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A testnet is an alternative blockchain, operating virtually the same underlying software as the mainnet. It is used for the purpose of testing and experimenting without risking the loss of real funds.
Testnet coins are fundamentally different from mainnet coins. Since they can be freely obtained from faucets, they don't have value. Testnets can, moreover, be reset at any time.
Testnets are mainly used for the following purposes:
- Developing applications without risking the loss of real funds
- Testing applications against new versions of blockchain software
- Providing early access to a blockchain before the official release
- Analyzing blockchain data on a smaller scale before releasing it to the wider public network