Altcoins as an Alternative Crypto Investments – As the first crypto asset, Bitcoin still occupy the top ranked cryptocurrency asset and the largest market capitalization.
While Bitcoin is a pioneer in crypto assets it’s often called as the main cryptocurrency, Altcoins is the term for other crypto assets other than Bitcoin.
Let’s find out more about this Altcoins, the definition, types, and some examples.
Altcoin is a term to refers all cryptocurrencies except Bitcoin, altcoin stands from the word Alternative and Coin.
Different from Bitcoin which has it’s own value, Altcoins are the crypto assets with projects which also have their own values, roles, and functions.
For example, the mostly known altcoin until now is Ethereum (ETH). As an alternative crypto assets with the largest market cap besides Bitcoin. Ethereum started in 2015, have their own smart contract, and became the founder of Decentralize Finance (DeFi) which also gave birth to other thousands Altcoins in the world.
Read : DeFi and CeFi Differences
1. Smart Contract
Smart Contract is a function for altcoin to create their own application system. Every crypto assets with smart contract has a system of Decentralized Applications (DApps). Ethereum for examples, have it’s own system of applications, and cryptocurrency.
Stablecoin has a stable value of normal/fiat currencies (USD). There are two types of Stablecoins depends on what they are based on, by fiat or crypto. For examples, stablecoins backed by fiat are USDT, BUSD. And stablecoins backed by crypto are DAI, UST.
3. Decentralized Finance (DeFi)
Altcoins with this types are usually has function in Decentralized Finance (DeFi) Application as a governance token. Decentralized Finance has grown ever since Ethereum introduced their smart contract technology. For examples of this altcoin types are DYDX, UniSwap.
4. Layer 2
Layer 2 are created as an alternative solution for other blockchain networks. This types of altcoin assets are built based on their parent blockchain, It’s have a function to improve the transaction capabilities of it’s parents blockchain by providing faster transaction speed and lower fees.
Example of this Altcoin types are MATIC (Polygon), and ImmutableX (IMX).
How To Choose Altcoins for Investment ?
No such thing as “The best altcoins”, every each of them have their own pros and cons.
The only thing you need to pay attention before choosing Altcoins for investment are, what kind of technology ecosystem they are using, how big and active the community, look for the Tokenomics (Token Economy) that distributed by community oriented, and the token function usability.
On top of that, before investing in Altcoins better researching for it’s pros and cons first. Here some Example of Pros and Cons investing in Altcoins :
- Most of Altcoins have a bigger change to increases in price than Bitcoin.
- Not only for investment purpose, altcoin also have additional functions to use with their future projects.
- Some of altcoin projects offer a great potential profit, do a research for it’s fundamental value in crypto projects.
- With a lots of coins and smaller market, altcoin prices are tends to fluctuates more often. Altcoins can experience up to 90% drop in value.
- While a thousands of altcoins appear in the crypto asset, the projects with promising potential and good communities is very few.
- Higher risk than Bitcoin, many altcoins gains popularity quickly but also can died right after.