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Types of Altcoins

Should you Invest in Altcoins?

Pros and Cons of Altcoins

FAQ: Everything you should Know about Altcoins

Future of Altcoins  

What are Altcoins: Types, Examples, Pros and Cons

An altcoin is any cryptocurrency not named Bitcoin. But some people consider it to be any digital currency other than Bitcoin and Ethereum. All the new altcoins created were forked from one of those two. The first altcoin was developed in 2011 and is called Litecoin. Since then, thousands of these cryptos have been released into the market.   

Altcoin developers create these digital currencies with different utilities in mind. Usually, this is to improve upon bitcoin’s energy efficiency and transaction speed. Some were created as an alternative to fiat currency and for wealth storage. Ultimately, the aim of each altcoin depends on the goal of the developers.

Like bitcoin, altcoins run on blockchain technology. They can also be bought on exchanges like ATAIX. However, none of them has come close to bitcoin’s popularity, market value, and market cap. Polygon, Tron, Dogecoin, Luna, Tether, Ripple, Solana, and Cardano are some notable altcoins.

Key Takeaways

  • What is an altcoin? Any digital currency not named Bitcoin (and maybe Ethereum). They are primarily created to serve as Bitcoins alternative.
  • There are thousands of altcoins to invest in in the crypto market.
  • To know what altcoin to buy, it is best to research its utility. The ones that provide actual value to their users are usually sustainable.

Types of Altcoins

As mentioned earlier, there are thousands of altcoins on the market. But they are in different categories, depending on their utility and how they work. These are the main types of altcoins;

1. Payment Token

Cryptos in this category are used to pay for products or services. As a payment token holder, you can keep them as investments or use them for transactions. Bitcoin Cash, Ethereum, and Litecoin are examples of payment tokens.

2. Stablecoins

The cryptocurrency market is volatile. It has been this way since the beginning. But stablecoins peg their value to specific assets to reduce this volatility. This allows their value to remain stable while the other altcoins fluctuate in price. The assets could be fiat currency, gold, silver, and other intrinsic value items.

To simplify, when you invest in a stablecoin, its price will remain steady over time. The value might rise and fall sometimes, but that fluctuation would be over a very narrow range. Eventually, it will go back to the value of the asset it was pegged to. Tether (USDT) is the most popular stablecoin. And it is pegged to the United States Dollar.

3. Security Tokens

These are tokenized assets that can be traded on the stock market. When an asset is tokenized, its real-world value is represented in digital form. This digital representation is called a token and can be sold to investors. Assets, in this case, could be bonds, stocks, real estate, and other valuable items.

Think of it as a digital certificate to prove that you are the valid owner of a piece of land. So, when you sell that land to someone else, you will give them the certificate. That certificate will now prove that they rightfully own that piece of land.

4. Utility Tokens

These are digital currencies used for transactions on particular networks. Think of them as in-game currencies. When playing a video game, you might have to spend virtual coins/gems/tokens to unlock a character. That virtual currency is a utility token, but it only has value within that game. For example, you cannot use Fortnite coins to make purchases in Call of Duty. An example of a utility token is Ethereum.

5. Meme Coins

Meme coins are virtual currencies created as a joke. They are risky investments because they always lack real utility. Their value mainly comes from trends or, as a jest of other cryptocurrencies. This initial value is mostly short-lived, and the price will fall as soon as the trend dies. Dogecoin and Elongate are prime examples of this.

6. Governance Tokens

These are tokens that developers issue to users of a cryptocurrency. It gives them the right to make suggestions, or vote on proposals that will affect the future of that crypto. Governance tokens are mostly used in Decentralized Autonomous Organizations (DAO). They have no intrinsic value and cannot be used for transactions. Maker is one of such altcoins.

Should you Invest in Altcoins?

Altcoin investment is risky mainly because of the volatility of the crypto market. However, you can make massive gains from your investment. They can gain up to a 1000% increase in value in a short time. Gains like this made people millions of dollars in the bull market that lasted between 2020 and 2022.

In 2021, an altcoin called Shiba Inu gained an impressive 46,000,000% in value. If you invested just $1 when it launched, you could have made a whopping $46,000,000. In the same year, dogecoin went up 216% in value. This was also favorable for many investors at the time.

However, there is a dark side to this kind of investment. Gains like that are always short-lived, and the bubble will surely burst. Investors that gain are the ones that sell while the altcoin is still relevant. Meanwhile, people that hold their investment will lose when the price inevitably drops. When new altcoins come into the market, nobody can accurately predict their future price.

It is okay to invest in altcoins, but you should be very careful. Before investing, make a list of altcoins and research them extensively. Find out their utility and if credible organizations and individuals endorse them. Also, make sure they are listed on reputable exchanges like ATAIX. Then, create a new altcoins list, and place only the promising ones there. Lastly, only invest money you are prepared to lose and stay away from meme coins.

Pros and Cons of Altcoins

Just like every other asset, altcoins have their advantages and disadvantages.

Pros

  • Large Selection
    There are thousands to invest in, and new altcoins keep coming into the market every week.
  • Constant Improvement
    Altcoin developers primarily seek to improve on Bitcoin. So, new coins come with faster transaction speeds and more utilities.
  • Volatility Resistance
    There are altcoins pegged to the price of certain assets. This helps them preserve their value. And is a feature bitcoin does not have.

Cons

  • Low Market Cap
    There are many altcoins to choose from. And investments are spread out instead of focused on one asset. So, it is difficult for any altcoin to rival bitcoin in market cap.
  • Skepticism
    Investors only trust a few of the thousands of altcoins in the market. This makes it hard for the value of the rest to grow.
  • Risk
    Scammers can artificially inflate the value of an altcoin you invest in. And when they suddenly exit the market, the price will fall.

FAQ: Everything you should Know about Altcoins

What does Altcoin mean in crypto?

Altcoin means any other crypto on the market that is not Bitcoin.

What is the purpose of Altcoins?

Altcoins have different purposes depending on the developer. They can be used for transactions, trade of securities, store of wealth, and more.

How many Altcoins exist?

The number of altcoins in existence today ranges between 5,000 and 12,000.

What are the most popular Altcoins?

The most popular altcoins today are Ethereum, Tether, USDC, Cardano, and Ripple.

What Altcoins are available on ATAIX?

ATAIX has Ethereum, Litecoin, Bitcoin Cash, ChainLink, Ripple, and, Dash available. There are also many other altcoins on the platform.

What Altcoin to buy in 2022?

In 2022, you should buy Ethereum, Binance Coin, Ripple, Cardano, Avalanche, and Solana.

Why is Bitcoin not an Altcoin?

Bitcoin was the first cryptocurrency to be created. Altcoins are meant to be Bitcoins alternative, as the name implies.

Is Bitcoin better than Altcoins?

Generally speaking, yes, bitcoin is better than altcoins. This is because of its market value and availability on almost every exchange. But some altcoins are better than bitcoin. For example, stablecoins have a fixed value and are not volatile like bitcoin.

Are all Altcoins made equal?

No, they are not. They have different developers and serve different purposes.

Will any altcoin ever flip Bitcoin?

This is unlikely to happen based on current market trends. However, it is impossible to predict.

What is the difference between Altcoins and cryptocurrency?

There is no difference. Altcoins refers to any other cryptocurrency apart from Bitcoin.

How many types of cryptocurrency are there?

There are mainly two types. Bitcoin and altcoins. Bitcoin is a specific cryptocurrency. Meanwhile, all others are called altcoins. But there are thousands of these altcoins.

Future of Altcoins  

Since there are so many altcoins in the market today, it is hard to predict their future. However, many of them will likely die off with time. This will leave only the ones that offer real value. There is also a chance that governments would create regulations around cryptocurrency trades. And this might limit scams and encourage more investments in the long run.

The altcoin market is still novel and volatile. So, experts cannot make accurate predictions. Still, some analysts believe the crypto market will triple by the end of this decade. Everything, for now, is still pure speculation. So, it would be best if you were cautious with your investments. Try to diversify your altcoin portfolio. This is because nobody knows the next altcoin that will make massive gains or losses.

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