2021 saw major upheavals in the cryptocurrency market as the good old cryptos like Bitcoin and Ether lost to newer tokens promising much more security of investment and greater returns, also known as altcoins.
“Bitcoin’s performance has been dwarfed by the incredible altcoin growth this year. 2021 has felt like a continuous altseason, only taking a breather during the summer months. This altseason has seen several short-lasting bull runs in various parts of the markets as traders have rotated through the narratives,” Arcane Research said in a note.
The research firm further noted that while Bitcoin may have beaten the stock market in 2021, it has been overtaken by other cryptocurrencies this year. Of these, Binance Coin (BNB) has fared as the best performer of the three biggest cryptos by m-cap with a 1,344 percent gain whereas the Binance Smart Chain ecosystem has seen massive growth in 2021 as it took some of Ethereum’s market share.
WHAT EXACTLY IS AN ALTCOIN?
Altcoins are cryptocurrencies other than Bitcoin. Altcoin is a combination of the words “alternate” and “coin”. These coins differentiate themselves from Bitcoin by extending their capabilities and plugging their shortcomings.
As of November this year, there were more than 14,000 cryptocurrencies. Of these, Bitcoin and Ethereum accounted for around 60 percent of the total cryptocurrency market whereas so-called altcoins made up for the rest in November 2021.
TYPES OF ALTCOINS
There are several categories of altcoins on the basis of their functionalities and consensus mechanisms—mining-based, pre-mined, meme coins, utility tokens, security tokens and stablecoins.
- Mining-based altcoins: These coins are mined into existence and most of them employ the proof of work (PoW) method which is used to generate new coins by solving different problems to create blocks. Notable mining-based altcoins are Litecoin, Monero and ZCash.
- Pre-mined altcoins: These are the exact opposite of…
