In the crypto space, there are many thousands of altcoins, each created for its own purpose. But what are altcoins?
Bitcoin was the first widely known cryptocurrency and is, currently, the most popular. It paved the way for more crypto projects to follow, and every one of them is an altcoin, or alternative coin.
So, if you ask what are altcoins, they are simply every cryptocurrency that isn’t Bitcoin.
What are Altcoins – The Details
There has been much buzz around altcoins in recent months. This was due to Bitcoin suffering a dramatic loss in value, inspiring investors to look at alternatives. However, the market downturn affected most of the leading altcoins as well as BTC, so that didn’t always work out.
As Bitcoin prices recover, the altcoin buzz remains. That’s because wherever BTC values go, many other crypto prices are likely to follow.
In this article, we’ll look at some of the altcoins on the market, as well as what makes an altcoin valuable and the techniques and strategies widely used to generate significant returns on altcoin investments.
Many altcoin cryptocurrencies are based on the same basic structure as Bitcoin. As a result, most are peer-to-peer, necessitating a mining process. Even though they share many characteristics, altcoins can differ significantly from one another.
Some popular altcoins:
• USD Coin
• Shiba Inu
Types of Altcoins
Despite all being inspired by Bitcoin’s open-source technical blueprint, every altcoin, on the whole, seeks to be unique.
Many crypto enthusiasts treat altcoins as though they were just another type of asset. They do, however, fall into one or more well-defined categories.
While altcoin is the general name used to identify coins that are not Bitcoin, they divide into different categories. These include:
• Utility tokens
• Governance tokens
• Security tokens
Let’s look at the popular ones: Stablecoins, memecoins, and utility tokens.
A stablecoin, unlike other cryptocurrencies, is a less volatile coin. The value of a stablecoin is pegged on a fiat currency, for example, the US dollar. They are not affiliated with the fiat currency they are pegged to, just affected by the currency’s value. Examples include USDT and BUSD.
Memes are usually jokes about existing cryptocurrency. They are often created in large quantities and influenced by large cryptocurrency communities. They pump really fast and, often, dump just as fast. That said, some of these coins do have prospects. Examples include Dogecoin and Shiba Inu.
These are tokens used to pay for transactions, mint tokens, trade services, and receive certain access within any particular blockchain network. An example of a utility coin is Ethereum, the second-largest cryptocurrency in the crypto market.
Other altcoin types not highlighted are useful as well, but not as well used as those listed.
Are Altcoins Legit?
There are many thousands of altcoins, with new ones being launched all the time. Many have made investors large profits and continue to perform well. Many new entrants have strong prospects because of their potential utility.
Sadly, we cannot say that all altcoins are legit. While many are genuine and successful, there are scams and frauds which blight the crypto space.
Pump and dump schemes exist. They seek to entice investors with promises of an exciting or unique new altcoin, then cash out once the price soars and leave investors with almost valueless coins.
To avoid scams, do your own research. Read widely, look for white papers and use case explanations.
Are Altcoins Long-Term Investments?
The answer depends on the particular altcoins. Not all altcoins are long-term investments; some excel when they are newly created and never come up again after that. These have become known as shitcoins.
Other altcoins have been on a steady growth path from launch.
Ethereum is a good example of a long-term coin, but the price is much higher than that of other altcoins. There are other good long-term coins, but DYOR is the best way to figure out which is an investment possibility.
Shitcoins are cryptocurrencies with little or no value. They usually have no purpose and are created in really large numbers.
It is pretty easy to spot shitcoins as their prices increase quickly after the launch and start dumping once investors remove their investments.
How do you identify these shitcoins? Well, the answer is to do your own research. Take a look at the crypto you are planning to invest in online. Find out if the company has a purpose, the number of tokens created, how these tokens are circulated, and how the company operates.
Though shitcoins are bad investments, most people still invest in them as a scheme to get rich quick. Many have become rich through investing in shitcoins, but many others have lost fortunes.
If you must invest in shitcoins, you must learn not to be greedy and know when to pull out your investment.
Which Altcoin Will Be the Next Bitcoin?
After ‘what are altcoins?’, this is the big question.
Most crypto investors are eager to know if there will be an altcoin as successful as Bitcoin.
That’s because of FOMO – fear of missing out. Early investors in BTC benefited from engaging at the start – they bought at low prices and now hold BTC worth substantial amounts.
Investors don’t want to miss being in on the ground floor of the next Bitcoin.
Is it possible for an altcoin to do better than Bitcoin? Well, yes, it is. Most of these altcoins use more advanced technology than Bitcoin, and there is more publicity now about cryptocurrency. Although it could happen, knowing which of the altcoins will achieve Bitcoin-style success is difficult.
There is high volatility in the crypto market, meaning it is not predictable.
Once again, DYOR. There are many altcoins with good prospects, do your research on them, and most importantly, invest wisely.
Not everyone holds altcoins in high regard, especially bitcoiners. That doesn’t change the fact that altcoins are here to stay or that they can also make suitable long-term investments.
There are altcoins not to trust, like shitcoins and a fair few memecoins, but that doesn’t make them all bad.
A benefit of investing in altcoins is not putting all your eggs in one basket. If you only buy Bitcoin, your portfolio’s fortunes rise and fall with BTC. Diversify and spread the risk.