Litecoin is the biggest Altcoin
Even if they do not accurately understand how it works, most people are at least somewhat familiar with Bitcoin. However, once they begin to get involved with cryptocurrency, they may be surprised to learn that there are actually hundreds of types of cryptocurrencies known as altcoins. Altcoins are anintriguingfacet of the cryptocurrency landscape, but they are not foreveryone. Altcoin newcomers often have many questions, and this guide will provide a brief overview of altcoins to help beginners decide whether or not to invest in them as part of their cryptocurrency portfolio.
The word altcoin is an abbreviation of Bitcoin alternative, and thus describes every single cryptocurrency except for Bitcoin. Altcoins are referred to as Bitcoin alternatives because, at least to some extent, most altcoins hope to either replace or improve upon at least one Bitcoin component.
There are hundreds of altcoins (CoinMarketCap listed 478 at the time this guide was written), and more appear each day. Mostaltcoins are little more than Bitcoin clones, changing only minor characteristics such as its transactions speed, distribution method, or hashing algorithm. Most of these coins do not survive for very long. One exception is Litecoin, which was one of the first altcoins.In addition to using a different hashing algorithm than Bitcoin, Litecoin has a much higher number of currency units. For this reason, Litecoin has branded itself as silver to Bitcoins gold.
The top 5 altcoins according to CoinMarketCap
However, some altcoins innovate by experimenting with useful features Bitcoin does not offer. For example, Darkcoin hopes to provide a platform for completely anonymous transactions, BitShares describes itself as a fair version of Wall Street, and Ripple serves as a protocol users can employ to make inter-currency payments with ease. Some altcoin ecosystems, such as CounterParty and Mastercoin, even utilize the Bitcoin blockchain to secure their platform.
Many Bitcoin enthusiasts argue that altcoins are completely unnecessary and will not succeed because they cannot rival the infrastructure Bitcoin boasts. However, altcoins serve an important role. Decentralization is one of Bitcoins most prominent goals, and altcoins further decentralize the cryptocurrency community. Moreover, altcoins allow developers to experiment with unique features. While it is true that Bitcoin can copy these features if the developers or community desires, fully-functioning altcoins are much better cryptocurrency laboratories than Bitcoins testnet. Finally, Altcoins give Bitcoin healthy competition. Altcoins give cryptocurrency users alternative options and forces Bitcoins developers to remain active and continue innovating. If users do not feel that Bitcoin satisfies their digital desires, they can adopt an altcoin. If enough users left Bitcoin for a particular altcoin, the Bitcoin developers would have to adopt the features the community desired or risk losing its place as the preeminent cryptocurrency.
Namecoin was the first altcoin. It seeks to decentralize the world of online identities.
Created in April 2011, Namecoin was the first altcoin. Although it also functions as a currency, Namecoins primary purpose is to decentralize domain-name registration, which makes internet censorship much more difficult. As its place among the top ten cryptocurrency market caps suggests, Namecoin has remained one of the most successful altcoins throughout its short lifespan.
Due to how recent cryptocurrency was invented and how rapidly the landscape changes, all cryptocurrency investments carry a great deal of risk. Even Bitcoinby far the most stable cryptocurrencyexhibits price volatility on a regular basis.
By comparison, however, altcoins are exponentially more volatile. Because they have such low market caps (the total value of all coins combined), altcoin markets are highly prone to price manipulation. Wealthy traderscolloquially called whalesoften inject large amounts of capital into low-priced coins to build hype and cause the price to skyrocket. Once the price has risen considerably, the whales sell their coins on exchanges at a massive profit, hurting many gullible investors in the process. This method is known as a pump and dump. Not only does this hurt greedy traders who did not take the time to do their homework, but it often proves to be the breath of an altcoins brief lifespan.
To avoid losing all your money in a pump and dump, focus on long-term investments in coins you believe have immense potential and exhibit overall health. Generally, healthy altcoins possess strong communities, exhibit high liquidity, and have developers who proactively improve the coins source code (though not necessary, many users also prefer developers who reveal their true identities).CoinGeckos comprehensive coin metric analysis algorithm statistically analyzes these three important factors and ranks coins according to overall strength.
CoinGeckos coin ranking chart ranks coins according to overall health.
If you do choose to invest in altcoins, it is important to remember somebasic tenets of investing. Avoid the hype that coin communities propagate. Investors have an agenda, so you should not take their word at face value. Only invest in coins you have researched. It is unwiseto invest in something you do not understand. Making an ill-informed investment is the first step to losing your hard-earned money. Take the time to research the coins you are considering for long-term investments, and research day-trading before you attempt to become a high-volume, short-term trader. Most importantly, never invest more than you can afford to lose. Far too many people have lost their life savings by centralizing them in volatile investments.
As with Bitcoin, there are a variety of ways to obtain altcoins. The most basic way to obtain altcoins is to accept them as payment for goods or services. If you are interested in doing this, place an ad showcasing your skill-set ona cryptocurrency job board.
You can also trade for altcoins on cryptocurrency exchanges. Most exchange use Bitcoin as an intermediary (although a few include fiat pairs), so if you do not already own bitcoins you will need to buy some before you can trade for altcoins. Some of the most-trafficked exchanges include BTER,Bittrex, MintPal,Cryptsy, and BTC38 (Chinese-only).
Many altcoin communities also sponsor giveaways to increase exposure of their coin and enticenew users to join their communities. This is a great way to acquire coins if you are low on fundsor do not have marketable skills.
Featured images from Shutterstock.
What is an Altcoin? - CCN
- Top Analyst Says One Altcoin Massively Undervalued, Goes ... - September 19th, 2020
- A "Tsunami" of Wealth - Investorplace.com - September 19th, 2020
- Heres why 2017 altcoin Aelf (ELF) has surged 100% in the past day - CryptoSlate - September 17th, 2020
- Uniswap Protocol Governance Token (UNI) is Live! - Product Release & Updates - Altcoin Buzz - September 17th, 2020
- Analyst Nicholas Merten Says One Altcoin Poised to Outperform Bitcoin As Crypto Markets Search for Direction - The Daily Hodl - September 17th, 2020
- Binance Coin surges by ~22%; could it be the Burger talking? - AMBCrypto English - September 17th, 2020
- Linear Finance Token (LINA) Lists on Uniswap! - Product Release & Updates - Altcoin Buzz - September 17th, 2020
- User who turned $200 in Ethereum into $250k due to altcoin bug comes clean - CryptoSlate - September 10th, 2020
- Bitcoin Crashes Below $10,000, Is The 'Altcoin & DeFi Apocalypse' Over Yet? - Bitcoin Exchange Guide - September 10th, 2020
- YFI Climbs 50% From $18K Low While The Rest Of Crypto Stagnates, But Why? - NewsBTC - September 10th, 2020
- DeFi Exit Scam Alert - $2.5M Moved - Finance and Funding - Altcoin Buzz - September 10th, 2020
- BTC and Altcoin Pay is Growing Fast, Says Crypto Payment Firm BitPay - Cryptonews - August 28th, 2020
- This Will Hold Altcoin Until It Reaches $ 100 Thousand - Somag News - August 28th, 2020
- Analyst Explains Anatomy Of An Altcoin Shakeout With BATs Vertical Rally - newsBTC - August 28th, 2020
- The altcoins are really starting to pop - Asia Times - August 26th, 2020
- But why is altcoin trading concentrated mostly in East Asia? - AMBCrypto English - August 26th, 2020
- Altcoins Look Excessively Swollen Compared to Ethereum - Somag News - August 26th, 2020
- 2017s forgotten altcoins ZRX, OMG, and BAT are booming on a DeFi promise - CryptoSlate - August 26th, 2020
- Analyst Explains Anatomy Of An Altcoin Shakeout With BATs Vertical Rally - The Coin Radar - August 26th, 2020
- Cosmos (ATOM) price surges despite most altcoins in the red - Invezz - August 26th, 2020
- Bitcoin 'maximalists' accused of 'shilling' an SEC-cleared token - Cointelegraph - August 26th, 2020
- 3 Reasons Why Ethereum Price Rallied 75% to Hit a 2-Year High at $400 - Cointelegraph - August 2nd, 2020
- Bitcoin SV Price Analysis: BSV/USD takes the altcoin rally a notch higher, approaching $250 - FXStreet - August 2nd, 2020
- DataDash: Two Crypto Newcomers Will Surge Alongside Bitcoin, Ethereum and XRP in New Bull Cycle - The Daily Hodl - August 2nd, 2020
- As Altcoin Season Presses on, Whats Next for Crypto Futures? - Finance Magnates - July 31st, 2020
- Altcoin Price Analysis Bitcoin Cash, Tezos and IOTA: BCH/USD and IOT/USD look to break past key levels - FXStreet - July 31st, 2020
- Bitcoin Price Touched $11,400, Altcoin Season Over? - CryptoPotato - July 31st, 2020
- Bitcoin Struggles At $11,000: Altcoins Starting To Regain Momentum? - CryptoPotato - July 31st, 2020
- Litecoin spikes 10% to lead top altcoin gains today | CoinJournal.net - CoinJournal - July 31st, 2020
- As Bitcoin tops $11,000 level, investor interest in India on the rise - Livemint - July 31st, 2020
- Long Gold, and Long Cryptos - InvestorPlace - July 31st, 2020
- Cardano and Litecoin Lead the Altcoin Market - Somag News - July 27th, 2020
- Top Analyst Bullish on Ethereum and Five Altcoins, Says Bitcoin Wont Lead Surge in Crypto Market Cap - The Daily Hodl - July 27th, 2020
- Bitcoin Analyst Says Crypto Traders Who Ignore Two Emerging Trends Will Miss Out, Warns Altcoins Set for Pullback - The Daily Hodl - July 27th, 2020
- Ethereum 2.0 validator testnet goes live: ETH Research Team - AMBCrypto - July 27th, 2020
- Altcoin Market Update: Akropolis and Ocean Protocol are unstoppable lately thanks to DeFi bull... - Forex Crunch - July 27th, 2020
- Prominent Bitcoin Whale Predicts Mass Altcoin Extinction Ahead of Next BTC Rally - The Daily Hodl - July 5th, 2020
- PrimeXBT Comparison: Will DeFi Defy The ICO-Fueled Ethereum All-Time High? - Ethereum World News - July 4th, 2020
- These Altcoins Set a New ATH While Bitcoin And Ethereum Tank | NewsBTC - newsBTC - July 4th, 2020
- Renowned analyst predicts Bitcoin to outperform altcoins in 2021 - FXStreet - July 4th, 2020
- Ouroboros, as explained by IOHK researchers - Altcoin Buzz - July 4th, 2020
- XRP Price Can Outperform Bitcoin in the Short Term Heres Why - Cointelegraph - July 4th, 2020
- Ethereum, Chainlink and Tezos price analysis: June 28 - AMBCrypto - June 29th, 2020
- This top-30 altcoin is integrating with Chainlink (LINK) for bolstering smart contract ecosystem - CryptoSlate - June 29th, 2020
- Brutal Drop In Altcoins Anticipated as Bitcoin Dominance Projected to Surge | NewsBTC - newsBTC - June 29th, 2020
- Chainlink (LINK) Near New All-Time High Heres 3 Reasons for the Rally - Cointelegraph - June 29th, 2020
- Pantera Capital: Bitcoin Set to Begin Meteoric Bull Run But Ethereum and Certain Altcoins Will Outperform BTC - The Daily Hodl - June 29th, 2020
- Most traded crypto in June 2020: are we in the altcoin season? - Capital.com - June 20th, 2020
- Top 3 Price Prediction Bitcoin, Ethereum, Ripple: Altcoin season just around the corner - FXStreet - June 20th, 2020
- Top Crypto Strategist Predicts Bitcoin (BTC) Will Surpass $20,000 in Just Two Months With Ethereum Leading Next Altcoin Rally - The Daily Hodl - June 17th, 2020
- Liquidations May Loom as Altcoin Bulls Hold Despite Shorts Spiking - Cointelegraph - June 13th, 2020
- Tether.io becomes second largest altcoin behind Ethereum tokens - HedgeWeek - June 13th, 2020
- ETH Miners Will Have Little Choice Once Ethereum 2.0 Launches With PoS - Cointelegraph - June 13th, 2020
- Sparks fly as developer suggests an altcoin will overtake Bitcoin in the next five years - CryptoSlate - June 9th, 2020
- Bitcoin Price To Hit $150,000; Ethereum At $9,000 In Next Bull Run, Blockfyre Founder Predicts - International Business Times - June 9th, 2020
- Despite Its Recent Controversy, This is the Latest Altcoin Ready to Moon - Bitcoin Exchange Guide - June 9th, 2020
- Why An Even Deeper Correction Is Expected For The Crypto Markets Hottest Altcoin | NewsBTC - newsBTC - June 8th, 2020
- Analyst Predicts Next Bull Run Will Send Bitcoin to $150K and Ether to $9K - Cointelegraph - June 8th, 2020
- Venture Capitalist Predicts Bitcoin Boom to $150,000, Says Ethereum and Four Altcoins Will Outperform BTC - The Daily Hodl - June 8th, 2020
- Stocks aren't the only asset climbing - InvestorPlace - June 8th, 2020
- Cryptocurrency in Undeveloped Nations - Altcoin Buzz - June 8th, 2020
- Ethereum, Binance Coin, Algorand Price Analysis: 03 June - AMBCrypto English - June 8th, 2020
- Ethereum looks bullish as its fees surpassed BTC's on June 7 - CoinJournal - June 8th, 2020
- Crypto Index Analysis: Boosted by altcoin breakout - Capital.com - June 2nd, 2020
- Ethereums price rush may run out of steam - AMBCrypto English - June 2nd, 2020
- ETH showing strong signals as EOS and XRP likely to regress - CoinJournal - June 2nd, 2020
- Cardano and Ethereum Price Surge Alongside Bitcoin Will XLM Follow? - Cointelegraph - June 1st, 2020
- Ethereum Chart Makes It Clear: Altcoin Season Is Already Over | NewsBTC - newsBTC - June 1st, 2020
- Max Keiser: There Isn't Anything Crypto Altcoins Do That Bitcoin Won't Do - Bitcoinist - June 1st, 2020
- Altcoins Outpace Bitcoin in Broad Crypto Rally: Cardano and Ethereum Biggest Gainers - The Daily Hodl - June 1st, 2020
- Are Altcoins Silver To Bitcoin As Gold? Unusual Correlation Discovered | NewsBTC - newsBTC - May 20th, 2020
- Polkadot: The Interoperable Blockchain Network - Altcoin Projects - Altcoin Buzz - May 20th, 2020
- Beware: this altcoins price action could be part of a pump and dump scheme - CryptoSlate - May 18th, 2020
- Is Tezos rapid progress a threat to both Bitcoin and Ethereum? - AMBCrypto English - May 18th, 2020
- XTZ Price Analysis: Bears Take a Breather on XTZ/USD As Price Swings Past $2.6, Tezos Becomes 2020 Altcoin With STO Pipeline Projects - Latest Crypto... - May 18th, 2020
- Bitcoin Cash struggles with negative pressure, while VET & LINK trend higher - AMBCrypto - May 15th, 2020
- Stellar Cryptocurrency Prints a TD9: Heres Why It Means More Upside is Likely - newsBTC - May 15th, 2020
- As Halving Nears, Ethereum (ETH) Stands More Chances Amid Altcoins - KryptoMoney - May 12th, 2020
- Heres Why Altcoins Bouncing as Bitcoin Retraced From $10K Is Bullish - Cointelegraph - May 11th, 2020
- Crypto scams are on the rise: 5 ways to avoid them - Livemint - May 11th, 2020