BitcoinEducation

Three Types of Cryptocurrencies

Three Types of Cryptocurrencies

Altcoins

Three Types of Cryptocurrencies

Altcoins are the same cryptocurrencies as Bitcoin or Bitcoin Cash, but with a new pseudo-significant changes and their own blockhain. Sometimes alts have no blockchain, but in such cases thats not actually altcoins anymore, but something smaller.

To create altcoin, you will need to clone the Bitcoin’s codebase, i.e. its soul. Then just name it somehow as you wish. It could be Shitcon or Shitcoin Cash. The name of the coin doesn’t really matter.

Most often, altcoins are created for fun, they are not inventions and have no influence over anything. People who really studied the history of cryptocurrencies know that such coins mean nothing to their creators. The highly marketed Litecoin, Dash, Monero, Doge — those coins are the jokes. But you read the news and see how stupid it could be — Litecoin is often presented as the silver to Bitcoin’s gold. Maybe, as the second cryptocurrency or the SegWit revolution currency. But the LTC supply is centralized and the author himself sold all the coins at the 282 usd or so price peak, causing a local ecosystem price disaster which is impossible scenario for BTC.

You can search on Reddit to find out the exact details about the altcoin creation for pure fun. Also, please note, that those altcoin creators always have million or two of their own coins at the beginning of public mining. The public now has lots of money for such ventures, so thieves from the social engineering camp succeed on this crypto soil fast. Bitcoin was the different deal, there were no guarantees it will work and the price was like cents.

However, altcoin creators understand over time that public like free money most of all. Also, they see that nobody wants to develop ”new and revolutionary” solutions on top of their things. Afterwards, they start PR of their cryptocurrency as if it was already successful and meaningful. In real life, the state of things is the opposite, even mush worse than you may presume. But any person will do the greedy thing, that’s our nature. We want power, fame and money. The law is simple: the more troubles you have, the more success stories you need to tell about the venture. How much news per year do you read about Bitfury company? Probably not more than five. In the same time, Bitmain splashes everywhere, though those companies are equal competitors.

The funny altcoin creators simply start pre-mining, pre-selling, pre-this pre-that, and sell the useless tokens. Rich but poorly informed investors fall victims to persuasion and buy the tokens only to sell them at zero.

Such investors like you and me somehow decided that many of the ICO tokens will follow the Bitcoin’s price history. In reality, even God cannot guarantee that the token price will pump. It would be naive to think about the survival of such coins, as well as their evolutionary success.

But this happened: lots of old investors — former bankers — and a huge society of scholars from Server Corea, USA and Russia did eat lots of tokens. Those tokens have caused the investors to lose money during 2017-2018. Who is responsible if people are easily attracted by free cash? Bitcoin journalists of course, many of whom didn’t even try to uncover the real state of things to the army of newcomers. The public needs education, not the paid articles with crappy investment advises from idiots like the ones that current Bitcoin related Russian press does publish.

Well who believe that crap? Just look at your local scholars, your corporate slavery comrads or even relatives. Everyone are persuaded, just like in the old good times of Avon. By the way, anytime the price goes down such people are in hurry to sell their coins. This happens because they don’t understand how cryptocurrency works. Probably such people shoudn’t involve themelves in long-term investments, otherwise, they have a chance to get trapped in some kinda bitcoin casino.

But how to warn people here? You don’t want to turn a bar advisor who will carry the responsibility for someone else’s decisions. So you just remain silent while people lose money. While the beta-launches and other ICO-related crap is basically everywhere. They launch ICO-jets, ICO-ships and even ICO-rockets, till the ICO-orbital station.

What will happen to the price?

Wise puppet-masters pump the platforms, after which the altcoin that was created for fun begins to either fly or collapse. It is often two days of fly and a year of falling down to pitch black collapse. Sure: some coins even drop their price for two to three years. OneCoin, Namecoin, Litecoin… The last one is centralized too. The cryptocurrency media told you otherwise? Lies, they finally learned it.

So altcoin is something like Bitcoin but worse and can be destroyed or changed at any moment. Its hard to make bitcoin disappear, but the altcoins of different size are thrown into Oblivion on everyday basis thanks to the anonymous hackers.

The altcoin developers never write the code from scratch. They extensively use Satoshi Nakamoto’s developments, as well as the other coder’s works from the Bitcoin system. Only then they can achieve significant results with more or less understandable product.

If we dig deeper we’ll see that there are couple of sidechains in development, these address bitcoin’s scalability problem as well. Some experts even thik they can let ”harm the marker of altcoins in the future, by solving the problems that they seem to solve”.

However, many startups that have joined the industry, they decided that people need their coins together with the own, separate blockchains.

A false superstition has born that bitcoin gives lots of money to stupid people, without problems or requirements. In fact, the case is the opposite. Bitcoin is the cryptocurrency for the smart ones, and it gives nothing just like that.

Bitcoin managed to survive thanks to the lack of attention. The now unknown coins sometimes have authors who extesively work on building a big, influential groups around the project. Surely, they will catch the wave of luck. In the final matter, why not diversify risks of a secret society payments by using a number of selected and publicly appreciated altcoins?

Forked Coins

Three Types of Cryptocurrencies

 

The forked coin is in some sence an altcoin. The big difference is that forked coins usually appear as a result of doubling of the existing blockchain.

The dates of the forks are set beforehead. But sometimes, the fork happens silently. Silent miner can use the planned hardfork to stay on the old chain and gain mining ultra-profits.

For example, there were one cool crypto coin. It was building its own blockchain for years (like Ethereum). As we know from Jimmy Song’s words, the longer the chain, the better. So, now you need to form a bandwagon of people ready to continue to support the blockchain using old or other rules. Obviously, the consensus system of cryptocurrencies won’t allow that to happen. Only the nodes that obey the network rules can continue working within it. All others are kicked out fast. This is not banks where money laundering is a normal practice with fees and holidays and stuff.

Not lets presume for a moment that a bunch of miners had a conspiracy contract to simultaneously change the rules of block propagation or implement full ASIC-resistance to the network core protocol, while adding the priority to videoblade miners. It is not important how to do that because Im not gathering money under such idea.

Now, a part of the network doesn’t work the same way as it was working earlier.

So, when a bunch of theoretical pirate miners reach consensus, a small part of the network is working with some new rules (or it is following the old ones as it was with ETC). Usually, the network divides into 2 groups, like %90 in one and 10 percent in the other.

Some people want to mine one way, some people want use another. How to do it better of all – nobody knows. But this is insignificant while the network works and the transactions flow. Forked coin usually becomes vulnerable to 51% attack because it has small hashrate. Well planned conflicts among constant users is also a good trick.

But, we need not forget the good old alchemy formula: ”If something can be tested, it needs to be tested”.

Very often, fork coins inherit the main properties of their ancestors, like tha altcoins that inherit the Bitcoin genes. For example, the address format, which is a constant object of changes in many fork coins.

The interesting part here is that if you own a private key from an address and the coins on the parent chain, then you automatically own the address and the coins on the child chain. The addresses will even be the same. Wow!

To do it properly, first transfer the parent coins to some other address under your control. Then, swipe the private key from the address in the parent wallet and import it to the wallet of child coin (like the Electron Cash wallet, which is very dangerous o use as it comes closed sourse and signed by fake developer name Jonald Fyokball).

You will gather the access to the fork coins, but beware of software that steal your private keys to steal the parent coin. Thats why it is better to send all the coins you have to some other wallet before proceeding to retrieving the child or the fork coins.

Lets see where do we gain profits here: the same privete key can grant access to the different addresses in different blockchains, with the same number of coins on the balance. If at the fork moment you bought the coin that was forked, or you already had it, then after the fork you have all that coins. Complete you gaining of ”free money” on that freshly created blockchain by selling them somewhere like bisq.network. Nothing bad if you won’t be selling them at the very same moment. Those money may be useful in future. But sell immediately if you think the coin won’t survive more than 6 months.

Ok, so if you sold the main coin after the fork, the fork coin is still available to you at any time.

Hardfork coins are not usually show up after the hardfork happens. Sometimes its just the necessary changes implemenation for the network protocol and hardfork is the only solution to do that. Usually, there are no people who want to add their own rules or reject the new ones, and the hardfork passes smoothly for the majority of users.

One more bright sign of the altcoin which binds to the history of transactions of some parent coin is that you already have a community of supporters. If you want to create the altcoin, then you have to create it from scratch. On the other hand, if you already have a community, it is easier to divide it apart and become an Overlord of one! Cool, eh? Just look: Ethereum Classic, Bitcoin Cash, Bitcoin Gold, Bitcoin Diamond, Bitcoin Cash2x, FOUR forks of Monero (which is deadly for their decentralization), etc.

Shitcoins

Three Types of Cryptocurrencies

Shitcoins is a special flavor of coins. For example, if you have a neighbour and he is not a genius-coder, but still want to launch his own cryptocurrency, he becomes an author of a shitcoin. Such a shitcoin will not be backed by anything valuable, because your neighbour has no assets, products or reputation that is enough to pump the coin to the wide use.

In some way, shitcoin is a virtual paper bill, but it has absolutely no value. It is just technological and sophisticated right to sell it for dollars on a limited list of exchanges. But you wont be able to inspire brilliant coders with it, as well as you can’t attract investment. Also, dollar is the shitcoin too, so basically we are having the deal with many different scammers here. Each of them fool humanity in their own way by printing the fake money, while pretending that it is a valuable service.

Ah, it would be awesome if the hundreds of shitcoins would mean something. But they dont, and 2018 was about many articles saying that 10 or 25 or 50 or 75 or 90 percent of the ICO startups have the credibility, transparency and sustainability issues a size of a blockchain.

The Outcomes

As we observe, different tokens are created every day. The first ones are created very often and they fail very often. The second ones are rarely created, and they rarely fail. The third ones are created every day, dozens and hundreds of coins, and they won’t lase longer that the night moon.

No matter what reasons have led to a creation of a new token, it must pass a hard fact and technology check before the investors would be able to put the millions of untaxed shady cash piles to the sea of ICO projects.

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