However, many new comers don't actually know what that is.
At this point, most people signing up for Steemit.com know what a Bitcoin is, even if they might not fully understand exactly how it works.
However, many of these new users might be surprised to know that there are literally hundreds of other virtual currencies out there.
In fact, as of writing this, Coinmarketcap shows 747 of them with a total market cap of $107 Billion. Due to the enormous popularity right now, there are even more appearing seemingly every week.
The entire list can be seen here:
http://coinmarketcap.com/currencies/views/all/
The word "alt" literally means alternative and "coin", well coin just means coin. In this instance "coin" refers to Bitcoin, so "Altcoin" refers to every other coin on the planet outside of Bitcoin.
Altcoins are referred to as alternatives to Bitcoin because each one was created with the purpose of replacing or improving upon Bitcion's technology in one way or another.
In most cases, Altcoins are basically no more than Bitcoin clones, at least they were at first. They only offered minor changes to Bitcoin such as transaction speed, hashing algorithm, or possibly the distribution method.
However, now there are several that offer very distinct differences and advantages.
From ones that hope to provide completely anonymous transactions, to ones that help facilitate inter-currency payments, to ones that mine their coins via a social media blogging site (Steem and Steemit.com), to ones that offer lightning fast transaction times.
There is some real competition out there to Bitcoin.
The top couple cryptocurrencies by market cap can be seen here:
(I made sure to include just enough of them to see how our beloved Steem stacks up)
Namecoin was the world's first altcoin, created in early 2011. It's primary purpose was to decentralize domain-name registration, which would make internet censorship much more difficult.
It was once a very popular coin, but now sits around number 46 on the list of coin market caps. It is actually truly a testament to how good it was that it is even still around to this day. Not many altcoins that were created over 5 years ago are still around today...
Currently most Altcoin purchases have to go through Bitcoin. Bitcoin has established itself as the gate keeper to just about all other cryptocurrencies. Some exchanges are just now starting to allow Ether to altcoin transactions, which would place Ether as the first real challenger to Bitcoin's thrown.
In most cases in order to perform the transaction, fiat currency would be used to buy Bitcoin and then that Bitcoin could then be used to buy one of many different altcoins the exchange might offer.
There are several exchanges that have created gateways from fiat straight into their altcoin, and as the technology and space continues to gain in popularity, I would imagine we will see much more of that.
In general, Bitcoin is a very volatile asset, but Altcoins are exponentially more volatile due to their lower market caps. It doesn't take much money to really move the prices around. Keep that in mind when you are deciding on whether you should make your next altcoin purchase or not.
There are many Bitcoin maximalists that think that every other coin besides Bitcoin is a waste of time and not worthy of investment. In their eyes any other coin cannot succeed because it doesn't have the infrastructure that Bitcoin currently boasts.
However, Ethereum is proving that might not be the case for long as it has jumped up to become far and away the second most valuable cryptocurrency. It has plans of eventually overtaking Bitcoin as the top dog.
In reality, any coin could theoretically supplant Bitcoin as the top dog if enough people started using it.
That is precisely what makes Steem so interesting. Taking all the technology advantages and setting them aside, if Steem gets millions upon millions of people transacting in Steem via the exposure gained from a social media site like Steemit.com, it could make a real case for challenging and eventually replacing Bitcoin as the alpha dog of cryptocurrency some day.
Now, all of that is a long shot, but if enough people start using a Steem backed social media site, Bitcoin could be in trouble.
Hope you were able to learn something new from this post.
Stay informed my friends!
Sources:
http://coinmarketcap.com/currencies/views/all/
https://www.cryptocoinsnews.com/altcoin/
Image Sources:
https://bitbillions.com/cryptocurrency/
http://coinmarketcap.com/currencies/views/all/
http://www.coindesk.com/need-altcoins-can-get/
https://steemit.com/@maxjoy
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