Altcoins offer alternatives for various cryptocurrencies such as Bitcoin, but they have their own sets of risks as investment tools. Altcoins emerged in the cryptocurrency market shortly after the launch of Bitcoin and have developed rapidly with a total market cap of 40 percent within the sector.
According to CoinFlip Chief Operating Officer Ben Weiss, there are over 5000 Altcoins in the market, which suggests that their economic potential will be a task to achieve on a long-term basis. However, many of these Altcoins indicate a great potential and make it easier for the further and current progress in Blockchain tech, for instance, Chainlink and Ethereum, which seek to reduce the disparities within the Blockchain space.
Many traders find these Altcoins to be reliable and exceptional investment means. Still, we cannot rule out the possibility of running into a loss or making a significant profit if a trader does not carry out in-depth research into the market. Market analysts say that calculating the risk factors before investing your cash is a strategic move.
Why Invest in Altcoins?
Trading cryptocurrencies is attracting a wide range of investors from all corners of the world. Although investing comes with its risk factors, Altcoins provide traders a better chance to generate increased returns based on the total percentage.
The crypto industry took the world by storm during the previous couple of months as many global investors joined the race by purchasing lots of Altcoins. This investor-driven demand pushed for the values of Altcoins to surge vastly. Market analysts claim that such investment trends can swing both ways, making the assets plunge or pick a price momentum.
According to Weiss, there is a period in the market where time conquers market timing, suggesting that it’s challenging to speculate the trades. Therefore, a long-term investment in assets you can count on is relatively better than depending on the short frenzy for assets with a hasty status, because you can likely lose more in case of a pullback.
Weiss further says that traders undertaking a long-term investment in Altcoins must believe in the assets they pick as better investments, because it can appear as just a gamble.
Therefore, are Altcoins a significant investment? Ryan George, the Chief Marketing Officer at Docupace, a digital operations tech company, says that we can’t tell and to be on alert about those who provide a decisive response.
However, the same can be said for security investments as the primary distinction about Altcoins in the established protections.
For example, if you choose to invest in regulated exchange platforms such as NYSE, several protections were founded for over 100 years at your disposal, like SIPC insurance.
If you’re looking to trade various Altcoins, including other cryptocurrency pairs, there are reliable and regulated exchange platforms such as Bitqt. The excellent part about Bitqt is that the platform has stunning features like convenient withdrawals and fast deposits. Moreover, the registration process is smooth since beginners will only provide minimal info.
How Do Altcoins Work?
Simply put, Altcoins work considerably better than other cryptocurrencies such as Bitcoin. Altcoin holders will need a private key to send money from their digital wallets to other wallets. There is a public ledger or Blockchain within the crypto industry where users’ transactions are booked permanently, which means that exchanges will never be changed or turned down.
Contrasting Altcoins to Bitcoin
Altcoins pursue their own established guidelines when compared to Bitcoin. For instance, to mine and produce Bitcoin will take approximately 10 minutes while Altcoins such as Litecoin generate coins within 3 minutes, indicating that Litecoin can process transactions quickly. According to market data, there are 84 million Litecoin units while Bitcoins’ total number stands at 21 million units.
Mining Litecoin uses convenient sets of regulations, while Bitcoin mining is expensive and requires complex hardware. There are other Altcoins such as Ripple, Dash, and Monero, but they can not match the total market cap of Bitcoin.
Benefits of Altcoins
Enhanced Bitcoin Drawbacks
Altcoins have been developed to remedy the Bitcoin network’s detected limitations, including the mining costs, speed, and other drawbacks.
Offer Healthy Competition
Altcoins modify the set guidelines on which Bitcoin runs, and offer healthy competition within the crypto industry.
Affordable Transaction Costs
Apart from the robust Blockchain tech, another advantage of utilizing Altcoins as payment means is that the transaction fees are pretty affordable.
Disadvantages of Altcoins
High Fluctuation Rates
Any investment project has its own set of risks. Altcoin prices are likely to surge or plunge violently depending on various market factors.
Prone to Scams
In the crypto market, we cannot rule out the possibilities of coming across feigned Altcoins, along with other dominant cryptos.
Types of Altcoins
Altcoins are occasionally initiatives from experts and other times serve as grounds for the establishment of start-ups. Basically, Altcoins may appear more than assets, proliferating into innovative systems, ranging from messaging apps to digital trading venues.
Altcoins are intended to adjust the laid grounds for Bitcoin and produce exceptional applications. For example, coins like Solarcoin emerged as an exchange unit for solar power production.
The following are types of Altcoins.
Altcoins that serve as digital tokens are backed up via the robust Blockchain tech; for instance, Tether is categorized as a digital coin because it’s founded on the Ethereum network, including the Blockchain tech.
Although there are set of risks, many traders buy and sell Altcoins to generate a significant return. However, trading digital coins on unregulated platforms may expose investors to scams and distorted prices within the market.
Stablecoins refers to Altcoins that are founded to address the fluctuations within the crypto industry. This is made possible by pinning their market values to a fundamental asset. One example in particular for a Stablecoin is Tether, while Facebook has taken the initiative to build their stablecoin termed as Libra.
Every investment has its set of risks. However, many traders can generate a significant return by trading Altcoin pairs when their market prices fluctuate. Still, make sure to rely on a reliable and regulated platform.