Tired of Bitcoin? Altcoins are for you
Updated: Aug 6, 2021
Have you heard the word altcoin? This is one of the many new words created for the crypto world. Altcoin (alternative-coins) is just another way to name crypto coins other than Bitcoin.
As you may know, Bitcoin was the original cryptocurrency, but it’s far from being the only one. So far, according to the website coinmarketcap, there are over 10,000 crypto.
The sheer amount of altcoins is overwhelming, but some of them are better known than others. Here, we list some of the altcoins you will most probably come across. The information here shown was taken from their documentation and official websites.
In addition, in this post we will talk about staking in a very superficial way: it will be the subject of another post later on.
It’s the runner-up behind Bitcoin, although Ethereum has a different proposal. It’s not just a coin with economic value. This is an entire ecosystem, that also has a coin called Ether (ETH), with economic value, which is needed to power-up it all.
Ethereum introduced a revolutionary view: the Ethereum blockchain came ready to perform loans, decentralised finance (DeFi), decentralised apps (Dapps), and many other types of transactions.
All this is possible because of the existence of smart contracts, which are at the core of Ethereum. Think of it as computational programs with an input and an output, that can only be triggered under specific circumstances. Nowadays smart contracts are common place within cryptocurrency, but they started with Ethereum.
It’s a project aimed to bring inclusive and resilient infrastructure for financial and social applications. It has some similarities to Ethereum, partly due to be founded by one of Ethereum co-counders, Charles Hoskinson.
Cardano’s protocol (Ouroboros) was the first to be based on Proof of Stake (PoS).
Its currency, ADA, is used to power the transactions, which now includes smart contracts.
The Cardano Foundation oversees the development of the Cardano ecosystem.
This is probably the best known currency (other than Bitcoin), because of its permanent news coverage.
Dogecoin, unlike the previous ecosystems, has no clear purpose. It’s advertised on its website as the ‘fun and friendly internet currency’, and is succeeding. This fun and irreverent side of crypto is what drives the Dogecoin fans, and this is why it keeps growing.
The Ripple blockchain was built for payments.
The Ripple cryptocurrency (XRP) powers the transactions within the blockchain.
This blockchain takes less than 5 seconds to verify transactions. By contrast, Bitcoin takes about 10 minutes. It’s aim is to be more scalable, less costly, secure and faster than other transaction-oriented tokens.
Its goal is to interconnect different blockchains (within Polkadot and to external ones, like Ethereum), both public and private, and to make possible the transfer of tokens and other kinds of data (e.g., financial, internet-of-things, files).
As it aims to be a hub for multiple networks, it has ready-to use tools to build your own blockchain. This allows easier development by teams with no enterprise backup.
Polkadot’s protocol is based on Proof-of-Stake, which consumes just a tiny bit of energy, when compared with “traditional” mining.
Its main supporter is the Web3 Foundation, whose objective is to build a safer, decentralised internet, where users control their data and privacy.
It’s a protocol built on top of Ethereum, to allow the exchange of tokens (coins) in a decentralised market, without the need of an intermediary. Basically, to use Uniswap you need to know which coin you want to swap, and to have the necessary amount of ETH to pay a fee (“gas fee”) for the transaction within the blockchain. Besides the exchange of coins, you can also participate in pools of coins.
The only tokens you can trade on Uniswap are the so-called ERC-20: all these are built on top of the Ethereum blockchain, and thanks to the smart contracts can be traded in sophisticated ways.
Notice that each transaction will have a “gas fee”, which is proportional to both ETH current price and the volume of transaction, which can make the transaction expensive (hint: the gas price tends to be lower during weekends)... Binance Academy has a good post about this.
Now a brief note about staking:
Ethereum, Cardano, Polkadot, and others, allows staking. This is a way to earn rewards for leaving the coins inside a pool.
Coins that use Proof-of-Staking protocol, need a pool of many coins to verify the transactions. The pool earns rewards because of this service. Therefore, if you are part of one of these pools, you also earn a reward proportional to the amount of coins you are leaving in the pool for ‘staking’. Kraken has the option to participate in such pools within the exchange.