an alternative based on Bitcoin, its source code is innovated or developed from scratch.
There are 3 main ways of their emergence:
Namecoin is the first altcoin that appeared in April 2011. It was developed for decentralization in the field of domain name registration and to provide censorship resistance. Namecoin allows you to buy domains in the dot bit zone and not to worry about their safety. This altcoin is used to pay for registration and renewal of domains.
Litecoin is the second altcoin that appeared in October 2011. It is also similar to Bitcoin, but it has other mining algorithm and much more coins (84 million). Litecoin is positioned as the silver of the cryptocurrency world (while Bitcoin is the cryptocurrency gold).
Bitcoin Cash is a younger brother of Bitcoin that appeared as hard fork in August 2017 following the decision to increase the block size from 1 to 8 MB. Most miners voted for that, as the larger blocks would speed up the transactions and increase the miners’ incomes due to the growth of the total fee in the block.
Ethereum is an open platform for creating blockchain-based decentralized services, which was launched in July 2015. Unlike other altcoins, the role of Ethereum is not restricted to payments. It is used for the exchange of resources and registration of transactions with the use of smart contracts. Most ICOs are based on it.
Ethereum Classic is a hard fork of Ethereum, within which the owners of the original ETH tokens got the same amount of ETC tokens.
Dash, Monero, Zcash are the cryptocurrencies, whose key feature is a complete anonymity of transactions, unlike the pseudonymity of Bitcoin. Thanks to special algorithms, transactions conducted with the use of DASH, XMR, ZEC don’t leave any information about the users who made the transfer.
Many people consider altcoins unnecessary and think they are unable to compete with Bitcoin. However, altcoins have useful properties and are an integral part of the cryptocurrency market. Decentralization is the main goal of Bitcoin while altcoins improve the decentralization process of the cryptocurrency community. And besides, altcoins enable the developers to experiment with the use of unique properties, not inherent in Bitcoin.