Love them or hate them, there’s a lot of altcoins in the crypto-economy. In fact, in 2017 there are roughly more than 700 different kinds of cryptocurrency. All of them claim to offer something unique. However, many people believe there is nothing innovative about these altcoins due to how easy it is to create them, the sketchy developers behind many such projects, and the significant pre-mines associated with altcoins.
The Introduction of Altcoins
Call them what you will: irrelevant pump-and-dump schemes, altcoins, appcoins, and yes even shitcoins. Altcoins have been controversial since the first bitcoin copy cats were released. Early alternative cryptocurrencies that appeared after bitcoin include Litecoin, Peercoin, and a few others. There are very few coins which have not copied bitcoin’s codebase, but there are a couple, such as Bytecoin or Monero.
Since the early days, altcoin creation has exploded, and there seems to be a digital currency made for literally everything under the sun, from marijuana to pornography. There are coins that claim they provide better anonymity, tokens that use Proof-of-Stake consensus mechanisms, and some that just create more altcoins.
Many people are of the opinion that altcoins are worthless and merely pump and dump schemes. Others believe, depending on the bags they hold or maybe they’re part of an altcoin community, that there is plenty of room for these tokens in the free market. Then there are those that believe a specific altcoin will someday remove bitcoin from its current throne.
Creating an Altcoin
The creation of an altcoin or blockchain is now pretty easy and some cryptocurrencies like Ethereum or Counterparty can create tokens as well. If a person is interested in creating their own cryptocurrency they can seek out a developer and pay them bitcoin for the creation. Then there are specifically designed platforms like Cryptolife Development, or Wallet Builders. Both website services claim to offer the creation of a genesis block with blockchain, and various Windows, Mac, and Linux wallet clients.
For instance Wallet Builder details on its website a custom altcoin can be built for the price of 0.05 BTC. The altcoin design company states:
Create your own coin with premine, custom logo’s and change coin parameters to your liking. You get an unique genesis block, the source code and a compiled Linux & Windows client.
As many cryptocurrency community members will tell you, maintaining an altcoin is not as easy as it sounds. The code and blockchain still has to be nurtured with programming and miners have to contribute to the network. Back in 2014 at The North American Bitcoin Conference in Chicago, Litecoin creator Charlie Lee explained five fundamentals needed to create a good altcoin: a good name, branding, a good logo, attracting miners, a fair launch, and solid code. However, a vast majority of altcoins in existence have not followed this advice most notably in regards to fair launches.
Premines, Scammers, Bugs, and Shills
Quite a bit of the altcoins in existence started as a stealthy “ninja launch” and what’s called a premine or instamine. This means the creators mined the coins by themselves for a period of time reaping a great percentage of the tokens created. People find premines very controversial as developers state the funds go towards marketing and development but typically get dumped on the market. When a large holder dumps their tokens on the market, the price typically crashes, and these smaller markets are easily manipulated.
Furthermore, many altcoin creators have been found to be very shady characters often promising things for the cryptocurrency’s roadmap that never materialize. There’s always some niche application offered, and most of altcoins never do what they claim to provide. With bitcoin, everyone knows all the rules as it’s the original cryptocurrency with the strongest blockchain in existence.
The bottom line is bitcoin’s hashrate is a pretty big deal as it is the most secure blockchain today. It gains more strength each day. The number one cryptocurrency has provided real-world benefits in contrast to tokens pumped and dumped on altcoin exchanges. Bitcoin has the largest community and the most merchant acceptance out of all altcoins combined. This network effect is often dismissed by alternative crypto-asset proponents, but it’s going to take an awful lot to overcome Bitcoin’s head start.
The fact that it is very easy to make an appcoin but not easy to maintain one is not very assuring. All of them even within the top ten most valuable suffer from significant controversies like instamines, bugs in the code, shady actors, and large groups of shills selling snake oil. Some of them may sustain a legitimate existence trying to compete or even complement the bitcoin network, but a great majority of altcoins today are merely smoke and mirrors.
What do you think about how simple it is these days to create an altcoin? Do you think some altcoins will sustain a legitimate existence? Let us know in the comments below.
Images courtesy of Crypto-graphics.com, and Pixabay.