{"id":17344,"date":"2022-05-20T10:33:41","date_gmt":"2022-05-20T10:33:41","guid":{"rendered":"https:\/\/egrowonline.com\/?p=17344"},"modified":"2022-05-20T10:33:41","modified_gmt":"2022-05-20T10:33:41","slug":"what-are-altcoins-what-investors-need-to-know","status":"publish","type":"post","link":"http:\/\/egrowonline.com\/?p=17344","title":{"rendered":"What Are Altcoins? What Investors Need to Know"},"content":{"rendered":"<p> <br \/>\n<\/p>\n<div data-v-3a81955c=\"\">\n<h2 class=\"MsoNormal article-body__parent-element\" data-v-3a81955c=\"\">What<br \/>\nIs an altcoin?<\/h2>\n<p class=\"MsoNormal article-body__parent-element\" data-v-3a81955c=\"\">In<br \/>\nthe crypto world, altcoin stands for alternative coins and is simply a term<br \/>\nused for any cryptocurrency other than bitcoin. So, that makes Ethereum, the<br \/>\ncryptocurrency with the second largest market cap an altcoin as much as the<br \/>\n3,000 ranked cryptocurrency.<\/p>\n<p class=\"MsoNormal article-body__parent-element\" data-v-3a81955c=\"\">Altcoins<br \/>\nare not required to be different from bitcoin as each altcoin will have its<br \/>\npreferred consensus mechanisms, such as proof-of-stake or proof-of-work. For<br \/>\nexample, bitcoin is the oldest cryptocurrency and uses the original validator<br \/>\nmethod of proof-of-work, which is used by many altcoins today. Proof of work is<br \/>\nresource-intensive and time-consuming, pushing more investors towards proof of<br \/>\nstake coins, allowing them to contribute to the blockchain.<\/p>\n<p class=\"MsoNormal article-body__parent-element\" data-v-3a81955c=\"\">However,<br \/>\naltcoins do try to differentiate themselves from bitcoin through new technology<br \/>\nlike smart contracts, PoS, or different tokenomics. Some aspects between<br \/>\naltcoins and <a target=\"_blank\" href=\"https:\/\/www.financemagnates.com\/tag\/bitcoin\/\" class=\"article-link\" data-v-3a81955c=\"\" rel=\"noopener\">bitcoin<\/a> will always stay the same, such as peer-to-peer systems,<br \/>\nwhich are embedded into the philosophy of cryptocurrency.<\/p>\n<h3 class=\"MsoNormal article-body__parent-element\" data-v-3a81955c=\"\">Relationship<br \/>\nbetween Bitcoin and Altcoins<\/h3>\n<p class=\"MsoNormal article-body__parent-element\" data-v-3a81955c=\"\">Since<br \/>\nthe beginning of cryptocurrency, with bitcoin as the spearhead, the market has<br \/>\ngenerally revolved around the price of bitcoin, with altcoins following its<br \/>\npumps and dips. Altcoins often come from bitcoin, tending to follow bitcoins&#8217;<br \/>\noverall trends. Some of this matching can be put down to investors using<br \/>\nbitcoin as a major market indicator, but some altcoin graphs are similar to<br \/>\nbitcoins that it becomes hard to ignore.<\/p>\n<aside class=\"related-articles\" data-v-1a0049b8=\"\" data-v-3a81955c=\"\">\n<p>Keep Reading<\/p>\n<\/aside>\n<p class=\"MsoNormal article-body__parent-element\" data-v-3a81955c=\"\">However,<br \/>\nas bitcoin dominance steadily decreases and more of the <a target=\"_blank\" href=\"https:\/\/www.financemagnates.com\/tag\/crypto\/\" class=\"article-link\" data-v-3a81955c=\"\" rel=\"noopener\">crypto<\/a> market cap is<br \/>\neaten up by bitcoin, we start to see more independently priced altcoins, not<br \/>\nexactly following bitcoins trajectory. We can put this phenomenon down to two<br \/>\nmajor factors:<\/p>\n<ol start=\"1\" type=\"1\" class=\"article-body__parent-element\" data-v-3a81955c=\"\">\n<li class=\"MsoNormal\" style=\"color:black;vertical-align:baseline\" data-v-3a81955c=\"\">Investors<br \/>\n     are slowly plowing more capital into new projects with huge potential.<br \/>\n     Often large ecosystems such as DOT.<\/li>\n<li class=\"MsoNormal\" style=\"color:black;vertical-align:baseline\" data-v-3a81955c=\"\">The<br \/>\n     overall amount of cryptocurrencies being created is ever increasing.<\/li>\n<\/ol>\n<h3 class=\"MsoNormal article-body__parent-element\" data-v-3a81955c=\"\">Are<br \/>\nAll Altcoins Made Equal?<\/h3>\n<p class=\"MsoNormal article-body__parent-element\" data-v-3a81955c=\"\">Simply<br \/>\nput, no. The term altcoin encompasses a massive group of coins, all providing<br \/>\ndifferent utility to the crypto sphere, the term is used to differentiate them<br \/>\nfrom bitcoin.<\/p>\n<aside class=\"from-our-directory\" data-v-46902626=\"\" data-v-3a81955c=\"\"> <\/aside>\n<p class=\"MsoNormal article-body__parent-element\" data-v-3a81955c=\"\">Cryptocurrency<br \/>\nis still a very new asset class, so each cryptocurrency project has its own<br \/>\ncoin which investors buy into and often use inside of the ecosystem. For<br \/>\nexample, HIVE is used to navigate the platform. Later down the line, we should<br \/>\nexpect major altcoins to take over as the main coin used over multiple<br \/>\nprojects, as there is simply too much volatility for so many different altcoins<br \/>\nto be viably used in the future.<\/p>\n<h3 class=\"MsoNormal article-body__parent-element\" data-v-3a81955c=\"\">The<br \/>\nDifferent Types of Altcoins<\/h3>\n<p class=\"MsoNormal article-body__parent-element\" data-v-3a81955c=\"\"><b data-v-3a81955c=\"\"><i data-v-3a81955c=\"\">Remember<\/i><\/b><i data-v-3a81955c=\"\">: <\/i>Altcoins can be part of<br \/>\nseveral categories at once.<\/p>\n<h4 class=\"MsoNormal article-body__parent-element\" data-v-3a81955c=\"\">Stable<br \/>\nCoins<\/h4>\n<p class=\"MsoNormal article-body__parent-element\" data-v-3a81955c=\"\">Stablecoins<br \/>\nhave come into existence to try and counteract the extreme volatility that the<br \/>\ncrypto market faces. Investors can hold some value in stable cryptocurrency,<br \/>\nwithout having to convert it into fiat, while waiting for the next investment<br \/>\nopportunity, or the perfect entry.<\/p>\n<p class=\"MsoNormal article-body__parent-element\" data-v-3a81955c=\"\">Examples<br \/>\nof altcoins would be USDT (Tethered to the US dollar, or USDC). Stablecoins are<br \/>\npegged to the value of a fiat currency or other more stable commodities such as<br \/>\ngold to help hold their value.<\/p>\n<p class=\"MsoNormal article-body__parent-element\" data-v-3a81955c=\"\">Also,<br \/>\nstable coins help investors get money into exchanges, without having to<br \/>\ninstantly buy a more traditional cryptocurrency.<\/p>\n<h4 class=\"MsoNormal article-body__parent-element\" data-v-3a81955c=\"\">Utility<br \/>\nTokens<\/h4>\n<p class=\"MsoNormal article-body__parent-element\" data-v-3a81955c=\"\">Utility<br \/>\ntokens act as a way of payment for services or to participate in an ecosystem.<br \/>\nEach ecosystem will usually have its own unique utility token that is not<br \/>\nmineable. <\/p>\n<p class=\"MsoNormal article-body__parent-element\" data-v-3a81955c=\"\">A<br \/>\nwell-known example of a utility token is Filecoin, used to provide storage to<br \/>\nother blockchains. The most famous example is Ethereum.<\/p>\n<h4 class=\"MsoNormal article-body__parent-element\" data-v-3a81955c=\"\">Meme<br \/>\nCoins<\/h4>\n<p class=\"MsoNormal article-body__parent-element\" data-v-3a81955c=\"\">A<br \/>\ntype of stable coin fresh in the mind of most crypto investors, meme coins are<br \/>\ndescribed by the name, memes. Examples would be dodge coin or the recent<br \/>\nspeculation on SHIB, based on Elon Musk\u2019s dog. <\/p>\n<p class=\"MsoNormal article-body__parent-element\" data-v-3a81955c=\"\">Typical<br \/>\nattributes of a meme coin include a rapid surge in price over a short period of<br \/>\ntime, lack of utility, and often shilled and advertised by crypto influencers<br \/>\nor celebrities on platforms such as Twitter.<\/p>\n<p class=\"MsoNormal article-body__parent-element\" data-v-3a81955c=\"\">Meme<br \/>\ncoins have become rife with scams once people saw the massive potential that<br \/>\ncomes from playing with investors&#8217; FOMO. <\/p>\n<h4 class=\"MsoNormal article-body__parent-element\" data-v-3a81955c=\"\">Security<br \/>\nTokens<\/h4>\n<p class=\"MsoNormal article-body__parent-element\" data-v-3a81955c=\"\">Security<br \/>\ntokens are the closest cryptocurrency comes to traditional stocks and shares.<br \/>\nThose buying security tokens will have \u2018shares\u2019 in a company that participates<br \/>\nor does business on a blockchain. <\/p>\n<p class=\"MsoNormal article-body__parent-element\" data-v-3a81955c=\"\">Security<br \/>\ntokens help to validate ownership of a certain asset, providing greater<br \/>\nsecurity than before to owners and their assets. However, when a user owns<br \/>\ntheir own \u2018keys\u2019 they are at risk of permanently losing access to the asset, as<br \/>\nno centralized body can help them regain it.<\/p>\n<h4 class=\"MsoNormal article-body__parent-element\" data-v-3a81955c=\"\">Mining-Based<br \/>\nvs Pre-mined<\/h4>\n<p class=\"MsoNormal article-body__parent-element\" data-v-3a81955c=\"\">Altcoins<br \/>\nwhich are mining based use PoW (Proof of Work) as a way to generate new coins,<br \/>\nthe method that bitcoin uses. As mentioned before this is resource-intensive<br \/>\nand many altcoins are moving over to a PoS model, allowing users to participate<br \/>\nin the blockchain themselves. <\/p>\n<p class=\"MsoNormal article-body__parent-element\" data-v-3a81955c=\"\">The<br \/>\nalternative is to have a project with pre-mined coins, which requires initial<br \/>\ncapital to get off the ground. Coins are usually distributed during an ICO, or<br \/>\ninitial coin offering, where investors pay Bitcoin, Ethereum, or fiat for a<br \/>\npre-arranged amount of the essentially worthless coin. ICOs are naturally risky<br \/>\nas there is no guarantee these coins will ever be worth anything, having never<br \/>\nbeen traded before.<\/p>\n<p class=\"MsoNormal article-body__parent-element\" data-v-3a81955c=\"\">XPR<br \/>\nis a massive example of a successful pre-mined coin, firmly sitting in the top<br \/>\n10 coins by market cap.<\/p>\n<h3 class=\"MsoNormal article-body__parent-element\" data-v-3a81955c=\"\">Do<br \/>\nAny Altcoins Stack Up to Bitcoin<\/h3>\n<p class=\"MsoNormal article-body__parent-element\" data-v-3a81955c=\"\">Currently,<br \/>\nbitcoin has a market dominance hovering around 40%, with Ethereum second just<br \/>\nunder 20%. For an altcoin to ever flip bitcoin, we would need to see an already<br \/>\nprominent coin such as <a target=\"_blank\" href=\"https:\/\/www.financemagnates.com\/tag\/ethereum\/\" class=\"article-link\" data-v-3a81955c=\"\" rel=\"noopener\">Ethereum<\/a> really explode in the coming years.<\/p>\n<p class=\"MsoNormal article-body__parent-element\" data-v-3a81955c=\"\">Bitcoin<br \/>\nwas the first cryptocurrency and will always be in the hearts of crypto<br \/>\ninvestors as the unbreakable, decentralized, permissionless blockchain, an<br \/>\nexample for all future altcoins to follow.<\/p>\n<h3 class=\"MsoNormal article-body__parent-element\" data-v-3a81955c=\"\">Will<br \/>\nAny Altcoin Ever Flip Bitcoin?<\/h3>\n<p class=\"MsoNormal article-body__parent-element\" data-v-3a81955c=\"\">Many<br \/>\nexperts suggest that Ethereum is capable of flipping bitcoin, but will rely on<br \/>\na successful Ethereum 2.0 release, executing the promises that were made about<br \/>\nfaster transactions and cheaper transaction fees (Gas Fees).<\/p>\n<p class=\"MsoNormal article-body__parent-element\" data-v-3a81955c=\"\">However,<br \/>\nto successfully flip Bitcoin or even Ethereum, the coin must defeat the problem<br \/>\nof scalability, making it accessible to billions, such as Cardano. <\/p>\n<p class=\"MsoNormal article-body__parent-element\" data-v-3a81955c=\"\">Bitcoin<br \/>\nhas had an early bird advantage over all other cryptocurrencies, so only time<br \/>\nwill tell if an altcoin topples the Satoshi Tower.<\/p>\n<h3 class=\"MsoNormal article-body__parent-element\" data-v-3a81955c=\"\">Why<br \/>\nAltcoins Are Important<\/h3>\n<p class=\"MsoNormal article-body__parent-element\" data-v-3a81955c=\"\">Obviously,<br \/>\nBitcoin does not provide a solution to every problem trying to be solved by<br \/>\ncryptocurrencies, so Altcoins are a necessity to solve the shortcomings of<br \/>\nBitcoin and provide actual utility across thousands of different sectors and<br \/>\nmarkets. A task that no singular coin could finish.<\/p>\n<p class=\"MsoNormal article-body__parent-element\" data-v-3a81955c=\"\">Altcoins<br \/>\nare absolutely essential for this stage in the cryptocurrency ecosystem,<br \/>\nproviding investors with a massive choice of projects to invest in and allowing<br \/>\ndifferent projects to show off their potential utility and use-cases while we<br \/>\ngrow in the adoption phase.<\/p>\n<p class=\"MsoNormal article-body__parent-element\" data-v-3a81955c=\"\">Time<br \/>\nwill slowly weed out useless altcoins as cryptocurrency becomes more heavily<br \/>\nadopted and the strongest altcoins will emerge and most likely become staples<br \/>\nas utility tokens across many ecosystems.<\/p>\n<h3 class=\"MsoNormal article-body__parent-element\" data-v-3a81955c=\"\">The<br \/>\nDangers of Altcoins<\/h3>\n<p class=\"MsoNormal article-body__parent-element\" data-v-3a81955c=\"\">Altcoins<br \/>\nencompass almost all cryptocurrencies in the market, meaning as much as they<br \/>\nare a necessity, many come with their flaws, or are suffering from a volatile<br \/>\nmarket. Here are the main dangers presented by altcoin investing and what you<br \/>\nshould look out for:<\/p>\n<ul type=\"disc\" class=\"article-body__parent-element\" data-v-3a81955c=\"\">\n<li class=\"MsoNormal\" style=\"color:black;vertical-align:baseline\" data-v-3a81955c=\"\"><b data-v-3a81955c=\"\">The cryptocurrency market is driven around sentiment:<\/b><\/li>\n<\/ul>\n<p class=\"MsoNormal article-body__parent-element\" data-v-3a81955c=\"\">Market sentiment is arguably the most<br \/>\npowerful indicator in the cryptocurrency markets as massive bearish or bullish<br \/>\nswings are common. Volatile cryptocurrencies are the most dangerous to hold<br \/>\nduring a bearish sentiment, as there are zero guarantees they will even recover<br \/>\n50% of their original price, especially if real-world utility is low, such as<br \/>\nmeme coins.<\/p>\n<ul type=\"disc\" class=\"article-body__parent-element\" data-v-3a81955c=\"\">\n<li class=\"MsoNormal\" style=\"color:black;vertical-align:baseline\" data-v-3a81955c=\"\"><b data-v-3a81955c=\"\">The Crypto Market Does Not Follow Economic Principles<\/b><\/li>\n<\/ul>\n<p class=\"MsoNormal article-body__parent-element\" data-v-3a81955c=\"\">Just because an altcoin has utility, does not<br \/>\nmean the price will reflect it. We are still too early for mass adoption,<br \/>\nmeaning most utility speak is around the potential utility, making the<br \/>\ncryptocurrency vulnerable to a massive drop in value.<\/p>\n<ul type=\"disc\" class=\"article-body__parent-element\" data-v-3a81955c=\"\">\n<li class=\"MsoNormal\" style=\"color:black;vertical-align:baseline\" data-v-3a81955c=\"\"><b data-v-3a81955c=\"\">Low Market-cap altcoins are even more volatile<\/b><\/li>\n<\/ul>\n<p class=\"MsoNormal article-body__parent-element\" data-v-3a81955c=\"\">Many altcoins operate on extremely low market<br \/>\ncaps, possibly trapping an investor&#8217;s liquidity forever as trades are rare.<\/p>\n<ul type=\"disc\" class=\"article-body__parent-element\" data-v-3a81955c=\"\">\n<li class=\"MsoNormal\" style=\"color:black;vertical-align:baseline\" data-v-3a81955c=\"\"><b data-v-3a81955c=\"\">Anyone can make an altcoin<\/b><\/li>\n<\/ul>\n<p class=\"MsoNormal article-body__parent-element\" data-v-3a81955c=\"\">Do not get fooled by the term altcoin, any<br \/>\ncoin that is not Bitcoin is an altcoin, even meme coins made by anyone with<br \/>\nabsolutely zero value.<\/p>\n<h3 class=\"MsoNormal article-body__parent-element\" data-v-3a81955c=\"\">What<br \/>\nDoes the Future Hold for Altcoins<\/h3>\n<p class=\"MsoNormal article-body__parent-element\" data-v-3a81955c=\"\">The<br \/>\nhonest truth that most altcoin investors do not want to hear is: that most, almost<br \/>\nall altcoins, will not survive the next ten years. To see this as evidence, we<br \/>\nonly must look back a few years at the top 100 cryptocurrencies by market cap<br \/>\nand see which ones are still there. Many projects have simply vanished out of<br \/>\nexistence, which will happen for our current set of altcoins now, only the<br \/>\nstrongest will survive.<\/p>\n<p class=\"MsoNormal article-body__parent-element\" data-v-3a81955c=\"\">Most<br \/>\nanalysts predict a consolidation around the top ten, fifty, or whatever the<br \/>\noptimal amount of strong altcoins are needed for their utility and real-world<br \/>\nuse cases. <\/p>\n<h3 class=\"MsoNormal article-body__parent-element\" data-v-3a81955c=\"\">Conclusion<\/h3>\n<p class=\"MsoNormal article-body__parent-element\" data-v-3a81955c=\"\">Altcoins<br \/>\nwill always be around and only time will tell which ones survive. The most<br \/>\npractical advice one can give on altcoins is to simply look for projects which you<br \/>\nsee surviving past the adoption phase, based purely on speculation, and assess<br \/>\nthe future utility that is possible, and what real-world problems they are<br \/>\ntrying to solve.<\/p>\n<\/div>\n<div data-v-3a81955c=\"\">\n<h2 class=\"MsoNormal article-body__parent-element\" data-v-3a81955c=\"\">What<br \/>\nIs an altcoin?<\/h2>\n<p class=\"MsoNormal article-body__parent-element\" data-v-3a81955c=\"\">In<br \/>\nthe crypto world, altcoin stands for alternative coins and is simply a term<br \/>\nused for any cryptocurrency other than bitcoin. So, that makes Ethereum, the<br \/>\ncryptocurrency with the second largest market cap an altcoin as much as the<br \/>\n3,000 ranked cryptocurrency.<\/p>\n<p class=\"MsoNormal article-body__parent-element\" data-v-3a81955c=\"\">Altcoins<br \/>\nare not required to be different from bitcoin as each altcoin will have its<br \/>\npreferred consensus mechanisms, such as proof-of-stake or proof-of-work. For<br \/>\nexample, bitcoin is the oldest cryptocurrency and uses the original validator<br \/>\nmethod of proof-of-work, which is used by many altcoins today. Proof of work is<br \/>\nresource-intensive and time-consuming, pushing more investors towards proof of<br \/>\nstake coins, allowing them to contribute to the blockchain.<\/p>\n<p class=\"MsoNormal article-body__parent-element\" data-v-3a81955c=\"\">However,<br \/>\naltcoins do try to differentiate themselves from bitcoin through new technology<br \/>\nlike smart contracts, PoS, or different tokenomics. Some aspects between<br \/>\naltcoins and <a target=\"_blank\" href=\"https:\/\/www.financemagnates.com\/tag\/bitcoin\/\" class=\"article-link\" data-v-3a81955c=\"\" rel=\"noopener\">bitcoin<\/a> will always stay the same, such as peer-to-peer systems,<br \/>\nwhich are embedded into the philosophy of cryptocurrency.<\/p>\n<h3 class=\"MsoNormal article-body__parent-element\" data-v-3a81955c=\"\">Relationship<br \/>\nbetween Bitcoin and Altcoins<\/h3>\n<p class=\"MsoNormal article-body__parent-element\" data-v-3a81955c=\"\">Since<br \/>\nthe beginning of cryptocurrency, with bitcoin as the spearhead, the market has<br \/>\ngenerally revolved around the price of bitcoin, with altcoins following its<br \/>\npumps and dips. Altcoins often come from bitcoin, tending to follow bitcoins&#8217;<br \/>\noverall trends. Some of this matching can be put down to investors using<br \/>\nbitcoin as a major market indicator, but some altcoin graphs are similar to<br \/>\nbitcoins that it becomes hard to ignore.<\/p>\n<aside class=\"related-articles\" data-v-1a0049b8=\"\" data-v-3a81955c=\"\">\n<p>Keep Reading<\/p>\n<\/aside>\n<p class=\"MsoNormal article-body__parent-element\" data-v-3a81955c=\"\">However,<br \/>\nas bitcoin dominance steadily decreases and more of the <a target=\"_blank\" href=\"https:\/\/www.financemagnates.com\/tag\/crypto\/\" class=\"article-link\" data-v-3a81955c=\"\" rel=\"noopener\">crypto<\/a> market cap is<br \/>\neaten up by bitcoin, we start to see more independently priced altcoins, not<br \/>\nexactly following bitcoins trajectory. We can put this phenomenon down to two<br \/>\nmajor factors:<\/p>\n<ol start=\"1\" type=\"1\" class=\"article-body__parent-element\" data-v-3a81955c=\"\">\n<li class=\"MsoNormal\" style=\"color:black;vertical-align:baseline\" data-v-3a81955c=\"\">Investors<br \/>\n     are slowly plowing more capital into new projects with huge potential.<br \/>\n     Often large ecosystems such as DOT.<\/li>\n<li class=\"MsoNormal\" style=\"color:black;vertical-align:baseline\" data-v-3a81955c=\"\">The<br \/>\n     overall amount of cryptocurrencies being created is ever increasing.<\/li>\n<\/ol>\n<h3 class=\"MsoNormal article-body__parent-element\" data-v-3a81955c=\"\">Are<br \/>\nAll Altcoins Made Equal?<\/h3>\n<p class=\"MsoNormal article-body__parent-element\" data-v-3a81955c=\"\">Simply<br \/>\nput, no. The term altcoin encompasses a massive group of coins, all providing<br \/>\ndifferent utility to the crypto sphere, the term is used to differentiate them<br \/>\nfrom bitcoin.<\/p>\n<aside class=\"from-our-directory\" data-v-46902626=\"\" data-v-3a81955c=\"\"> <\/aside>\n<p class=\"MsoNormal article-body__parent-element\" data-v-3a81955c=\"\">Cryptocurrency<br \/>\nis still a very new asset class, so each cryptocurrency project has its own<br \/>\ncoin which investors buy into and often use inside of the ecosystem. For<br \/>\nexample, HIVE is used to navigate the platform. Later down the line, we should<br \/>\nexpect major altcoins to take over as the main coin used over multiple<br \/>\nprojects, as there is simply too much volatility for so many different altcoins<br \/>\nto be viably used in the future.<\/p>\n<h3 class=\"MsoNormal article-body__parent-element\" data-v-3a81955c=\"\">The<br \/>\nDifferent Types of Altcoins<\/h3>\n<p class=\"MsoNormal article-body__parent-element\" data-v-3a81955c=\"\"><b data-v-3a81955c=\"\"><i data-v-3a81955c=\"\">Remember<\/i><\/b><i data-v-3a81955c=\"\">: <\/i>Altcoins can be part of<br \/>\nseveral categories at once.<\/p>\n<h4 class=\"MsoNormal article-body__parent-element\" data-v-3a81955c=\"\">Stable<br \/>\nCoins<\/h4>\n<p class=\"MsoNormal article-body__parent-element\" data-v-3a81955c=\"\">Stablecoins<br \/>\nhave come into existence to try and counteract the extreme volatility that the<br \/>\ncrypto market faces. Investors can hold some value in stable cryptocurrency,<br \/>\nwithout having to convert it into fiat, while waiting for the next investment<br \/>\nopportunity, or the perfect entry.<\/p>\n<p class=\"MsoNormal article-body__parent-element\" data-v-3a81955c=\"\">Examples<br \/>\nof altcoins would be USDT (Tethered to the US dollar, or USDC). Stablecoins are<br \/>\npegged to the value of a fiat currency or other more stable commodities such as<br \/>\ngold to help hold their value.<\/p>\n<p class=\"MsoNormal article-body__parent-element\" data-v-3a81955c=\"\">Also,<br \/>\nstable coins help investors get money into exchanges, without having to<br \/>\ninstantly buy a more traditional cryptocurrency.<\/p>\n<h4 class=\"MsoNormal article-body__parent-element\" data-v-3a81955c=\"\">Utility<br \/>\nTokens<\/h4>\n<p class=\"MsoNormal article-body__parent-element\" data-v-3a81955c=\"\">Utility<br \/>\ntokens act as a way of payment for services or to participate in an ecosystem.<br \/>\nEach ecosystem will usually have its own unique utility token that is not<br \/>\nmineable. <\/p>\n<p class=\"MsoNormal article-body__parent-element\" data-v-3a81955c=\"\">A<br \/>\nwell-known example of a utility token is Filecoin, used to provide storage to<br \/>\nother blockchains. The most famous example is Ethereum.<\/p>\n<h4 class=\"MsoNormal article-body__parent-element\" data-v-3a81955c=\"\">Meme<br \/>\nCoins<\/h4>\n<p class=\"MsoNormal article-body__parent-element\" data-v-3a81955c=\"\">A<br \/>\ntype of stable coin fresh in the mind of most crypto investors, meme coins are<br \/>\ndescribed by the name, memes. Examples would be dodge coin or the recent<br \/>\nspeculation on SHIB, based on Elon Musk\u2019s dog. <\/p>\n<p class=\"MsoNormal article-body__parent-element\" data-v-3a81955c=\"\">Typical<br \/>\nattributes of a meme coin include a rapid surge in price over a short period of<br \/>\ntime, lack of utility, and often shilled and advertised by crypto influencers<br \/>\nor celebrities on platforms such as Twitter.<\/p>\n<p class=\"MsoNormal article-body__parent-element\" data-v-3a81955c=\"\">Meme<br \/>\ncoins have become rife with scams once people saw the massive potential that<br \/>\ncomes from playing with investors&#8217; FOMO. <\/p>\n<h4 class=\"MsoNormal article-body__parent-element\" data-v-3a81955c=\"\">Security<br \/>\nTokens<\/h4>\n<p class=\"MsoNormal article-body__parent-element\" data-v-3a81955c=\"\">Security<br \/>\ntokens are the closest cryptocurrency comes to traditional stocks and shares.<br \/>\nThose buying security tokens will have \u2018shares\u2019 in a company that participates<br \/>\nor does business on a blockchain. <\/p>\n<p class=\"MsoNormal article-body__parent-element\" data-v-3a81955c=\"\">Security<br \/>\ntokens help to validate ownership of a certain asset, providing greater<br \/>\nsecurity than before to owners and their assets. However, when a user owns<br \/>\ntheir own \u2018keys\u2019 they are at risk of permanently losing access to the asset, as<br \/>\nno centralized body can help them regain it.<\/p>\n<h4 class=\"MsoNormal article-body__parent-element\" data-v-3a81955c=\"\">Mining-Based<br \/>\nvs Pre-mined<\/h4>\n<p class=\"MsoNormal article-body__parent-element\" data-v-3a81955c=\"\">Altcoins<br \/>\nwhich are mining based use PoW (Proof of Work) as a way to generate new coins,<br \/>\nthe method that bitcoin uses. As mentioned before this is resource-intensive<br \/>\nand many altcoins are moving over to a PoS model, allowing users to participate<br \/>\nin the blockchain themselves. <\/p>\n<p class=\"MsoNormal article-body__parent-element\" data-v-3a81955c=\"\">The<br \/>\nalternative is to have a project with pre-mined coins, which requires initial<br \/>\ncapital to get off the ground. Coins are usually distributed during an ICO, or<br \/>\ninitial coin offering, where investors pay Bitcoin, Ethereum, or fiat for a<br \/>\npre-arranged amount of the essentially worthless coin. ICOs are naturally risky<br \/>\nas there is no guarantee these coins will ever be worth anything, having never<br \/>\nbeen traded before.<\/p>\n<p class=\"MsoNormal article-body__parent-element\" data-v-3a81955c=\"\">XPR<br \/>\nis a massive example of a successful pre-mined coin, firmly sitting in the top<br \/>\n10 coins by market cap.<\/p>\n<h3 class=\"MsoNormal article-body__parent-element\" data-v-3a81955c=\"\">Do<br \/>\nAny Altcoins Stack Up to Bitcoin<\/h3>\n<p class=\"MsoNormal article-body__parent-element\" data-v-3a81955c=\"\">Currently,<br \/>\nbitcoin has a market dominance hovering around 40%, with Ethereum second just<br \/>\nunder 20%. For an altcoin to ever flip bitcoin, we would need to see an already<br \/>\nprominent coin such as <a target=\"_blank\" href=\"https:\/\/www.financemagnates.com\/tag\/ethereum\/\" class=\"article-link\" data-v-3a81955c=\"\" rel=\"noopener\">Ethereum<\/a> really explode in the coming years.<\/p>\n<p class=\"MsoNormal article-body__parent-element\" data-v-3a81955c=\"\">Bitcoin<br \/>\nwas the first cryptocurrency and will always be in the hearts of crypto<br \/>\ninvestors as the unbreakable, decentralized, permissionless blockchain, an<br \/>\nexample for all future altcoins to follow.<\/p>\n<h3 class=\"MsoNormal article-body__parent-element\" data-v-3a81955c=\"\">Will<br \/>\nAny Altcoin Ever Flip Bitcoin?<\/h3>\n<p class=\"MsoNormal article-body__parent-element\" data-v-3a81955c=\"\">Many<br \/>\nexperts suggest that Ethereum is capable of flipping bitcoin, but will rely on<br \/>\na successful Ethereum 2.0 release, executing the promises that were made about<br \/>\nfaster transactions and cheaper transaction fees (Gas Fees).<\/p>\n<p class=\"MsoNormal article-body__parent-element\" data-v-3a81955c=\"\">However,<br \/>\nto successfully flip Bitcoin or even Ethereum, the coin must defeat the problem<br \/>\nof scalability, making it accessible to billions, such as Cardano. <\/p>\n<p class=\"MsoNormal article-body__parent-element\" data-v-3a81955c=\"\">Bitcoin<br \/>\nhas had an early bird advantage over all other cryptocurrencies, so only time<br \/>\nwill tell if an altcoin topples the Satoshi Tower.<\/p>\n<h3 class=\"MsoNormal article-body__parent-element\" data-v-3a81955c=\"\">Why<br \/>\nAltcoins Are Important<\/h3>\n<p class=\"MsoNormal article-body__parent-element\" data-v-3a81955c=\"\">Obviously,<br \/>\nBitcoin does not provide a solution to every problem trying to be solved by<br \/>\ncryptocurrencies, so Altcoins are a necessity to solve the shortcomings of<br \/>\nBitcoin and provide actual utility across thousands of different sectors and<br \/>\nmarkets. A task that no singular coin could finish.<\/p>\n<p class=\"MsoNormal article-body__parent-element\" data-v-3a81955c=\"\">Altcoins<br \/>\nare absolutely essential for this stage in the cryptocurrency ecosystem,<br \/>\nproviding investors with a massive choice of projects to invest in and allowing<br \/>\ndifferent projects to show off their potential utility and use-cases while we<br \/>\ngrow in the adoption phase.<\/p>\n<p class=\"MsoNormal article-body__parent-element\" data-v-3a81955c=\"\">Time<br \/>\nwill slowly weed out useless altcoins as cryptocurrency becomes more heavily<br \/>\nadopted and the strongest altcoins will emerge and most likely become staples<br \/>\nas utility tokens across many ecosystems.<\/p>\n<h3 class=\"MsoNormal article-body__parent-element\" data-v-3a81955c=\"\">The<br \/>\nDangers of Altcoins<\/h3>\n<p class=\"MsoNormal article-body__parent-element\" data-v-3a81955c=\"\">Altcoins<br \/>\nencompass almost all cryptocurrencies in the market, meaning as much as they<br \/>\nare a necessity, many come with their flaws, or are suffering from a volatile<br \/>\nmarket. Here are the main dangers presented by altcoin investing and what you<br \/>\nshould look out for:<\/p>\n<ul type=\"disc\" class=\"article-body__parent-element\" data-v-3a81955c=\"\">\n<li class=\"MsoNormal\" style=\"color:black;vertical-align:baseline\" data-v-3a81955c=\"\"><b data-v-3a81955c=\"\">The cryptocurrency market is driven around sentiment:<\/b><\/li>\n<\/ul>\n<p class=\"MsoNormal article-body__parent-element\" data-v-3a81955c=\"\">Market sentiment is arguably the most<br \/>\npowerful indicator in the cryptocurrency markets as massive bearish or bullish<br \/>\nswings are common. Volatile cryptocurrencies are the most dangerous to hold<br \/>\nduring a bearish sentiment, as there are zero guarantees they will even recover<br \/>\n50% of their original price, especially if real-world utility is low, such as<br \/>\nmeme coins.<\/p>\n<ul type=\"disc\" class=\"article-body__parent-element\" data-v-3a81955c=\"\">\n<li class=\"MsoNormal\" style=\"color:black;vertical-align:baseline\" data-v-3a81955c=\"\"><b data-v-3a81955c=\"\">The Crypto Market Does Not Follow Economic Principles<\/b><\/li>\n<\/ul>\n<p class=\"MsoNormal article-body__parent-element\" data-v-3a81955c=\"\">Just because an altcoin has utility, does not<br \/>\nmean the price will reflect it. We are still too early for mass adoption,<br \/>\nmeaning most utility speak is around the potential utility, making the<br \/>\ncryptocurrency vulnerable to a massive drop in value.<\/p>\n<ul type=\"disc\" class=\"article-body__parent-element\" data-v-3a81955c=\"\">\n<li class=\"MsoNormal\" style=\"color:black;vertical-align:baseline\" data-v-3a81955c=\"\"><b data-v-3a81955c=\"\">Low Market-cap altcoins are even more volatile<\/b><\/li>\n<\/ul>\n<p class=\"MsoNormal article-body__parent-element\" data-v-3a81955c=\"\">Many altcoins operate on extremely low market<br \/>\ncaps, possibly trapping an investor&#8217;s liquidity forever as trades are rare.<\/p>\n<ul type=\"disc\" class=\"article-body__parent-element\" data-v-3a81955c=\"\">\n<li class=\"MsoNormal\" style=\"color:black;vertical-align:baseline\" data-v-3a81955c=\"\"><b data-v-3a81955c=\"\">Anyone can make an altcoin<\/b><\/li>\n<\/ul>\n<p class=\"MsoNormal article-body__parent-element\" data-v-3a81955c=\"\">Do not get fooled by the term altcoin, any<br \/>\ncoin that is not Bitcoin is an altcoin, even meme coins made by anyone with<br \/>\nabsolutely zero value.<\/p>\n<h3 class=\"MsoNormal article-body__parent-element\" data-v-3a81955c=\"\">What<br \/>\nDoes the Future Hold for Altcoins<\/h3>\n<p class=\"MsoNormal article-body__parent-element\" data-v-3a81955c=\"\">The<br \/>\nhonest truth that most altcoin investors do not want to hear is: that most, almost<br \/>\nall altcoins, will not survive the next ten years. To see this as evidence, we<br \/>\nonly must look back a few years at the top 100 cryptocurrencies by market cap<br \/>\nand see which ones are still there. Many projects have simply vanished out of<br \/>\nexistence, which will happen for our current set of altcoins now, only the<br \/>\nstrongest will survive.<\/p>\n<p class=\"MsoNormal article-body__parent-element\" data-v-3a81955c=\"\">Most<br \/>\nanalysts predict a consolidation around the top ten, fifty, or whatever the<br \/>\noptimal amount of strong altcoins are needed for their utility and real-world<br \/>\nuse cases. <\/p>\n<h3 class=\"MsoNormal article-body__parent-element\" data-v-3a81955c=\"\">Conclusion<\/h3>\n<p class=\"MsoNormal article-body__parent-element\" data-v-3a81955c=\"\">Altcoins<br \/>\nwill always be around and only time will tell which ones survive. The most<br \/>\npractical advice one can give on altcoins is to simply look for projects which you<br \/>\nsee surviving past the adoption phase, based purely on speculation, and assess<br \/>\nthe future utility that is possible, and what real-world problems they are<br \/>\ntrying to solve.<\/p>\n<\/div>\n<p><br \/>\n<br \/><a href=\"https:\/\/www.financemagnates.com\/cryptocurrency\/education-centre\/what-are-altcoins-what-investors-need-to-know\/\">Source link <\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p>What Is an altcoin? In the crypto world, altcoin stands for alternative coins and is simply a term used for any cryptocurrency other than bitcoin. So, that makes Ethereum, the cryptocurrency with the second largest market cap an altcoin as much as the 3,000 ranked cryptocurrency. Altcoins are not required to be different from bitcoin [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":17345,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":"","jetpack_publicize_message":"","jetpack_publicize_feature_enabled":true,"jetpack_social_post_already_shared":true,"jetpack_social_options":{"image_generator_settings":{"template":"highway","enabled":false}}},"categories":[42],"tags":[200,102],"class_list":["post-17344","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-altcoins","tag-altcoins","tag-investors"],"jetpack_publicize_connections":[],"jetpack_sharing_enabled":true,"jetpack_featured_media_url":"http:\/\/egrowonline.com\/wp-content\/uploads\/2022\/05\/altcoins_id_b88a4280-802f-4c55-b52d-1e2f3986ada9_size900.jpg","_links":{"self":[{"href":"http:\/\/egrowonline.com\/index.php?rest_route=\/wp\/v2\/posts\/17344","targetHints":{"allow":["GET"]}}],"collection":[{"href":"http:\/\/egrowonline.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"http:\/\/egrowonline.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"http:\/\/egrowonline.com\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"http:\/\/egrowonline.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=17344"}],"version-history":[{"count":1,"href":"http:\/\/egrowonline.com\/index.php?rest_route=\/wp\/v2\/posts\/17344\/revisions"}],"predecessor-version":[{"id":17346,"href":"http:\/\/egrowonline.com\/index.php?rest_route=\/wp\/v2\/posts\/17344\/revisions\/17346"}],"wp:featuredmedia":[{"embeddable":true,"href":"http:\/\/egrowonline.com\/index.php?rest_route=\/wp\/v2\/media\/17345"}],"wp:attachment":[{"href":"http:\/\/egrowonline.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=17344"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"http:\/\/egrowonline.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=17344"},{"taxonomy":"post_tag","embeddable":true,"href":"http:\/\/egrowonline.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=17344"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}