Since the last couple of years, bitcoin has continued to gain popularity among all investors and traders. If you are still finding ways to know about it, check out the bitcoin billionaire. Meanwhile, Altcoins have come up as an alternative for bitcoin. The name “Altcoins” itself is a fiat alternative to established cryptocurrency- “Bitcoin.”
So, here is a quick read about Altcoins, their types, and most importantly, are Altcoins here to stay long? Plus, we give you the tips to decide whether to invest in altcoins. Further, you will know precisely how altcoins work, with their pros and cons.
Understanding Altcoins
Is investing in altcoins worth your money?
Simply, altcoins are gaining attention as these are alternatives to Bitcoin. These are the cryptocurrencies that work on Blockchain technology. For everyone who hears it for the first time, here is what it means in simple yet helpful words-
Blockchain technology records information systematically. So, what makes it unique is that it’s impossible to hack or cheat the transactional system.
That means altcoins are built for secure money transactions. But, the rules to trade and invest here have a slight change from that of Bitcoin. As a result, it appeals to varied users and requires less energy usage. Currently, you will find 7,000 altcoins in existence since November 2021.
So, the risk is the same as it came with Bitcoin trading. So, before investing, we suggest you research the crypto coins and only trade as per your trading goal. But, lucratively, blockchain technology holds the potential across almost all industries!
Types of Altcoins
Cryptocurrencies are, in general, what the categorizations ever-evolves! So, based on some of the most functional types, here are the types of altcoins.
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Stablecoins
Stablecoins follow the price of another asset, which is less volatile. Popularly, these coins are linked to fiat currencies, like the Dollar. Also, its value is linked with other valuable metals and other high-priced cryptocurrencies. That means, if the price of the stablecoin, the issuer tries to rectify it to maintain a similar value. For this reason, most stable coins are used as a medium to exchange money.
Also, you can lend them out or use them for savings with the correct protocols.
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Staking-based
Here, staking verifies the transactions and eventually adds more coins to the supply. That means you will be locking up coins for a blockchain network. Furthermore, users can receive staking rewards as an alternative to crypto mining. So, to know the complete process to the staking of cryptocurrencies, know Proof of Stake works (PoS).
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Memecoins
As the name suggests, the value of these altcoins comes in with community influencers and users who are trend followers. The memecoins hit the crypto transactions in masses and hold power to change the trading graphs. For instance, July 2021 saw a meteoric rise in the value of Dogecoin, just after Elon Musk’s tweet!
So, it’s like 15 minutes of fame, and you will either gain or lose with these “get rich quick” trends. So, be sure to research, and take risks wisely while trading with memecoins.
3 Most popular Altcoins in existence today!
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Ethereum (ETH)
Built with a completely different goal, unlike Bitcoin, ETH is the most popular altcoin today. Arguably, there are 2,889 Ethereum dApps for socializing, gaming, etc. And thus, ETH commands one of the most potent blockchains globally.
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Solana (SOL)
SOL is a newcomer but has skyrocketed its popularity among users. Solana altcoin supports NTFS and dApps, as ETH does. But its combination of Proof of History (PoH), PoS, and robust transaction model makes it valuable.
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Polkadot (DOT)
Ethereum co-founder Gavin Wood made it. It is one of the best altcoins, allowing customization of user-created blockchains and trustless communication with permanent transactions. Indeed, you don’t have to reply in exchange to trade with it!
Pros and Cons of Altcoins
Pros
- Provide better-investing opportunities
- Lower transaction fees
- Improvement on Bitcoin’s flaws
Cons
- Highly volatile market cap
- Risky and high potential for scams
So, should you consider investing in altcoins?
If you want to make cryptocurrency a significant part of your portfolio, consider investing in altcoins. But, ensure you research it thoroughly. A worthy tip would be to finance only a tiny amount of your portfolio to different altcoins, with a yes to do your homework.
Get started with crypto trading today!
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