Bitcoin has not only been a trendsetter, ushering in a wave of cryptocurrencies built on a decentralized peer-to-peer network, but also has become the de facto standard for cryptocurrencies, inspiring an ever-growing legion of followers and spinoffs.
Key Takeaways
- A cryptocurrency, broadly defined, is a form of digital tokens or “coins” that exist on a distributed and decentralized ledger called a blockchain.
- Beyond that, the field of cryptocurrencies has expanded dramatically since Bitcoin was launched over a decade ago, and the next great digital token may be released tomorrow.
- Bitcoin continues to lead the pack of cryptocurrencies in terms of market capitalization, user base, and popularity.
- Other virtual currencies such as Ethereum are being used to create decentralized financial (DeFi) systems.
- Some altcoins are being endorsed as having newer features than Bitcoin, such as the ability to handle more transactions per second or use different consensus algorithms like proof of stake.
What Are Cryptocurrencies?
Before we take a closer look at some of these alternatives to Bitcoin, let’s step back and briefly examine what we mean by terms like cryptocurrency and altcoin. A cryptocurrency, broadly defined, is virtual or digital money that takes the form of tokens or “coins.” While some cryptocurrencies have ventured into the physical world with credit cards or other projects, the large majority remain entirely intangible.
The “crypto” in cryptocurrencies refers to complicated cryptography that allows for the creation and processing of digital currencies and their transactions across decentralized systems. Alongside this important “crypto” feature of these currencies is a common commitment to decentralization; cryptocurrencies are typically developed as code by teams who build in mechanisms for issuance (often, although not always, through a process called mining) and other controls.
Cryptocurrencies are almost always…
