An altcoin refers to any cryptocurrency alternative to Bitcoin. The term combines “alternative” and “coin” to describe the many other coins and tokens that have launched alongside or after Bitcoin.

Like Bitcoin, altcoins are decentralized digital assets and currencies that utilize blockchain technology. However, altcoins have distinct technical features, monetary policies, governance structures, and other attributes tailored to different goals and use cases.

There are two primary types of altcoins:

• Native coins of independent blockchains (Litecoin, Ethereum, etc)
• Tokens issued on other blockchain platforms like ERC-20 tokens on Ethereum

Altcoins aim to build on Bitcoin’s innovations in various ways or target specific utility that Bitcoin does not provide. The field includes both reputable long-running projects as well as short-lived coins. We’ll explore some major examples next.

Examples of Major Altcoins

Some prominent established altcoins include:

• Ethereum (ETH) – Programmable smart contract blockchain able to support powerful decentralized applications. Native asset is Ether.
• Cardano (ADA) – Blockchain utilizing proof-of-stake consensus focused on scalability and academic research principles.
• Solana (SOL) – High-speed blockchain focused on scalability capable of 50,000 transactions per second.
• Polkadot (DOT) - Next-generation sharded multichain network focused on interoperability between blockchains.
• Avalanche (AVAX) – Smart contract platform aiming to bring speed and low fees through its novel consensus protocol.
• Litecoin (LTC) – Payments-focused network with faster transaction times than Bitcoin.

These examples illustrate the diversity of altcoins spanning smart contract platforms, application-specific blockchains, and Bitcoin forks with tweaked attributes.

How Altcoins Differ from Bitcoin

While altcoins share decentralization and blockchain with Bitcoin, key differences include:

• Consensus models - Most altcoins use alternatives to Bitcoin’s proof-of-work like proof-of-stake, proof-of-history, or hybrid consensus.
• Speed - Many altcoins like Solana and Avalanche boast faster transaction speeds than Bitcoin.
• Supply rules - Altcoin networks have different native asset supplies and mining/emission schedules than Bitcoin’s fixed 21 million cap.
• Use cases - Altcoins target specialized uses ranging from smart contracts to supply chain tracking rather than solely payments.
• Governance - Altcoin upgrade decisions vary between networks with Bitcoin relying on miner signaling. Some utilize token holder voting.
• Energy use - Few altcoins are as power intensive as Bitcoin since most don’t rely on energy-intensive proof-of-work mining.

These contrasts illustrate how altcoins adapt Bitcoin’s model with their own innovations tailored to community values and target applications.

Market Position Relative to Bitcoin

As the first mover and most dominant cryptocurrency, Bitcoin comprises over 40% of the total crypto market capitalization as of 2022. This percentage fluctuates over time but Bitcoin remains the center of gravity in crypto pricing and sentiment.

Most altcoins depend on Bitcoin for valuation pairings. During bull markets, many altcoins outperform Bitcoin’s gains. But during downturns, altcoin valuations often decline further than Bitcoin’s losses as risk appetite diminishes.

However, Ethereum has cemented itself as the second largest cryptocurrency, carrying its own gravity and influence on the broader altcoin market. Its movements also impact altcoin prices and activity.

The Future of Altcoins in Crypto

The altcoin ecosystem is likely to play a key role in crypto’s future as innovation continues but questions persist over which networks will lead the next generation:

• Continued specialization – New altcoins will target specific unmet needs rather than competing directly with Ethereum/Bitcoin.
• Cross-chain interconnectivity – Seamless swapping and bridging between altcoin networks could remove current friction between siloed assets.
• Dominance of smart contract networks – Ethereum and its soon-to-be-merged proof-of-stake Beacon chain may cement dominance as the settlement layer for Web3 applications.
• Unforeseen disruptive innovation – What the next major evolutionary leap will be after Satoshi’s invention of Bitcoin and blockchain remains unknown. An altcoin project may introduce this.

While their futures remain speculative, development and adoption of the strongest altcoins appears poised to accelerate as the overall industry matures.

Conclusion

In summary, altcoins are cryptocurrencies that offer an alternative to Bitcoin, introducing adaptations and innovations on Bitcoin’s model. There is huge diversity among altcoin projects targeting various use cases, consensus rules, and community values.

Leading altcoins like Ethereum have grown to hold significant market position, while many others occupy niche roles. To understand the broader crypto space, familiarizing oneself with the altcoin landscape beyond just Bitcoin provides great benefit.