Bitcoin (BTC) is the world’s most popular cryptocurrency for the last few years, thanks to its enhanced profitability and positive adoption.
Whenever you talk about cryptocurrency, the only name that is mostly repeated is Bitcoin.
But have you heard about altcoins?
Altcoins are alternative cryptocurrencies to Bitcoin that you can buy. Today, there are thousands of cryptocurrencies circulating in the crypto market presenting a versatile option for investment.
Despite that, it is recommended that you should be clear about altcoins and study the market factors affecting them.
Here is everything you need to know about altcoins and how you can safely invest in them.
What are Altcoins?
Altcoins or alternative coins are simply cryptocurrencies other than Bitcoin.
During the early years of cryptocurrency, Bitcoin dominated the market, and everything else got associated with it. So, whatever was not Bitcoin, was called an altcoin.
Bitcoin is the world’s largest cryptocurrency by market capitalization. But several other cryptocurrencies also exist in the market.
With each passing day, the popularity of altcoins is increasing as you can see that Ethereum (ETH) has become the second most valued cryptocurrency after Bitcoin.
Carl Runefelt or famously known as “The Moon,” is a global crypto leader who is pushing for the mass adoption of cryptocurrency.
He says, “We have seen altcoins rally very, very strongly in the last few months. I think we will continue to see that. I think the likely scenario is that we will continue to see altcoins rise before Bitcoin peaks.”
Types of Altcoins
As you can see that altcoins are cryptocurrencies other than Bitcoin, and they are divided into diverse types.
The following are the types of altcoins:
Stablecoins are cryptocurrencies whose value is pegged to an asset, typically the U.S. dollar. This gives Stablecoins a base in real currency. Some of the popular Stablecoins include USD Coin and Tether.
The mining-based coins are created by computer networks to solve complex mathematical problems, which require a lot of energy. Bitcoin and several other altcoins are mining-based coins.
As the name suggests, Memecoins are altcoins based on the public’s fancy. Celebrities through social media play an active role in the circulation of these altcoins. The value of Memecoins can increase or decrease very quickly. Examples of Memecoins are Shiba Inu and Dogecoin.
Security tokens are altcoins that represent a fractional interest in another asset. For example, your shares in the ownership of an asset are represented by security tokens.
Some Popular Altcoins
Based on the market capitalization, some of the popular altcoins of today are:
- USD Coin
Should You Invest in Altcoins?
You may like to invest in cryptocurrency but are afraid of the risks involved in the crypto market.
If there is one word that is mostly linked to cryptocurrency, it is volatility. You should know that cryptocurrency is extremely volatile, and you can lose everything within seconds.
So, considering the challenges of crypto investment, here are a few things you should do:
- Never invest in cryptocurrency based on market hype. Always do market research and invest according to the facts.
- You should study the trade charts of cryptocurrencies before investing.
- Avoid spending more than what you can easily afford to lose.
- Try to diversify your crypto portfolio. Never put all your investments in one cryptocurrency.
- Always focus on the technical capacity of altcoins. So, avoid listening too much to traders.
- Cryptocurrency is a game of patience and a long-term investment. You should never make decisions based on short-term changes in crypto.
Carl on his YouTube channel, The Moon, says, “Sell coins when they hit the top value and purchase another coin, take your profits, and buy other coins as cryptocurrencies are highly volatile. This applies to everything whether it is Bitcoin or any other coin.”
At present, Bitcoin may be out of your reach due to its soaring value.
But this does not mean that you cannot buy cryptocurrency.
There are thousands of other cryptocurrencies circulating in the market known as altcoins. You can invest in any of these cryptocurrencies to earn a lot of money in the future. But the most important thing is that you should base your investment in altcoins on a sound trading strategy; otherwise, it would be a waste of time and money.