Altcoin is used to describe cryptocurrencies other than Bitcoin. Altcoin means coins that are alternative to Bitcoin. Some altcoins use the same consensus mechanism as Bitcoin, while others are completely separated from this system. According to coin market cap data, there are around 9000 cryptocurrencies.Ethereum and Binance coins are the largest altcoins. Bitcoin accounts for 60% of the total cryptocurrency market, the remaining 40% are altcoins. (https://www.investopedia.com/terms/a/altcoin.asp)
The most important altcoins are;
Ethereum (ETH)
Litecoin (LTC)
Cardano (ADA)
Polkadot (DOT)
Bitcoin Cash (BCH)
Stellar (XLM)
Chainlink
Binance Coin (BNB)
Tether (USDT)
Monero (XMR)
The Type of Altcoins
Stable Coins: Stable coins are cryptocurrencies whose value is fixed to another currency or valuable asset.The most popular Stable Coin is Tether (USDT), whose value is pegged to the US dollar.
Crypto Security Tokens:A security token is essentially a digital form of traditional securities. There are three primary types of traditional securities: equities, debt and a hybrid of debt and equity. Examples of securities include stocks, bonds, ETFs, options and futures. Hypothetically, any of these things can be tokenized to become a security token. It is possible that in the near future, security tokens could serve as a very viable alternative and competitor to stocks and other traditional securities.
Security tokens run on an existing blockchain, meaning that a security token could run on the Ethereum blockchain. Actually, Ethereum is the blockchain that is most commonly used for the deployment of security tokens. Many companies use ERC-20 tokens, which are Ethereum-compatible tokens that can run on the Ethereum blockchain using smart contracts for execution. People who own security tokens can profit from the performance of the token. Sometimes, they can also earn profits through dividends in the form of additional tokens and they often get other benefits such as voting power. In this way, security token holders can get many of the same benefits of stocks and other securities. One of the most well-known security tokens is Blockchain Capital (BCap). (https://coinmarketcap.com/alexandria/glossary/security-token)
Mining Based Altcoins: Mining based altcoins use Proof of Work, which is a Bitcoin consensus mechanism. Litecoin, Monero and Zcash are the example of Mining Based Altcoins.
Utility Tokens: Utility tokens are a type of digital voucher for goods or services. The issuer pledges a service or delivery of goods when redeeming the token.The utility token also symbolizes rights and obligations between the issuer and the purchaser. The issuer promises the purchaser a future service, which can be specified in the white paper or the terms of use. The traditional paper voucher is thus regarded as a so-called bearer instrument or bearer token within the meaning of sec. 807 BGB . This judgement is also applied to gift cards that are charged electronically. In the case of tokens, however, transferring this value is rather difficult due to the lack of a certificate. While the (voucher) data is saved on the gift cards resulting in tangibility, tokens remain intangible. Accordingly, tokens do not have a legal character but represent the underlying rights.(https://www.twobirds.com/en/news/articles/2019/global/ico-legal-classification-of-tokens-utility-token)
Utility tokens should not be confused with coins (Bitcoin, Monero, Litecoin and so on) as they are not mineable and are based on third-party blockchain. However, similarly to coins, utility tokens are valued only for its inherent functions and properties.
Utility tokens are often used for Initial Coin Offerings (ICO). While performing a utility token ICO company issues a certain number of tokens that are sold to the community (mostly in several rounds for different prices). The owners of the token are granted a specific right in the usage of the company’s products like being first to access it or getting other privileges. This approach helps a company to gain funding without losing its independence.
Sometimes, these tokens are not used for ICOs. If the blockchain-based company’s team decides to gather funding in some other way, security tokens can be used only for powering up the network, acting like its native currency or some other purposes.
Most of utility tokens are based on the Ethereum blockchain. However, it is possible to build unique utility token with a lot of various blockchain platforms. Most of the platforms that provide decentralized applications development like NEO, Counterparty or Hedera Hashgraph are also providing the service of the establishment of in-app utility tokens.
Important fact is that the distinction between utility and security tokens is not a legal distinction, but only a technical one. Legal framework of the countries that already established cryptocurrency regulations does not take this distinction into consideration when deciding on the token’s nature. Most of legal definitions of “investment” are applied to every type of cryptocurrency tokens.
Some examples of Utility tokens are: