Bitcoin is the “Beatles of cryptocurrency” since it has revolutionized digital currency in a way that is redefining the financial industry. Now even the mainstream is finding out about it and is curious about its decentralized nature. Altcoin is an emerging cryptocurrency used as an alternative to Bitcoin, based on much of the same technology. Here’s a deeper look at what this Bitcoin offshoot is about and why it’s attracting new players.
Why Altcoin Exists
There are a variety of altcoins to choose from with some of the most popular being Litecoin, Dash and Ethereum. Altcoin is even being offered by bitcoin mining platforms. Whether you are mining for bitcoins or altcoins you need a “mining rig,” which is a series of powerful computers to make more than pennies per day. The goal is for these computers to solve math problems for group projects, culminating in new digital coins, which can be exchanged for U.S. dollars or other currency.
Mining success involves beating the cost of electricity bills that must be paid to keep mining rigs running 24/7, which accounts for big fans to keep them cool. Altcoin is patterned after Bitcoin, based on the same blockchain framework. It offers more competitive advantages through affordability and less scarcity. Despite the similarities of these cryptocurrencies, different altcoins offer unique features involving privacy, proof and transaction speed.
How Altcoin Evolves
The goal of altcoin developers is not to reinvent the wheel, since Bitcoin has already paved the way for cryptocurrencies to thrive. Altcoin developers are often quick to duplicate innovations in bitcoin code. At the same time, altcoin developers look to add features that bitcoin developers won’t adopt. While Bitcoin is a $70 billion network, altcoins are closer to $100 million in value, so there’s more room for growth in the altcoin space.
One of the reasons why Litecoin has emerged from the pack as a popular altcoin is that it can be exchanged through Bitcoin. The rise of various cryptocurrencies has led to a new technology called Atomic Swaps, in which peer-to-peer exchanges of different coins can be executed. You will need a “Hash-Time Lock Contract (HTLC)” on a multisig wallet to accomplish this cross-chain transaction.
Turning To Mining Specialists
Instead of investing thousands of dollars in your own personal mining rig, many investors are turning to data centers that facilitate mining for them. Not only do they save money on hardware, they also save on shipping, customs and electricity costs. The electricity rates will be much cheaper at data centers that invest in green energy. Another advantage to the cloud solution is that downtime won’t be a problem, whereas running your own rig may not have as much reliable continuity.
For an affordable fee, you can purchase a 24-month contract that allows you to mine for an altcoin such as Dash. Mining in the cloud will free you from worrying about time-consuming hardware maintenance, excessive heat and loud noise. The beauty of large data centers is that they experience close to zero downtime, if any, since they have backup generators that automatically kick in if there’s a power failure. Your local utility company may not guarantee quick response in the event of power failure.
Unless you’re a computer-savvy techie who loves playing with hardware, you will likely have an easier time earning profits through a data center. So instead of putting in hard work to build a rig that will surely be costly but has no guarantees of success, you can minimize financial risk by turning to data centers that specialize in bitcoin and altcoin mining.
Blockchain technology, which is what bitcoins and altcoins are based on, is growing in popularity for decentralized cryptocurrencies. One of the keys to profiting is paying attention to risk management. Working with a data center that specializes in mining gives you more opportunities for mining both bitcoins and altcoins.