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Bitcoin is one of the most popular and liquid cryptocurrencies. This currency has spread throughout the web. Money is used to pay for goods and services. You can buy currency on cryptocurrency exchanges or "get" using a special program - a miner.
Bitcoin is a decentralized system equipped with a cryptographic security mechanism. The currency works on the basis of open source code. The technology has become widely known. Some enterprising programmers began to use it to create their own currencies - "forks" (offshoots) of Bitcoin. Virtual coins that appeared after Bitcoin are called altcoins.
The strongest will survive
There is a huge amount of altcoins on the modern electronic market. In just six months, about 500 cryptocurrencies were launched. But in a highly competitive environment, only a few types of digital money will survive. The rest, the most vulnerable and unadapted, are likely to disappear from the vastness of the World Wide Web.
Today, two leaders stand out - Bitcoin and Litecoin. Among the young cryptocurrency systems that are showing great promise, professionals name projects whose developers have managed to change the source code of Bitcoin. Such systems include:
- Dash - the creators of these coins ensured complete confidentiality of transactions.
- Ripple offers a simplified mechanism for conducting foreign exchange financial transactions.
- Bitshares is a virtual version of Wall Street.
But most of the services not only did not bother to make changes to the source code of the worlds most popular currency. They use the Bitcoin blockchain to operate their networks.
The case for altcoins
There are many ardent opponents of altcoins among Bitcoin fans. They believe that forks will not be able to compete with liquid currencies, that alternative money will sooner or later become obsolete, so they should not be created.
The opinion of specialists is diametrically opposite. They are confident that altcoins are an integral part of the cryptocurrency market. Alternative currencies facilitate the decentralization process. And the most important task of virtual money developers is precisely to create a decentralized cryptocurrency network.
Altcoins are also useful in that they can become a good basis for various kinds of experiments: programmers can select characteristics, check their compatibility, etc. Thanks to such research, the Internet community can receive digital money with unique properties.
Users can also find their benefit in altcoins. An alternative currency can be a training ground for beginners. Of course, you can use a test version of Bitcoin, but in this case, the person will not receive a profit. Altcoins are valuable in their own way: they can be sold or exchanged for other types of digital money.
And one more argument in favor of altcoins. Alternative coins create competition in the electronic market. If Bitcoin were the only currency on the Internet, there would be no incentive for development. In a competitive environment, Bitcoin developers have to mobilize all their forces and offer users an updated cryptographic system.
Consider the brightest systems that issue alternative currencies.
- Namecoin is the first altcoin that was taken as the basis for the creation of DNS - the domain name system. The peculiarity of the DNS is that it cannot be controlled by government authorities. NMC coins are mined together with BTC.
- Litecoin is one of the most successful altcoins. The money is powered by Scrypt, a modified hashing algorithm. Litecoin has the following characteristics:
- high speed of transactions;
- small block database.
The system can issue no more than 84 million currency units.
Litecoin, unlike Bitcoin, has an underdeveloped infrastructure: LTC can be paid in a limited number of stores, the system does not have an ATM-terminal network, and gateways to the banking network are not open.
- DOGE (Dogecoin) also uses the Scrypt algorithm in its work. The creation of this currency began as a joke. The coins attracted the attention of users and quickly spread across the web. Some believe that the reason for the popularity of this brands virtual money lies in the logo: it depicts a cute Shiba Inu dog.
To date, the system has issued over 100 billion currency units. The emission of coins continues. "Dogs" have their own advantages:
- low transaction costs;
- instant confirmation of financial transactions.
By mining DOGE, the user also receives LTC.
- Ripple - the currency of this system (XRP) has an original program code that was written from scratch. Ripple coins do not belong to Bitcoin forks. The system has the following features:
- open source;
- high speed of transactions;
- minimum commission fees for financial transactions (0.00001 dollars).
The payment takes the 2nd position in terms of capitalization (after Bitcoin).
- Nextoin (NXT) - This currency uses the Proof-Of-Stake storage confirmation method. Users dont need to mine to earn coins. The developers of the cryptocurrency wrote the program code on their own (using the Java language), and did not copy it from Bitcoin.
The system operates on a decentralized basis. Nextoin members do not need to install e-wallet software on their computer.
Application of Proof-Of-Work and Proof-Of-Stake technologies
In the work of many online currencies, the simultaneous use of Proof-Of-Stake (confirmation of storage) and Proof-Of-Work (confirmation of work) technologies is practiced. This means that only those funds that are stored in the accounts of system participants are involved in confirming a transaction. For the owner of an e-wallet, such a scheme will be beneficial: he receives interest on the rest of the money.
Mining coins requires high energy costs, and this way of operating the payment service allows you to reduce energy consumption.
This method of confirming transactions is typical for such payment systems as Novocain (NVC), Pictoin (PPC).
Altcoins with hashing algorithms X11, X13, X15
More recently, new coins have appeared on the electronic currency market - Dash, which work on the basis of the X11 hashing algorithm. The algorithm consists of 11 cryptoalgorithms with different mathematical models. Dash mining requires special hardware - video cards and processors.
Experts say that only Dash can provide absolute confidentiality of payments. Impressive and speed of transactions - payments are made instantly.
Mining is not the only way to earn Dash. You can also get virtual coins by keeping "nodes" (main network nodes).
Cryptocurrency developers pay a lot of attention to improving their system. It is worth noting that their work is rewarded: altcoins become a liquid currency, and their rate is gradually increasing.
Following Dash, other cryptocurrency systems began to use the X11 algorithm. New versions have already appeared, which consist of 13 and 15 cryptoalgorithms. They are characterized by greater energy efficiency and high performance.
Is there a second generation currency?
Some developers position their cryptocurrencies as electronic money of the new generation and call them "Crypto 2.0". In fact, behind this loud name, there are ordinary altcoins that look nothing more than add-ons on Bitcoin: the work of "Crypto 2.0" is based on the Bitcoin blockchain.
- Mastercoin is the first "new generation" money. The cryptocurrency was developed as a superstructure over the blockchain. The add-on was to be used to enter into cryptographically validated smart contracts.
- Ethereum is a very promising project. Investors have invested over US $ 15 million in the system. Cryptocurrency developers want to please the community with low commissions, the ability to conclude transactions in automatic mode, as well as support for the Internet of Things. The entire Internet community is closely following the development of the project.
- Colored Coins (colored coins) - this payment system is under development. Programmers working on a project have a lot of ideas. The technologies being introduced will make it possible to issue electronic valuable documents (bonds, shares), tickets for various types of transport, etc.
Is it possible to earn capital on altcoins?
Cryptocurrency is a 21st century invention. Electronic money is still at the testing stage. The virtual currency market is characterized by abrupt changes, therefore, investing in cryptocurrency, a person is at great risk. The most liquid and stable currency is Bitcoin, but there is also high volatility (sharp jumps in the rate).
Having decided to invest in altcoins, the user should carefully study the market, get acquainted with the features of this or that type of online money. There will be no problems with information: it is enough to visit specialized sites or cryptocurrency exchanges to collect data on the altcoin of interest.
Unfortunately, the prices of virtual money are often manipulated by “whales” (merchants) who buy electronic coins in large volumes. This is done in order to sow excitement among network users and artificially raise the cost of a particular cryptocurrency. But as soon as the exchange rate rises to the maximum level, "Whales" begin to sell their monetary units and receive a very immodest profit. This process is called "Pump" and "Dump".
How do I choose a liquid altcoin?
To invest, you need to choose a cryptocurrency with high liquidity (the level of coin liquidity is indicated on the exchanges). It is worth paying attention to the developers of electronic money: what are they doing to promote and develop the currency they have created? If such events are carried out as updating the software, strengthening the security system, introducing the latest technologies, then such a cryptocurrency has every chance of becoming stable and efficient. Such money is purchased in large quantities, even large Internet communities can buy currency.
Invest funds only in those projects that have been researched and verified by you personally. If you do not understand something, then it is better not to take risks: enterprising people do not spend money on what they do not understand.
On the Internet, you can find communities that offer to make money on cryptocurrency by carrying out fraudulent activities. Better not to get involved with scammers and avoid hypes.
How do altcoins earn?
There are several methods for obtaining altcoins:
- Receiving payments in cryptocurrency. One of the simplest and most popular methods is accepting payment for goods or services (altcoins are electronic money that is used for online payments).
- Buying an altcoin. Electronic money can be purchased on cryptocurrency exchanges.
- Receiving coins from sponsors. When launching cryptocurrency, some developers give away electronic money for free. This is done in order to spread information and attract users. You can also get coins as sponsorship.
- "Extraction" of cryptocurrency. You can earn electronic money through mining. This will require special equipment (video cards, processors) and miner programs.
The CryptoNote algorithm is very popular among miners. Its advantage is that it can run on the central processing unit of a home computer. CryptoNote ensures confidentiality and high speed. The algorithm uses “ring signature” cryptological technology.