Bitcoin might have been the trendsetter for cryptocurrencies focused on a decentralized network, but it isn’t the only one. However, it’s now the standard for crypto and has inspired a growing legion of spinoffs and followers.

What’s Cryptocurrency?

Before learning of the Bitcoin alternatives, it’s important to know what cryptocurrency is. Overall, it’s digital or virtual money used like coins or tokens. While some cryptocurrencies come with credit cards and have broken the physical-world barrier, most are intangible and stored online.

Since Bitcoin is so popular, you may want to consider trading it online. You don’t need to buy Bitcoins specifically; Bitcoin Motion allows you to trade CFDs with ease and streamlines the process.

Types of Altcoins

Altcoins are cryptos that get modeled after Bitcoin. Some say they’re improved or modified versions of the trendsetting cryptocurrency. Here are the types of Altcoins:

  • Cryptocurrencies – These are intended to transmit value and payment across the decentralized network of users.
  • Tokens – These are blockchain-based tokens that aren’t used as money. An example is an ICO (initial coin offering), which represents a stake in the project. If they are linked to value for the company, they’re often referred to as security tokens.

Top Cryptocurrencies to Consider

Ethereum (ETH)

Ethereum allows decentralized applications and smart contracts to be run and built with no fraud, downtime, interference, or control by a third party. This platform helps create a decentralized list of financial products that everyone can access freely.

The applications here run on ether, which is the platform-specific token. Ether is similar to gasoline for vehicles because it moves around on the platform and is preferred by developers using Ethereum and investors wanting to purchase other ether-style digital currencies.

It was launched in 2015 and is the second-largest digital currency after Bitcoin, though it’s lacking by a significant margin and has a market cap of half of the Bitcoins.

Litecoin (LTC)

Litecoin was launched in 2011 and was one of the first cryptocurrencies to follow behind Bitcoin. Some people call it the silver to Bitcoin’s gold. Charlie Lee created it, and he was a former Google engineer and MIT graduate.

It features an open-source payment network that no central authority controls. Plus, it uses scrypt as the PoW, which is decoded with CPUs (consumer-grade central processing units). While it’s similar to Bitcoin in many ways, it features a faster rate of block generation and quicker confirmation times.

Cardano (ADA)

Cardano is the “ouroboros proof-of-stake) crypto, which was created using a research-based approach by cryptography experts, mathematicians, and engineers. Charles Hoskinson co-founded the project after being upset about Ethereum’s direction.

The team behind this cryptocurrency created the blockchain through peer-reviewed research and significant experimentation. Because of that, it stands out among PoS peers and larger cryptos. Some even call it an “Ethereum killer” because the blockchain does more. However, it’s still in its infancy stages.

Cardano hopes to be the financial operating system of the world because it uses DeFi products like Ethereum’s and offers solutions for voter fraud, chain inoperability, and others.

Polkadot (DOT)

Polkadot is a PoS cryptocurrency that delivers inoperability for other blockchains. The protocol connects permission-less and permissioned blockchains and oracles so that systems can work together from one location.

The core component here is the relay chain, allowing inoperability for various networks. It also includes parachains (parallel blockchains) to have their native tokens for specific needs.

Overall, Polkadot differs from Ethereum because developers create their blockchains while using the security features the Polkadot chain has already. Ethereum requires developers to set up security measures.

Conclusion

Most people have heard of Ethereum and Litecoin, but Bitcoin reigns supreme. It’s crucial to understand that you have options. That way, you can research various cryptocurrencies and Altcoins to create a diversified investment portfolio.