Ever since Bitcoin’s launch and quick success in 2009, the world witnessed the launch of several other cryptocurrencies. All these cryptocurrencies, developed and launched after Bitcoin are collectively called altcoins.
The word 'altcoin' is a portmanteau of 'alt' (short for alternative) and 'coin' (referring to crypto-tokens or ‘coins’). Most altcoins attempt to replicate the decentralized, peer-to-peer (P2P) structure of Bitcoin while also trying to fix pertinent issues with Bitcoin, with varying results.
Some major issues with Bitcoin that altcoins have tried to address are slow transactions, which can take upto 10 minutes to be fully processed, and high fees for transactions or trades. Ethereum, an altcoin with a fairly large user base, has managed to offer faster transaction speeds with lower fees and increased security.
Launched in April 2011, Namecoin was one of the first Bitcoin alternatives, and used the same proof-of-work algorithm. Namecoin allowed miners to generate an individual .bit domain for mining, having an increased focus on user anonymity. Litecoin, another early alternative to Bitcoin, was launched in October of the same year, and instead of being a direct competitor was touted more as the 'silver to Bitcoin's gold.' Litecoin has much faster transaction speeds compared to Bitcoin.
While altcoins have a multitude of classifications, the two basic types are stablecoins and mining-based cryptocurrencies. Altcoins like Ethereum are mining-based, complex cryptographic puzzles are solved to generate, or mine, new blocks aka coins. On the other hand for stablecoins, the values of altcoins like USDC, USDT, and DAI are pegged to another commodity, which can be another cryptocurrency, a fiat (non-digital) currency, or even a exchange-traded physical commodity such as gold which reduces market volatility and price uncertainty.