Bitcoin set the trend for cryptocurrencies to emerge as an alternative to traditional assets. If you are a beginner in the world of cryptocurrency, you might be wondering if Bitcoin is the only cryptocurrency or there are more!!
There are certainly more cryptocurrencies, many more than the number of fiat currencies in the world. The number of actively traded cryptocurrencies is said to be more than 2500. There was a point around 2017-2018 when many startups launched their cryptocurrencies and tokens. But only some have sustained in the market with a decent market cap.
Bitcoin has been hitting upper circuits every single day and getting more and more unaffordable for retail investors due to its volatility. If you are one of those retailers, who want affordable digital assets to invest in, with long-term strategies, this is the right article to start.
We are going to help you understand the basics of Altcoins. How to buy and sell these Altcoins? Types of Altcoins and much more!!
Let’s get started.
What are Altcoins?
Altcoin, short for Alternative coin, is a term used to describe cryptocurrencies and digital assets other than Bitcoin. Altcoins are similar to Bitcoin. They are cryptocurrencies that use a technology called blockchain, which allows secure peer-to-peer transactions.
BTC gets designated as a First-generation cryptocurrency. While other digital assets provide alternative solutions to crypto users that Bitcoin could not offer to solve! Hence they are called Altcoins. Altcoins were built on the success of Bitcoin by slightly altering the rules and functions to appeal to a larger user base.
According to CoinMarketCap, there are nearly 5,400 cryptocurrencies in the market, and none of them has managed to take over Bitcoin’s lead since the inception of the digital asset industry.
The Brief History of Altcoins
The history of Bitcoin started in 2009 when the mysterious Satoshi Nakamoto created the world’s first cryptocurrency. The year 2011 marked the birth of altcoins when Namecoin (NMC) emerged as the first cryptocurrency ever created after Bitcoin.
While Namecoin was the first digital asset after Bitcoin, its position as the second-largest cryptocurrency was overtaken by other altcoins. One of them is Litecoin (LTC), a cryptocurrency that is very similar to Bitcoin.
In August 2013, Ripple (XRP) joined the ranks of cryptocurrencies, followed by Ethereum in July 2015. Since then, thousands of new altcoins have appeared in the market, providing the crypto industry with new use-cases and innovative solutions.
Also Read : Ethereum-Complete Guide on World’s Second Crypto
Where Can You Buy Altcoins?
The easiest way to purchase altcoins is by utilizing cryptocurrency exchange services. You can buy BTC and other major coins via bank transfers or credit cards.
On the other hand, if you want to buy altcoins with smaller market caps, you should first exchange your fiat currency into major crypto (preferably ETH or BTC). Then you have to transfer your crypto to an altcoin exchange that supports the coin you want to purchase.
How to Buy Altcoins?
Step 1: The first step to buy altcoins is to register an account at a reputable crypto exchange where you can exchange fiat currency for digital assets.
Step 2: The next step is to buy crypto using Fiat Currency. As soon as the exchange has verified your documents, you can start trading on the platform.
Step 3: After you have your crypto ready, the next step is to register an account and verify it at an altcoin exchange. The process should be identical or very similar to fiat-to-crypto exchanges.
Step 4: When your coins have been transferred to your wallet, it is time to exchange them for your altcoin of choice. Head to the trading platform of the exchange and choose your preferred altcoin-major crypto pair (e.g., ASK/ETH).
Step 5: After setting the number of coins you want to buy, execute the trade.
How to sell Altcoins?
Step 1: Selecting a fiat-friendly exchange
Step 2: Identify a pairing with your Desired Fiat Currency
Step 3: Selecting a Coin to Convert With
Step 4: After identifying your most cost-effective pairing, you can exchange your altcoins for the cryptocurrency in your pairing
Step 5: Transferring to the Fiat Exchange
Step 6: On the fiat exchange, navigate to the pairing that has your coin and desired fiat currency. Sell Your Coins and Cash Out
Altcoins Use cases
Due to Bitcoin’s limitations, altcoins have appeared on the market with the ambitious goal of empowering the crypto space with more use-cases. To date, many successful altcoin projects have delivered value to crypto users.
For example, Ethereum supercharged its blockchain platform with smart contracts and DApps to provide new functionality to cryptocurrencies. As a result, Ethereum is one of the busiest blockchain networks, featuring nearly 900,000 transactions every day.
Due to Ethereum’s features, decentralized finance (DeFi), a fast-growing movement in the crypto space to create decentralized alternatives to traditional finance solutions has become a reality.
What is the Altcoin season?
Alt season is a shortened version of the ‘altcoin season’ term. It is a type of market cycle for cryptocurrencies where altcoin prices rise relatively quickly. With or without the influence of the dollar value of Bitcoin, this price movement can occur.
The price success of altcoins often typically surpasses that of Bitcoin during this market period. The price of altcoins usually appears to be stable or very slow-moving. However, the value of all altcoins can rapidly increase within a short period once in a while.
The length of this demand cycle varies, spanning from a few days to several months. Many investors attempt to increase their gains during this period as a result of this uncertainty. The pace and extent of the price rise during the alt season often vary considerably.
Altcoins Pros and Cons
- Higher potential for higher ROI
- They have low transaction fees
- Legitimate altcoin projects add new value and functions to cryptocurrencies
- Many altcoins utilize more efficient consensus algorithms than Bitcoin
- Some altcoins feature highly scalable blockchains.
- Increased risks of volatility
- High potential for scams and fraud
- Altcoins with small market caps and limited liquidity face increased risks of market manipulation.
We have tried our best to provide you with insight into Altcoins, the types of altcoins, etc. It is not easy to choose an altcoin to invest in. You have to look at various aspects of stability and the future of Altcoins.
Since Altcoins are susceptible to risks in the market, while their market capitalization is lower, they may pose risks. It is also true that early investments result in higher profit margins, provided you have invested in a strong cryptocurrency.
The largest number of projects died in 2018. This is understandable since the largest number of altcoins appeared in 2017 with the ICO boom and, unfortunately, they began to die as quickly as they appeared.
To avoid major upsets, due diligence before investing your hard-earned money is suggested.