The market is flooding with cryptocurrencies and yet there are some terminologies about the cryptocurrency which boggles your mind because you have never heard about them before.
One such name is Altcoins and if you have never heard about this term, don’t worry. We are going to talk about it. This article would explore that terminology for you in a much needed way!
Keep reading, keep learning!
What Are Altcoins?
What Are Altcoins?
Altcoins refer to all other cryptocurrencies except Bitcoin. Their name is derived from the fact that they are alternatives to both Bitcoin and conventional fiat money.
The very first altcoins were launched in 2011, and then their number increased to thousands. Early altcoins were trying to improve some particular part of Bitcoin, like the ease and speed of transaction or the efficiency in its energy usage. More recent altcoins are trying all manner of different things depending on the goals of the developers.
Types of Altcoins
Types of Altcoins
There are several different types of altcoins. The type of altcoin depends on how it works and what its purpose is.
Here are the types of altcoins:
Stablecoins:
Stablecoins are cryptocurrencies that are specifically geared to track the value of a other asset. Most stablecoins are attached to the US dollar and try to replicate its value.
Because stablecoins are designed to hold the same value, they are typically not selected as an asset to invest in a cryptocurrency. Therefore, everyone uses it to park their money without volatile price fluctuations. You can even lend stablecoins to earn interest, or they are lendable to gain certain saving protocol’s interest.
Mining-based:
The cryptocurrency in question uses a process referred to as mining to verify transactions and add more currency to the already existing supply. Miners use devices to solve mathematical equations. Generally, the first miner to solve the equation is likely to verify a block of transactions. Miners who verify the blocks get paid in crypto rewards.
Staking-based:
Staking is the process of validating transactions and also adding new coins to the network. A holder of a staking-based cryptocurrency is able to pledge the mathematically contributed coins on the network to a fraction of remaining thereof. A Bitcoin-style decree with the use of consensus protocol, will give the miners permission to mine blocks of transactions for a reward using cryptocurrency.
Governance:
These are the digital tokens that come with voting rights where the holder can participate in charting the course of the project. Often, the tokens will give you an opportunity to create, make a vote, and stake on the proposal of such cryptocurrencies. This makes the cryptocurrency a decentralized project, whereby all other holders have a say in it and not of decisions from one central person.
Top Altcoins
Top Altcoins
Here is the list of top altcoins:
- Ethereum (ETH)
- Tether (USDT)
- Binance (BNB)
- Solana (SOL)
- USD Coin (USDC)
- XRP (XRP)
- Dogecoin (DOGE)
- Toncoin (TON)
- Cardano (ADA)
- Shiba Inu (SHIB)
- Avalanche (AVAX)
- Tron (TRX)
- Chainlink (LINK)
- Polkadot (DOT)
- Uniswap (UNI)
- Dai (DAI)
- Litecoin (LTC)
- Polygon (MATIC)
- UNUS SED LEO (LEO)
- Wrapped Bitcoin (WBTC)
Is it the Right Time to Invest in Altcoins?
Is it the right time to invest in Altcoins?
Entering into cryptocurrencies like one should treat research and inclusivity in their portfolios to make it work, you should start with altcoins. Some of these altcoins are really ambitious projects that provide more use cases than Bitcoin which is mainly just a store of value. Altcoins are less well-known, so they could see larger price increases if they catch on.
However, many people may not find sophisticated features to drawing cards among other risks in purchasing altcoins. Few of them are promising, but, as they are so many, choosing the best altcoins to invest in becomes a tough task and needs careful paid to the right source of information. Altcoins are of higher risk and many of the smaller altcoins are scams and are not legitimate.
Investors need to take an active, hands-on approach for consideration of altcoins worth investing in and due diligence toward them. If you want to spend less time or minimize the level of risk, you would rather go for cryptocurrency stocks. Maintain the wisdom that it is also better to be safe rather than to live with constant uncertainty, never forget your assets are valuable so you should try to avoid going too deep into the funds.
Conclusion
Altcoins are any cryptocurrency that is not Bitcoin. There are thousands in existence so it is hard to say what ones might be legit and which may not be. It’s best to read up on all documentation behind the blockchain of the cryptocurrency that you’re interested in.
Let me add that altcoins have the potential for rewards in terms of investment, but it really pays to be decently informed and careful. If you are a beginner, you could look into starting off with Bitcoins or Ethereum instead of investing directly in altcoins. Remember never to invest based on hype or fears of missing out.
