An altcoin is usually meant to refer to any cryptocurrency that is not bitcoin.
When Bitcoin appeared in 2009, it was the first cryptocurrency to come into existence.
Once other types of blockchains and cryptocurrency appeared, starting in 2011, it became necessary to distinguish them from bitcoin. That is why the term “altcoin” — short for “alternative to bitcoin” — was created.
The most popular altcoins available today include ether (which is powered by the Ethereum blockchain), litecoin, EOS, dash, XRP, bitcoin cash and monero.
All altcoins share the following core trait with bitcoin: Their transactions are recorded on a blockchain.
In other ways, however, certain altcoins can work differently from bitcoin.
Because there are many different altcoins in existence, it is not possible to draw strict comparisons between bitcoin and all altcoins. Some altcoins, such as litecoin and bitcoin cash, are mostly similar to bitcoin in that they are mined like bitcoin and used primarily as payment mechanisms. They can also be easily traded on public exchanges.
In other cases, altcoins work differently from bitcoin. Some altcoins, such as ERC-20 compatible altcoins running on the Ethereum blockchain, are created by developers for use in specific DApps; they are not general-purpose cryptocurrencies in the way that bitcoin is.
In still other cases, the architectures of the blockchains on which altcoin transactions are recorded are fundamentally different from the Bitcoin architecture. For example, XRP tokens on the Ripple network are recorded using a consensus mechanism known as proof of correctness, which varies in key ways from the proof of work mechanism used by the Bitcoin network. For users, this difference means that XRP transactions can be recorded almost instantaneously, whereas bitcoin transactions have become infamously slow as Bitcoin has grown in popularity.