Bitcoin is the most popular blockchain, followed by Ethereum. But other blockchains (altchains) have also seen significant adoption in recent years. This guide dives deep into altchains. We will discuss their relationship with altcoins and how to use them.
Altchains Defined
Simply put, an altchain is a blockchain other than Ethereum and Bitcoin. Litecoin was the first altchain to be launched in 2011, then came Ripple and Dogecoin two years later.
Most altchains emerged in 2017 when Ethereum started experiencing scaling issues. At the time, Solana, Cardano, Polkadot, and BNB Smart Chain were launched.
The Relationship Between Altchains and Altcoins
Altcoins are altchains’ native tokens. For instance, the native tokens for BNB Smart Chain and Solana are BNB and SOL, respectively. The word altcoin means a cryptocurrency that is not BTC or ETH.
It is worth mentioning that there are some altcoins that don’t serve as altchains’ native tokens. They operate on pre-existing blockchains. For instance, one of the biggest crypto assets, Shiba Inu, does not have an altchain. Instead, it lives on the Ethereum blockchain.
Additionally, altcoins can operate on various altchains. That is to say, SOL tokens can be distributed on altchains like BNB Smart Chain, Cardano, and Polygon, among others.
Types of Altchains
Layer-1 Blockchains
These are independent blockchains that are able to process transactions without needing support from other networks. Both Ethereum and Bitcoin are layer-1 blockchains. Several altchains are also self-sufficient. Some of them include Solana and Cardano. Parties involved in validating transactions on these blockchains earn new tokens and transaction fees.
Not all layer-1 blockchains are built from scratch. Some are hard folks of popular blockchains. For example, Bitcoin Cash is a fork of the Bitcoin blockchain.
Layer-0 Blockchains
A layer-0 blockchain allows different layer-1 altchains to interact with each other. Polkadot is the most popular layer-0 alternative blockchain.
Layer-2 Blockchains
Layer-2 blockchains are those built atop layer-1 blockchains. Most of them are developed to enhance the performance of the underlying blockchains. Polygon and Arbitrum are layer-2 altchains built atop the Ethereum blockchain. They rely on the underlying chain’s security features and consensus mechanism to process transactions.
However, there are layer-2 altchains known as Sidechains, which use their own consensus mechanism and security protocols even though they are connected to layer-1 blockchains.
How Do You Use an Altchain?
If you have ever used the Ethereum or Bitcoin blockchains, then you will find it easy to interact with altchains because they function similarly. Here is how you can start using altchains:
Set Up a Crypto Wallet
You need a crypto wallet to store and transfer digital assets using altchains. Some of the recommended wallets include MetaMask, Trust Wallet, Coinbase Wallet, and Exodus Wallet.
Use Altchains to Deposit Crypto to Your Wallet
Before depositing altcoins to your crypto wallet, you need to buy them on centralized exchanges like Coinbase and Binance. To do this, deposit fiat to your trading account and then use it to buy your favorite altcoin in the spot market. To transfer the crypto asset to your wallet, go to the “Withdraw” section, then choose the altchain you want to send your altcoin over and enter your wallet address. How long it takes for the altcoin to reach your wallet depends on the transaction speed of the altchain used.
Interact With the Altchain’s Ecosystem
You now have funds stored on a particular altchain. You can use them to explore its ecosystem, including the decentralized applications built on it. Altchains like Solana and Polygon host several decentralized finance protocols, allowing users to earn passive income by lending or staking their altcoins.
Take Necessary Measures to Keep Your Altcoins Safe
If you wish to explore decentralized applications on a certain altchain, it is important to research the projects before connecting your wallet because some are built by bad actors who only want access to your crypto assets. That said, do not share your seed phrases with anyone.
Conclusion
As developers continue building innovative altchains that facilitate quicker and cheaper transactions than Bitcoin and Ethereum, it is likely that many crypto projects will expand to those altchains to give their customers a better user experience.
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