Altcoin is the term given to describe alternative digital assets, such as a coin or token that is not Bitcoin. This nomenclature comes from the idea that Bitcoin is the original cryptocurrency and that all others are then considered “alternate” or “alternative” coins.
The term “altcoin” is also used quite broadly to refer to digital assets that would also technically be referred to as “tokens” rather than coins. The best-known examples are the ERC-20 tokens that exist on top of the Ethereum blockchain.
Since the creation of Bitcoin in 2008, more than 2,000 alternative cryptocurrencies were deployed. In fact, many of these altcoins were created as modified copies of Bitcoin, through a process known as Hard Fork. Despite sharing some similarities, each altcoin has its own functionalities.
The altcoins that were forked from Bitcoin often present a similar mining process, which relies on the Proof of Work consensus algorithm. However, there are several other cryptocurrencies experimenting with alternative methods of reaching consensus within distributed blockchain networks. The Proof of Stake consensus algorithm is the most common alternative to Proof of Work, but other notable examples include the Delegated Proof of Stake, Proof of Burn, Proof of Authority, and Delayed Proof of Work consensus algorithms.
While some users deem the term “altcoin” to be derogatory or deprecating, it is broadly held to be neutral in its usage. The term is not supposed to convey any positive or negative sentiment about the asset that is being referred to. On the other hand, the term “shitcoin”, for example, brings a negative sentiment and is usually deemed as pejorative.