If you've never heard of altcoins, that's okay—you're not alone! If you're new to the cryptocurrency world, you may be wondering what exactly altcoins are and how they compare to Bitcoin. In this article, we'll break down what altcoins are and how many types there are. We'll also explain how altcoins can benefit your portfolio and why it's important to invest in them now. [On next line] Altcoins, or alternative coins, are essentially any cryptocurrencies that aren't Bitcoin.
Introduction to Altcoins
Today we’re going to learn about altcoins. Altcoin is a term that has recently picked up steam in both investment circles as well as among cryptocurrency enthusiasts. If you’ve been living under a rock for some time, you may not have heard of it before. To give you an idea what it is, let me offer my definition of altcoin - an alternative coin to Bitcoin (hence alt). Cryptocurrencies other than Bitcoin are referred to as altcoins, while bitcoins are referred to as BTC.
The best way to define altcoin would be a cryptocurrency that is distinct from bitcoin but derived from bitcoin's open-source codebase. It was first introduced by Vitalik Buterin, who developed Ethereum on top of Bitcoin's protocol. As mentioned earlier, there are hundreds of cryptocurrencies available today, with new ones being introduced every day. Altcoins can be categorized into two major categories: 1) Currencies 2) Platforms/Applications Some examples include Ripple, Litecoin and Monero. However many others exist like PeerCoin or PrimeCoin.
The Concept behind Altcoins
One of Bitcoin’s primary goals is to make a single, global currency that can be sent to anyone anywhere in the world. Though cryptocurrency aficionados often take an anti-establishment tone, their shared vision is rooted in libertarian principles of decentralization and open access. Cryptocurrencies such as Dogecoin, Ripple, Darkcoin (Dash), Quark Coin, Namecoin, Feathercoin and Vertcoin (to name just a few) are known as alternative cryptocurrencies or altcoins because they aren’t Bitcoin. Not every alternative cryptocurrency survives long enough to become viable—in fact most do not—but many do succeed for reasons I will go into later on.
All alternative cryptocurrencies have one thing in common: they were all created using bitcoin code, which means that each altcoin has its own unique spin on how it works. The digital currencies built from bitcoin code are called forks. Forks differ from one another based on how developers use them to solve problems and address issues within existing code.
As a result, there is no standard definition for what constitutes an altcoin. This makes it hard to come up with an exact number of how many types there are; however we can narrow down our search by focusing on what distinguishes these coins from other forms of digital money. It’s helpful to think about altcoins as being either independent versions of bitcoin or improvements upon existing cryptocurrencies with new features added.
Is Investing in Altcoins Right for You?
Most altcoins are extremely risky. Even if they have an exciting concept, an innovative development team, or an active community behind them, these factors alone aren’t enough to make a currency successful. If you want to invest in altcoins because you believe in their potential value but you don’t have extensive knowledge of blockchain technology, then think twice before putting your money down.
The cryptocurrency world is a high-risk environment, largely unregulated by any legal entity or organization and rife with scam artists who stand ready to rip off unsuspecting investors. It's a good idea to research projects thoroughly before deciding whether or not you want to invest.
Read through white papers, check out what people say about coins on social media, search for information on forums like Reddit and Bitcointalk—and never buy anything without doing your own thorough research first. You can find out more about how to conduct thorough research into altcoins here .
But even after all that work, it might still be too early for you to get involved in investing in altcoins; some experts say that it could take years for cryptocurrencies like Bitcoin and Ethereum to reach mainstream adoption. And remember that even though a lot of people use terms like altcoin interchangeably with cryptocurrency, there are actually many different types of cryptocurrencies out there.
Where Do I Buy Coins?
When you buy an altcoin, like bitcoin, you're buying all of its past and future potential. Sure, not every cryptocurrency will have staying power. And yes, there are plenty of scammy coins out there to avoid. But as long as a cryptocurrency network remains active—and it's easy to determine whether it is based on factors like community size or market capitalization—you can still sell it at a future date for more than what you paid for it.
Or if you prefer to trade your crypto instead of holding onto it, platforms like Binance offer a wide range of trading pairs that let you swap one type of coin for another (though these swaps aren't always available).
What Else Should I Know About Altcoin Investing?
The advantage of altcoin investing is that investors can take more risks without losing a large amount of money. If an investor puts $100 into an altcoin that increases 10x, they still only lose 10% in fiat currency terms, but they now have $10,000 worth of a cryptocurrency that is probably increasing in value. In contrast, if an investor puts $100 into bitcoin or ether (one of the most popular altcoins), and it drops by 50%, they’ve lost half their investment in USD terms.
That said, there are significant differences between most altcoins; each one differs significantly from another. Therefore, it’s important to make sure you research these cryptocurrencies before putting any money into them. Here are some questions to ask yourself when considering whether or not to invest in an altcoin:
I’m ready to invest! Now what? Look for Initial Coin Offerings, also known as ICOs. An ICO is similar to IPO – it stands for Initial Public Offering. However, instead of buying shares of stock in a company at its initial public offering price, investors buy digital tokens created by developers with funding provided by enthusiasts and speculators who hope that demand will increase over time.
