When we talk about Altcoins, we can say that these are also a type of cryptocurrency. However, it is slightly different from Bitcoin.
What exactly is Altcoin?
An altcoin is a cryptocurrency. There is 10,000 Altcoin available in the market. The half market value of the entire cryptocurrency revolves around Altcoin. However, not all Altcoins bear the same value. Some of them may cost pennies, while others may cost more than a hundred dollars. Some Altcoins might create a short-term flash in the market; on the other hand, some Altcoins come to the market to go a long path. These and various other aspects make the world of Altcoin risky, adventurous, big, and fun.
How does it work?
The payment method of Altcoin is slightly different from Bitcoin, and however, it has been made by slightly changing bitcoin. If you are an enthusiastic cryptocurrency investor visit, how to earn profit from bitcoin which can show you a completely new way to invest in cryptocurrencies.
Altcoin vs. Bitcoin
When it comes to noting down the differences between Altcoins and Bitcoins, two of these cryptocurrencies vary based on their functionality. Talking about a bitcoin transaction, it normally takes 10 minutes where was, in case of Litecoin and Altcoin, such transactions take just 2.5 minutes.
There will be 84 million Litecoins produced, whereas only 21 million bitcoin will be produced ever.
In both cases, the mining process is also different. The hardware of common hardware can be used in the case of bitcoins, while costly hardware is required in the case of Bitcoin.
You can find more than thousands of Altcoins in the market, and some of them are considered a suitable alternative to Bitcoin. However, it is hard for an altcoin to reach the Bitcoin market of USD 1.07 trillion.
Categorization of Altcoins
It is hard to categorize the vast number of Altcoins. However, we can roughly categorize them in the following segments-
- Native Cryptocurrencies
Let’s take a look in each category-
By saying native cryptocurrency, we refer to the cryptocurrencies created to run on the blockchain network.
The token is a type of Altcoin used for only some specific purposes, and most importantly, it operates from the existing blockchain. For example, it is like an arcade where you exchange your currency and what you get is only applicable in the same environment.
Stablecoins are the Altcoins that were invented to accomplish all the tokens and cryptocurrency advantages. The value of stablecoins is tied to one particular currency, and the value will go up and down just like the currency goes. For example, a tether is connected to USD, and therefore, one tether is equivalent to one USD.
Important Factors To Consider Before Trading In Altcoins
Do not take a decision abruptly. Before investing or purchasing Altcoin, you need to gather some information. Or it would be best if you made clear things to yourself while investing in some Altcoin app. Questions you must have the answer of-
- If you have decided to invest in the token, do you think it would have any real-life application? If yes. What would it be?
- If the Altcoin is a fork, what is the purpose of the creation? Moreover, do you agree with the purpose?
- What plans do you have of using if it is a stablecoin?
- And lastly, do you think it is the better option and more fruitful option than bitcoin?
Advantages and Disadvantages of Altcoins
We’ve listed both of the advantages and disadvantages below-
- The Altcoin is built upon the improvements made on bitcoin.
- As the processing methods are quite similar to bitcoin, competitors remain in scope.
- Another advantage of Altcoin is the low-cost transaction. Apart from providing a secure transaction, it also does not cost any fees with each transaction.
- The market of Altcoin is highly volatile and new.
- Like the bitcoins, Altcoins also become the prey of many scams various times.
So, this was an overview of Altcoins to help you understand better before you plan to invest. Following up with these points will help you evaluate better this form of cryptocurrency and invest accordingly.