Beginners Guide to Blockchain Part VII: What is an Altcoin? What is an ICO?
Boom! We’ve covered a lot in this Beginners Guide to Blockchain, haven’t we? Well in this article we are going explain what and Altcoin is and what an ICO is, but if you haven’t checked out previous articles — Here they are too:
Now, let’s get down to business: What is an Altcoin?
Altcoin is a cryptocurrency alternative to Bitcoin — its name is a portmanteau of “alternative” and “coin.” Since Bitcoin is widely regarded as the first of its kind, new cryptocurrencies developed after are viewed as alternative coins — or altcoins. The emergence of altcoins began around 2011, with the first generation formed using the same blockchain engine as Bitcoin.
So that’s it. Pretty much any other token or coin that is not Bitcoin is considered an Altcoin I would only add that some people also leave out Ethereum out of the Altcoin category due to it’s big relevance in the market and being the second biggest project.
Now here’s some quick history on Altcoins that I found in this Business Insider article and thought it might be worth to share:
The first altcoin was Namecoin, which is based on Bitcoin’s code and was released in April 2011. Namecoin is integral to the history of altcoins in that it showed that there’s enough room in the crypto markets for more than one kind of coin.
It is also noteworthy to say that Blockchains today can run several hundreds of “altcoins,” fueling similar currency projects with unique rules and mechanisms, actually during 2017 there was a period of time in crypto currency world called the “IPO Craze” where a lot of people lost their money.
So let’s talk about that: What is an ICO?
An ICO, or Initial Coin Offering, is an event or process in which usually a start up attempts to raise funds by selling their new cryptocurrency to investors who hope that value of those coins goes up in time due to speculation or the actual successful work of the company.
Basically an ICO is the crypto-world equivalent to an IPO (Initial Public Offering) in the traditional stock market.
The main difference is that here we are dealing with cryptocurrency not stocks and that the crypto world, specially during the 2017 IPO craze was not regulated at all, so just remember this: For every story you hear about a guy turning $1,000 USD into $10,000,000 USD with a random token, there’s always 10,000 guys that lost it all — The crypto space is full of risks and you must always do your own research before aping into the new hottest opportunity.
I personally hold a portfolio of several Altcoins but I am 100% aware and willing to loose 100% of what I invest in them — One can only hope it doesn’t happen but you never know.
I hope you enjoyed this brief article and if you want deeper insights into the crypto ecosystem and opportunities, follow me on twitter Chris Pace.