What are altcoins

The word "altcoin" comes from two other words: alternative and coin. It means all cryptocurrencies except Bitcoin (BTC). Altcoins are similar to national currencies. There are rubles, tugriks, pesos, bolivars, other means of payment. Above the national currencies there is the main reserve currency — the American dollar.

In the world of cryptocurrencies the main currency is Bitcoin. The rest are used in their niches. Some altcoins are known in narrow circles. For example, Gridcoin (GRC) is paid for the user’s PC contribution to scientific computing. All you have to do is run a special program, and in a few days you’ll find new coins in your wallet. You can either save Gridcoin or exchange it for Bitcoin.

This system resembles a gift card in a store. Gift cards only have value in a particular place, but the card itself can always be sold for money. In our case, the gift card is the Gridcoin, and real money is Bitcoin.

There are more famous altcoins. For example, Litecoin, Ethereum, Monero. Each coin has its own application, just as there are many shops with different gift cards. Some altcoins extend the Bitcoin functionality. For example, Ethereum allows to create smart contracts.

When two users agree on something, they sign a virtual contract with each other, which works automatically. The system can be compared to a guarantor, only there is program code instead of a person.