In 2009, Bitcoin started the cryptocurrency age, and it quickly became the term used whenever anyone discussed digital currencies. In fact, it dominated the emerging market to the extent that any other cryptocurrency was viewed as an “altcoin,” or substitute for the Bitcoin Immediate Edge system. And the moniker remained, despite the fact that the original digital currency now has thousands of rivals.
Therefore, to put it very simply, all coins apart from bitcoin are commonly referred to as alt coins. While calling all other cryptocurrencies alt coins were feasible in the earliest of the launch, now it can be quite cumbersome. Even though bitcoin is the largest cryptocurrency in the market, there are currently more than 10,000 cryptocurrencies available. Therefore, it can be convoluted to refer to all other coins as alt coins. But since the name stuck at inception, people still refer to all other coins as alt coins.
Types of Altcoins
While there are many ways to distinguish between different altcoins, for now, let’s focus on the service they offer. Depending on their use cases, there are several sorts of altcoins in the cryptocurrency market. A few of these are:
Native coins are used as digital currency by parties on a certain platform or network of trade values. The platform’s or ecosystem’s internal economy is supported by these native currencies. Examples include Ethereum, Cardano, Solana, Filecoin, Internet Computer, and Tron.
Tokens: Tokens are not native tokens of a distinct blockchain; rather, they represent a unit of value on an existing network. For instance, the Layer-2 scaling solution developed on the Ethereum is the Chainlink platform.
Stable Coins: Since bitcoin was famous for its volatility, the financial experts came up with the idea of launching a cryptocurrency that would have some sort of stability. They have launched stable coins to prevent the high volatility of the BTC. Stable coins essentially refer to those cryptocurrencies that derive their values from an asset that is backing them. While this trend was initially started with the USDT, where the coin was backed by US Dollars. Nowadays, you can find many stable coins which are backed by different commodities, including gold and oil. So, if you are looking for an alternative investment option of BTC, then you can choose such stable coins.
Meme coins: one of the major reasons why alt coins started becoming popular was because of meme coins. These are usually coins that started out as a joke. They ride the hype of social media and then rich new heights. These coins can typically reach very high values but can also drop down in value once the social media wave has ridden down. Hence, you should choose meme coins carefully.
Are Altcoins Investment Worthy?
Bitcoin is very speculative, and altcoins are much more so, according to experts. Since its inception in 2015, Ethereum, the most well-known altcoin, has experienced substantial growth in popularity due to its smart contract features and the acceptance of non-fungible tokens, which are digitally rare works of art (NFTs). At the time this article was written, the market capitalization of ETH was above $500 billion. But avoid succumbing to FOMO due to the popularity of alternative currencies, and do not invest in a digital coin only because of other doing the same.
As investors, you should not think about cryptocurrency as a fast way to make money. They should make proper research on the subject. It is essential to do such research so that you can invest wisely. It is becoming even more essential to have a grasp on cryptocurrencies is because now governments all across the globe are looking at regulations. This means that cryptocurrencies are here to stay.
Hence, many experts say that investors should keep their portfolio under 5% and stick to the most established coins. Don’t abruptly alter your entire strategy. Examine your financial objectives, time horizon, and risk tolerance. There are various ways to invest in cryptocurrency through passive methods without actually purchasing any if you’re interested in it but aren’t ready to buy and hold it directly.
Another very important thing that people have to consider is choosing the correct cryptocurrency exchange place. One such platform is the link that allows users to have safe and secure transactions.