Bitcoin might be the most famous cryptocurrency globally, but it’s not the only one. For example, Ethereum is an altcoin that can transfer funds between accounts and pay for things online and offline, just like Bitcoin does. There are thousands of altcoins out there, with new ones popping up every year. So, it’s essential to understand what you’re investing in when you put your money into one of these currencies.
What Is An Altcoin?
An altcoin is any cryptocurrency that isn’t Bitcoin. There are many different types of altcoins, and more will come as programmers develop new blockchain technologies. That doesn’t mean all of them are suitable investments. In fact, a significant percentage of altcoins have no purpose, which is important to know- whether for yourself or to warn over-eager friends and family. Some might even be scams. However, some do stand out from the crowd- especially as cryptocurrency markets gain traction. As the rise of blockchain technologies and cryptocurrencies continues, these five altcoins are worth knowing about for various reasons.
1) Litecoin (LTC)
Litecoin, like Bitcoin, is a decentralized digital currency for purchasing merchandise and services worldwide. However, its transaction times are much faster than Bitcoin’s, and it has a much larger supply of coins: 84 million Litecoins compared to 21 million Bitcoins. If Bitcoin is ‘digital gold,’ think of Litecoin as digital silver in that it’s less valuable and more abundant.
2) Ether (ETH)
Ethereum is a decentralized platform that runs smart contracts: applications that run exactly as programmed without any possibility of downtime, censorship, fraud, or third-party interference. These apps run on a custom-built blockchain, an enormously powerful shared global infrastructure that can move value around and represent property ownership. Know that not all altcoins or blockchains have these features. Ether is the signature coin for the Ethereum blockchain, though traders and trading platforms also it Ethereum. Some trading platforms, like Coinbase, offer the option to stake Ether. The offer comes as the platform evolves to proof-of-stake, a more environmentally friendly blockchain process.
3) Cardano (ADA)
Charles Hoskinson, a co-founder of Ethereum, built Cardano as a more sustainable, balanced cryptocurrency. Built on the Ouroboros blockchain, a peer-reviewed algorithm, Cardano seeks to streamline cryptocurrencies. The Cardano blockchain aims to run financial applications and processes with very low fees. Cardano has been called Ethereum 2.0 for its potential as a more flexible version of Ethereum. As with all altcoins, it’s important to know ADA can be considered a high-risk, high-reward investment.
4) Shiba Inu (SHIB)
Shiba Inu is the heir-apparent to Dogecoin, a cryptocurrency created in 2013 as a joke. Dogecoin gained prominence when Elon Musk decided to promote it in 2021. Since Dogecoin’s blockchain raised concerns, Shiba Inu offers functional improvement. SHIB is a token, not a coin. Coins have a signature blockchain, and tokens are built on an existing blockchain. However, it is still considered an altcoin. SHIB exists on the Ethereum network, including features like smart contracts that make it more attractive. Unlike Bitcoin (and Ether), SHIB coins hold low value as of writing. As is the case with Dogecoin, this is by design. While Bitcoin has the place of digital gold, SHIB is meant to be abundant. So, in theory, SHIB could eventually become everyday-use crypto. Once a pipe dream, this vision becomes more viable as more businesses accept SHIB as payment.
5) Algorand (ALGO)
MIT professor and Turing Award winner Silvio Micali developed Algorand in 2017. It uses very fast, secure coin generation and has high levels of scalability. Algorand essentially removes all transaction fees. Like Cardano, Algorand relies on proof-of-stake for network security (instead of Bitcoin’s proof-of-work method). Algorand also offers interest gains for holders, creating the option of passive income. Depending on the trading platform, Algorand rewards offer between 4% and 6% yearly returns. Algorand may be worth looking at—if only to understand how its systems operate.
