What are Altcoins?
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The term Altcoin comes from the concept of a Bitcoin alternative. Altcoins generally portray themselves as a better substitute to Bitcoin and have a better use case. Altcoins have been trying to be an alternative solution for Bitcoin. They are continuously improving the use case in its way while keeping performance above that of BTC. Performance enhancements include transactions speeding the blockchain network, distribution method, & hashing method.
In spite of the crypto market not being as mature, thousands of Altcoins came into being since the epic market boom. CoinMarketCap, which is the top crypto index, contains over 5000 different Altcoins as of this writing. Many of these Altcoins did not survive for long. Primarily due to a lack of validation in the market or in some cases, they turned out to be just a scam.
But, there are some examples of early Altcoins such as Litecoin, Peercoin, Stella, Dogecoin, etc. that survived with BTC. They have continued to build a reliable product roadmap and have had a strong community base.
Some examples of Altcoins and their value
Litecoin has more coin supply than BTC and has the same usage case as BTC, being a digital payment method using blockchain technology, but has also solidified itself as “silver” of crypto as opposed to Bitcoin which is known as the “gold”.
Monero has developed a platform for making transactions completely anonymous. BitShares innovation has led it to improve a decentralized mechanism to enhance the traditional stock exchange.
Ripple has brought in a protocol to make payments more efficient and is known as the micro-payment of crypto.
Bitcoin early adopters have always claimed that Altcoins are not necessary for the space of crypto and that they will not replace BTC due to Bitcoin’s strong community base and infrastructure of the underlying blockchain technology. But what most Bitcoin diehard fans do not realize is that the Altcoins are not always trying to replace BTC. In fact, most of these Altcoins simply extend the concept of decentralization, that BTC has already established, to use cases beyond just being a digital currency.
Now you are probably wondering, how should I select an Altcoin for investment? Well, to begin with, it is imperative to focus on the altcoin project and the roadmap to see if there is potential. An alt with high potential will have a diverse and robust community base supporting the project. Also, another thing to research is to see if the Altcoin’s founding team is anonymous or known since this will give the investor an idea of how trustworthy the foundation is.
When investing in Altcoins always do extensive research and make sure there is a strong use case behind it. Social media and forums will give you a guide to see how active the community is, but always be wary of the inexperienced enthusiasts that like to hype-up projects that have no intrinsic value.
Apart from fundamental analysis, you can also do technical analysis. We will be posting more guides on technical analysis in coming weeks.
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