Friday, June 28, 2019

Altcoins: An Introduction

For many people considering investing in cryptocurrency, the entire endeavour
starts and ends with Bitcoin. Bitcoin is by far the most well-known of the various
cryptocurrencies available, to a point where it has almost become synonymous
with the entire concept.

However, Bitcoin is just one cryptocurrency that is currently available to would-be
investors. If you have been thinking about expanding beyond Bitcoin, then learning
more about the potential offered by so-called “altcoins” can be very advantageous. 

What are altcoins?

As a broad definition, the term “altcoins” generally refers to cryptocurrencies that
are not Bitcoin. Altcoins may work on slightly different technology, but for the most
part, the term is used to mean “alternative coin to Bitcoin”. 

How many different altcoins are there?

It has been estimated that there are over 1,200 different altcoins currently available,
and new “coins” are added all the time. However, just because an altcoin technically
exists does not mean that it is highly used; there is a definitive hierarchy in the
altcoin world. 

What are the most popular altcoins? 

While Bitcoin continues to be the best known cryptocurrency, there are a number
of altcoins that have risen to prominence despite this. These include Ethereum,
Ripple, Litecoin, and Dogecoin.

Why invest in altcoins? 

In many ways, altcoins are best seen as a simple method of diversifying your overall
cryptocurrency investments. Though cryptocurrency performances are often referred
to as if they are a singular market, there can be a significant difference between how,
for example, Litecoin performs on any given day when compared to Bitcoin. It is not
unusual for one cryptocurrency to have a very good day, while another flounders -
and then the next day, the trend reverses. By splitting your investment between a
number of coins, your investment is essentially better protected.

In addition, cost is a factor. Bitcoin is by far the most “expensive” cryptocurrency;
altcoins, in comparison, are relatively inexpensive. This is an important factor,
considering that some experts believe Bitcoin may actually be overpriced, and
altcoins offer a more realistic reflection of the technology behind cryptocurrencies
and the power that they offer. That’s not to say that Bitcoin is not worth including
in your portfolio; it’s just that diversifying your investment between different
coins can help to achieve the best value for money.

Which altcoins should you choose? 

As with any investment, researching an altcoin and establishing its reputation
is always important before choosing to invest. If you are just getting started
with altcoins, then it may be best to stick with the more established coins
such as those we mentioned above. Newer altcoins can be intriguing, but
it is not unheard of for altcoins to rise and fall in a relatively short period of
time, so the “bigger” altcoins can be a more stable choice - though, of course,
researching any altcoin before purchasing is always recommended. 

In conclusion

If you have considered investing in cryptocurrencies in the past, then altcoins
are a viable alternative to Bitcoin that can allow you to spread your funds
while still enjoying the benefits this form of investment is able to offer.

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