What is an Altcoin?
The term Altcoin is an abbreviation for the term alternative coin. This term is used as a label to any cryptocurrency other than Bitcoin.
The main reason other cryptocurrencies other than Bitcoin are called altcoins is because most are trying to be a substitute for the original implementation for the blockchain technology. They usually are a fork or copy of the bitcoin core software.
The first Altcoin was Namecoin which was created April 2011. It was the first fork of the bitcoin software. It is based on the same code base of Bitcoin and uses the same proof-of-work algorithm. The primary purpose of the this coin was to decentralize domain-name registration.
Currently there are thousands of Altcoins and the number grows every day. Most of these are startup project but others have a very large market cap like Litecoin and Dash. Each coin is either trying to improve on the limitations of Bitcoin or completely differentiate themselves. All of them still work on the basic blockchain premise that Bitcoin created. Some examples of those variations are rather than using Proof-of-Work that uses computers to solve puzzles they use different methods like Proof-of-Stake. Sometimes rather than improving on the technology, the same technology will be used but for a niche offering, like a blockchain ledger for solar power.
Even though a lot of these new coins are well intentioned improvements to the network or the software, there are a lot of altcoins that are just get launched for quick profits and nothing more. This can be done because Bitcoin is open source. They just copy the software, put some marketing around it and try to sell on a pump and dump scheme. The rise in popularity of this scam has caused ICO (Initial Coin Offerings) to come under scrutiny.