Altcoins came into existence shortly after Bitcoin (BTC) and offered an alternative to the most established cryptocurrency. Now, altcoins account for nearly 80% of the crypto market. Moreover, more than 5,000 altcoins are currently in circulation. Altcoins offer users an opportunity to earn high returns, especially those who know how to squeeze more earnings from the altcoins they already own. Users may consider this a quick guide for first-time investors in altcoins.
This article aims to show you how to trade altcoins and how do I get altcoins for beginners. Let's delve into these questions.
What is an altcoin?
“Altcoin” is short for “alternative coin.” Altcoins comprise all cryptocurrency coins that are not Bitcoin (BTC) and include Litecoin (LTC), Uniswap (UNI), Dogecoin (DOGE), Zcash (ZEC) and Cardano (ADA).
Since Bitcoin's inception in 2009, a plethora of cryptocurrencies have launched in the space, and others keep sprouting up almost daily. These Bitcoin alternatives began diverging further from the Bitcoin consensus mechanism to include various combinations of privacy features, functionalities and supply schedules. The altcoin strategy of offering additional functions makes them more enticing and valuable compared to their original counterpart (Bitcoin) and gives them additional utility in the eyes of investors. Some of the most common altcoins in the market at present include the following.
-Ethereum (ETH)
Ethereum is the second-largest cryptocurrency after Bitcoin by market cap, and it is the largest altcoin. However, many investors no longer regard it as an altcoin due to its potential for price stability; it is a more risk-adjusted investment than most altcoins and is close to Bitcoin.
-Litecoin (LTC)
Litecoin is also called the silver alternative to Bitcoin's gold and is a fork of the original Bitcoin mechanism. It comes with a different hashing algorithm (Scrypt) and has a faster block processing speed, which results in a production capacity of 4x what Bitcoin can supply. However, it’s been dismissed as a redundant (and ultimately unnecessary) Bitcoin fork.
-Stellar (XLM)
Unlike most cryptocurrencies, Stellar focuses on international bank transfers. Stellar leverages distributed ledger technology (DLT) to exchange value across various boundaries and then exchanges the cryptocurrencies into fiat.
-Ripple (XRP)
Ripple (XRP) is a popular digital payment platform that hosts crypto coins. It's also one of the most common cryptocurrencies and uses a consensus mechanism that is different from the traditional proof-of-work (PoW) mining process of Bitcoin.
-Uniswap (UNI)
Uniswap is the first decentralized exchange (DEX), and it’s hosted on the Ethereum blockchain. Therefore, Uniswap uses the ERC-20 algorithm native to its platform. Since it is open source, it has spawned several copycat competitors in the space, including Sushiswap (on Ethereum as well) and PancakeSwap (on the Binance Smart Chain).
-Polkadot (DOT)
Polkadot (DOT) is the brainchild of Dr. Gavin Wood, one of the cofounders of Ethereum. Polkadot is a promising blockchain because, like Cardano, much of it is peer-to-peer research-based. But instead of having a testnet on its own blockchain like with Cardano’s testnet on its chain, Polkadot first launches its experimental features on the Kusama chain for testing.
How to trade altcoins
The process for buying cryptocurrencies on different platforms may differ slightly, but the steps are mostly similar and fairly straightforward.
Step 1: Decide on a percentage of portfolio allocation for the investment
Step 2: Shop around for the most promising coins
Step 3: Exchange fiat currency for cryptocurrency
Step 4: Pick the right exchange
Step 5: Pick a currency pair
Step 6: Execute the trade
Step 7: Check that the altcoins are already in the wallet
Are altcoins the right investment for crypto users?
Like investing in anything, investing in crypto assets is no different, and comes with its own set of risks. But high volatility is a given in a new market and presents considerable upside potential compared to traditional markets. While “more stable” altcoins like Ethereum seemingly have reduced risks, there's no guarantee that an investment will yield greater returns.
Before investing in altcoins, especially the highly volatile options, users should conduct thorough research and invest only what they’re willing to lose. A couple of the benefits that come with investing in altcoins include having more room for growth, and some have interesting utility and present promising use cases.
How to trade altcoins and how do I get altcoins for beginners? Hope this article can provide you with a better understanding about this topic.
