The term Altcoin is short for alternative coin — as in, an alternative to BitcoinBitcoinbitcoin (BTC)1$ 26,155.920.18%1h-6.01%24h-15.89%7ddetails. Altcoins also are alternatives to currencies issued by governments. However, they aren’t physical coins. Like Bitcoin, altcoins are digital currencies.

They share characteristics with Bitcoin but are also different from them in other ways. For example, some altcoins use a different consensus mechanism A consensus algorithm refers to any number of methodologies used to achieve agreement, trust, and security across a decentralized computer network. A consensus mechanism refers to any number of methodologies used to achieve agreement, trust, and security across a decentralized computer network.Learn more to produce blocks or validate transactions. Or, they distinguish themselves from Bitcoin by providing new or additional capabilities, such as smart contracts or low-price volatility.

Altcoins accounted for over 40% of the total cryptocurrency market in March 2021. Because they are derived from Bitcoin, altcoin price movements tend to mimic Bitcoin’s trajectory. However, analysts say the maturity of cryptocurrency investing ecosystems and the development of new markets for these coins will make price movements for altcoins independent of Bitcoin’s trading signals.

Some of the main types of altcoins include mining-based cryptocurrencies, stablecoins Stablecoins are a type of cryptocurrency linked to an asset like the U.S. dollar that doesn’t change much in value.Learn more, security tokens, and utility tokens.