If you are an entrepreneur and looking for investing your funds in cryptocurrency, you must know about different currencies and their stability. An altcoin is one of the digital currencies. Let’s have an insightful look at Altcoin and judge whether you should invest in it.
What is Altcoin?
As its name depicts, Altcoin is a combination of two words, “alternative” and “coin”. In terms of digital currency, Altcoin refers to coins other than Bitcoin. Unlike start trading bitcoin now, it uses Ethereum as a platform.
Apart from bitcoin, 900 other currencies have been issued digitally, and they are collectively termed Altcoin.
How are altcoins divided based on functionalities?
Based on mechanism and functionality, altcoins are divided into the following types:
- Mining-based altcoins are created by validating proof of work (PoW) provided after solving complex mathematical puzzles.
- Stablecoins intend to make the currency less volatile by comparing it to goods such as precious metals(Gold).
- Security tokens that promise better equity.
- As the name depicts, meme coins are gained after the hype created online by posting some joke, for example, Dogecoin (DOGEUSD).
- Utility tokens are often associated with paying bills or other utilities.
What are some of the best altcoins?
With the progressive digital market, digital currencies have evolved exponentially. Many alternative coins have come into existence. Some of the famous and better promising altcoins are mentioned below:
- Ethereum is the first alternative to bitcoin and uses a blockchain system with smart contracts in a digital market. ETH denotes it.
- Litecoin: Denoted by LTC, litecoin provides some fantastic facilities. If we consider bitcoin as gold, Litecoin can be marked as silver. It works on an open-source global network and is decentralized.
- Cardano: It is denoted by ADA and was discovered by one of the initial founders of Ethereum
These are some famous altcoins. Other than these, Polkadot (DOT), Bitcoin Cash (BCH), Stellar (XLM), Chainlink (LINK), Tether (USDT), Monero (MXR), and Binance Coin (BNB) also exist as altcoins.
Altcoin versus Bitcoin. Which is better?
Since the beginning of digital currency, bitcoin has grabbed the top position. As time passed and the evolution of currencies started, alternative coins (Altcoins) started giving reasonable offers.
Their functionality has been enhanced. But as far as volatility and risk factors (for instance, return) are concerned, bitcoin is still superior.
Pros and Cons of Altcoins
Like every other digital currency, altcoins provide some benefits and disadvantages.
- They are available in a wide range.
- Altcoins, such as stablecoins, offer a promising future.
- Altcoins like Ethereum and Cardano have been accepted in certain institutions, increasing their value.
- The investment market of Altcoin is less than bitcoin.
- The prices of altcoins are highly volatile.
- Wide variety leads to confusion and a lack of understanding.
- The dead altcoins lead to considerable losses for investors.
Should I invest in an altcoin?
Investors who are well familiar with the risk of liquidity and a market without regulations should consider investing in altcoins. They must know the risk of price swings. This can help them to earn significant returns.
Which Altcoin should I invest in?
Ethereum has provided users with reliable results as an alternative to Bitcoin. The Ethereum currency is known as ether and is the most stable Altcoin in the digital market. The smart contracts and blockchain system have made it relatively safe and steadfast.
To close it in a nutshell, altcoins provide a better alternative to bitcoin, and some of them have given better perks. Therefore, keeping in view the pros and cons and the risk factors, one can choose which Altcoin should he invest in. one must also have complete knowledge of the basics of crypto to invest in any digital currency.