[Note: This was originally published on September 11, 2014 at Melotic.com]
Altcoins, appcoins, commodity coins – what are they? These are sometimes confusing, often undefined terms that have been received increased exposure by various media outlets.
Since the release of Namecoin in April 2011, hundreds and perhaps thousands of alternative coins (“altcoins”) have been created. Many of these altcoins are near duplicates – in both features and code base – as Bitcoin. A minority of others include new attributes, hash functions and extensibility characteristics providing room for additional metadata, changes in block timing, asset issuance and enhanced privacy. Notable examples of those listed on Melotic include Darkcoin which includes “DarkSend,” a type of CoinJoin implementation, Counterparty, which enables users to to issue assets tracked on top of the Bitcoin ledger, and Blackcoin, which uses proof-of-stake in place of proof-of-work in an experiment to reduce capital expenses.
Appcoins is a term that describes coins that give users access to decentralized applications similar to how gift cards and loyalty programs (e.g., frequent flier miles) give users access to specific facets and elements of goods and services. For instance, StorJ is attempting to decentralize cloud storage by incentivizing owners of idle capacity (both bandwidth and storage) to share their nodes in return for an appcoin, Storjcoin X, which was issued using Counterparty. Users wanting access to these resources in turn need to exchange a specific appcoin, in this case, storj, to use it. LTBcoin is another asset issued through the Counterparty platform and is used as the official advertising token of the Let’s Talk Bitcoin content network (e.g., rewarded for proof of content/activity). Other projects under development aim to accomplish similar tasks including crowd funding abilities over the coming months.
Commodity coins are the newest evolution of cryptoledgers, linking blockchains with specific assets in the real world. For example, DigitalTangible issues a gold backed coin (represented by an actual 1/10 troy ounce of gold) linked via Bitcoin – through a Counterparty asset – to a custodian that holds the gold (which can be physically delivered). Urocoin is attempting to peg 1 metric ton of urea to a cryptoledger (in this case, one that uses the X11 proof-of-work hash function), enabling users to trade coins and in this case, a commodity with a global reach. Other potential projects include linking other agriculture output (such as potatoes) and other precious metals to digital coins managed by a blockchain.