Altcoins Are to Take over Bitcoin? Potential of Alternative Currencies
Bitcoin appeared back in 2008. This revolutionary technology of the decentralized payment system was developed by Satoshi Nakamoto, who published a white paper of Bitcoin. It’s been ten years already and many things have changed. The use of blockchain technology has expanded and more than 1,500 cryptocurrencies have appeared. Is it possible that they will squeeze the big ancestor? Well they are already doing so. Although BTC dominates on the cryptocurrency market having a share of 38%, many alternative coins have become very popular and attracted a lot of investors. Yes, Bitcoin is not retiring, of course, even in the medium term, but today The Coin Shark will tell you about altcoins and their potential.
If the world's first cryptocurrency had no problems, other coins wouldn’t have even appeared or at list wouldn’t have been able to get their market share. First altcoins were developed in 2011 and aimed to improve bitcoin blockchain, namly by fastening transactions, decreasing commissions, providing higher anonymity and cheaper mining, advancing the functionality, etc.
A project offering a unique idea or a unique solution of existing problems stands behind each virtual currency. The general aim of cryptocoins is to conduct transactions in peer-to-peer, decentralized and independent payment systems, however many startups implemented special features that try to advance this process.
All altcoins, in fact, can be used the same way as Bitcoin and in some other way, which means their potential utility is higher. As Ethereum appeared in 2014, the scope of blockchain expanded significantly. Since then, many cryptocurrencies (like ether and EOS coins) have become internal means of payment of blockchain platforms. The functionality of such projects is not only about transferring virtual financial assets. They provide opportunities to deploy and run financial instruments, applications, issue other digital currencies, use smart contracts.
Many cryptocurrencies (like Dash, Litecoin, Bitcoin Cash and other bitcoin forks) are developed on the BTC blockchain and are therefore very similar to Bitcoin. All of them, however, provide different solutions to the technological problems of Bitcoin. The very first one is scalability. When the number of Bitcoin users and transaction volume increased, payments were processed slowly and commission fees grew. This especially affected small transactions that became completely unprofitable. This problem is that Bitcoin block size is limited to 1 MB, and with a large number of transactions, the block can not quickly process all the payments. Many altcoins, and Bitcoin forks (Bitcoin Cash, Bitcoin Gold, Bitcoin Diamond) decided to increase the block size. Bitcoin developers implemented SegWit, which implies the creation of an additional structure for transaction processing so that it is easier for the block “to do its job”.
Altcoins tend to offer additional functionality or improve bitcoin. Many of them have good liquidity (you can able spend them on something) and many provide their owners with big profits while their rates increase. Today altcoins are very important part of cryptocurrency market and it wouldn’t probably exist without them.
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