What are altcoins, types of altcoins, difference between altcoin and stable coin, difference between altcoin and bitcoin, altcoin future, pros and cons of altcoins, best altcoins to buy in 2022, altcoin which can explode in future,
What are altcoins?
All the coins other than Bitcoin are considered altcoins. There are thousands of altcoins in the market but all of them are not useful. Although some believe that altcoins are the coins which are other than bitcoin and Ethereum because all other token or coins are derived from these two.
There are various altcoins, and the working principle of the coins are different from each other which make them unique among each other.
Important points
- The term altcoin refers to all cryptocurrencies other than Bitcoin (and for some people, Ethereum).
- There are tens of thousands of altcoins on the market.
- Altcoins come in several types based on what they were designed for.
- The future value of altcoins is impossible to predict, but if the blockchain they were designed for continues to be used and developed, the altcoins will continue to exist.
All about of Altcoins
If you closely look at the word altcoin, you will see that it is made up of two words former Alt stands for Alternative and the other word is coin. Altcoins belong to blockchain for which they are made for. Example payment purpose, advertisement, raising fund for good cause, etc.
Many altcoins are used within their respective blockchains to accomplish something, such as ether, which is used in Ethereum to pay transaction fees.
And there are some altcoins which present themselves as a community and they raise funds for the wellfare of the project on which they are working on.
The first altcoin was Litecoin. Litecoin uses a different working principle than Bitcoin, which uses less energy and is quicker than Bitcoin.
Ether is another Altcoin, and it was designed to support Ethereum. Ether (ETH) is used to pay network participants for the transaction validation work their machines do.
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Types of Altcoins
There are a variety of categories in which altcoins are divided. Here’s a brief summary of some of the types of altcoins and what they are intended to be used for.
Payment token
As the name suggests, payment tokens are designed to be used as currency for payment purposes. Bitcoin is the main example of payment token.
Stable coins
Since the launch of cryptocurrencies, they come with the implied volatility and stable coin are less volatile or we can say a more stable than other cryptocurrencies. They used to travel within a narrow range.
They act as a shock absorber to volatility. There are two stable coin available in the market viz., USDT & USDC.
Utility token
Utility tokens are that token which provide services on the blockchain network.
For example, they might be used to purchase services, pay network fees, or redeem rewards. Filecoin, which is used to buy storage space on a network and secure the information, is an example of a utility token
Ether (ETH) is also a utility token. It is designed to be used in the Ethereum blockchain and virtual machine to pay for transactions.
Utility tokens can be purchased on exchanges and held, but they are meant to be used in the blockchain network to keep it functioning
Meme Coins
As the name suggest these are the tokens which are derived from memes or jokes. A well-known meme coin in the market is the dogecoin. These are rug pull coins and purely based on speculation. By one tweet they can go to moon also with the help of musk.
Difference between altcoin and stable coin
Stable coin is a type of altcoin but comes with less volatility. Currently in the market there are only 2 stable coins namely USDT USDC.
These are backed by Fiat currencies like US dollar whenever they put USDC and USDT on the blockchain network they must buy the same amount of US dollar with them.
There are various altcoins with different utility like for purchasing raising funds which is totally different from stable coin.
Difference between altcoin and Bitcoin
One of the major differences between altcoin and the bit coins is the working mechanism.
The implementation and use of Bitcoin are quite difficult as it is based on the proof of work mechanism which is very energy demanding and time consuming.
On the other hand, altcoins use totally different mechanism proof of stake to gain a competitive advantage over bitcoin as it is less energy consuming and reduces time to validate the transaction process.
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Pros of Altcoins
Altcoins are the improvised version of cryptocurrency, and it brings competition in the market and remove the monopoly of any particular coin. On basis of utility altcoins make new space in the market to facilitate competition besides Bitcoin.
The coins are usually designed in a way to address shortcomings faced by the bitcoin framework such as mining cost, speed and other factors.
Investors can choose variety of altcoin that are available in the market based on its utility in the crypto world.
Cons of altcoins
- Since altcoins are mined in large numbers with massive blockchain, it is highly potential to get scammed.
- Since there are less investors in the crypto world and still very far from mass adoption hence results in less liquidity.
- Since there are lot of altcoins available in the market so it is very difficult to distinguish them and there are several altcoins with same utility which makes the investment decision even more risky.
Altcoins future
There are a very few altcoins which works on the betterment of crypto use cases and there are also some foul coins which take money from the investor and run away and it is not easy to get not trapped by these coins. So, we have to make our investment decision more wisely better to rely on those coins which are continuously raising funds from the investors and working on the betterment of their network and having in top 10 market cap.
If you’re looking to diversify within the cryptocurrency market, altcoins can be less expensive than Bitcoin. However, the cryptocurrency market, regardless of the type of coin, is young and volatile. Cryptocurrency is still finding its role in the global economy, so it’s best to approach all cryptocurrencies cautiously.
Best altcoins to buy in 2023
The best altcoin to invest in depends on your financial situation, goals, risk tolerance, and the market’s circumstances. It’s best to speak to a financial advisor to help you decide which one is best for you.
There are numerous altcoins in the market. Some of the well-known ones, as per an Investopedia report are –
Ethereum (ETH), Litecoin (LTC), Stellar (XRM), Polkadot (DOT), Polygon (MATIC), Solana (SOL).
ETHEREUM (ETH), LITECOIN (LTC), Stellar (XRM), Polkadot (DOT), Polygon (MATIC), Solana (SOL)।
Altcoin which can explode in future,
- Ethereum
- Binance
- Solana
- Polygon
- Avalanche
- Uniswap
- Vechain
- Algorand
- Cardano
- Litecoin
Top 5 Altcoin
- Ethereum
- Tether (USDT)
- USD Coin (USDC)
- BNB
- Binance USD
Bitcoin VS Altcoin which one is best
Based on an investor’s financial circumstances, investing goals, risk tolerance, and beliefs, one can have different opinions.
People who have low risk and long term view can choose to invest in Bitcoin while those who are risk takers and are ready to lose some money with big gains they can opt for altcoins.
Investing in Altcoins and other ICOs (initial coin offering) is very risky and speculative if you do not understand their use cases.
