History
The history of altcoins can be traced back to 2011, when the first altcoin, Namecoin, was launched. Namecoin was developed to decentralize the domain name system and to provide a more secure and private method of registering domain names.
Litecoin, the second most popular cryptocurrency after Bitcoin, debuted in 2011, as did a slew of other cryptocurrencies such as Ripple, Ethereum, and Bitcoin Cash.
Definition
Altcoins are cryptocurrencies that are not Bitcoin. They are frequently created with the intention of solving specific problems or providing a unique feature that Bitcoin does not provide. Litecoin, for example, was designed to provide faster transaction times and lower fees than Bitcoin.
Other cryptocurrencies, such as Ripple, are intended to facilitate cross-border payments or to serve as a platform for decentralized applications.
Types
| Type of Altcoin | Examples | Main Use Cases |
|---|---|---|
| Payment-oriented | Litecoin (LTC), Dash (DASH), Bitcoin Cash (BCH) | Used for making payments and transactions |
| Privacy-oriented | Monero (XMR), Zcash (ZEC), Verge (XVG) | Offers enhanced privacy and anonymity |
| Platform-oriented | Ethereum (ETH), Cardano (ADA), Polkadot (DOT) | Used for building decentralized applications |
| Stablecoin | Tether (USDT), USD Coin (USDC), Dai (DAI) | Designed to maintain a stable value relative to a specific asset or basket of assets |
| Layer 2 scaling solution | Polygon (MATIC)1 | Used for improving scalability and reducing transaction costs on the Ethereum network |
| Insurance coverage | Lossless (LSS)2 | Provides insurance coverage for cryptocurrency investments |
| Interoperability | Quant (QNT)3 | Connects different blockchain networks and enables secure interoperability between them |
Popular coins
| Altcoin | Market Capitalization4 | Brief Utility |
|---|---|---|
| Ethereum (ETH) | $500+ billion | Smart contracts, decentralized applications (dApps), and non-fungible tokens (NFTs) |
| Binance Coin (BNB) | $80+ billion | Cryptocurrency exchange, transaction fee payments, and token sales |
| Cardano (ADA) | $50+ billion | Sustainable and secure blockchain platform for dApps and smart contracts |
| Polygon (MATIC) | $15+ billion | Layer 2 scaling solution for Ethereum, interoperability, and infrastructure development |
| Quant (QNT) | $4+ billion | Enterprise blockchain solutions, decentralized finance (DeFi), and the Internet of Things (IoT) |
| Lossless (LSS) | $11+ million | Decentralized insurance platform |
Pros and Cons
Pros
• Higher potential returns than Bitcoin
• Larger coin selection Potential to invest in promising projects early on Wide range of use cases other than store of value and medium of exchange
• Transaction times are faster and fees are lower than with Bitcoin.
Cons
•Higher risk and volatility than Bitcoin Potential for scams or fraudulent projects
•Regulation is lacking.
•The value is heavily influenced by the price of Bitcoin.
Bitcoin price depandancy
Many altcoins’ prices are frequently dependent on the price of Bitcoin, which means that when Bitcoin’s price rises or falls, it can have a ripple effect on the value of altcoins.
This is due to the fact that Bitcoin is the largest and most well-known cryptocurrency, and it frequently serves as a barometer for the overall health of the cryptocurrency market.
When the price of Bitcoin rises, investors may be more inclined to invest in altcoins, increasing their value. When the price of Bitcoin falls, investors may be less willing to invest in altcoins, causing their value to fall as well.
However, it is important to note that not all altcoins are equally affected by changes in Bitcoin’s price. Some altcoins may have distinguishing features, use cases, or communities that set them apart from Bitcoin and make them less reliant on its price fluctuations.
Furthermore, as the cryptocurrency market matures and more institutional investors enter the space, the relationship between Bitcoin and altcoins may become less significant as investors become more knowledgeable about the relative merits and risks of various cryptocurrencies.
Bitcoins vs Altcoins
| Aspect5 | Bitcoin | Altcoins |
|---|---|---|
| Market dominance | Dominant with 60%+ market | Lower market share, high volatility |
| Volatility | Moderate to high | Very high volatility |
| Liquidity | High | Can vary depending on the altcoin |
| Adoption | Widespread | Varied, depending on the altcoin |
| Use cases | Store of value, currency | Varied, depending on the altcoin |
| Risk/reward profile | Less risky, potentially, lower reward | Higher risk, potentially higher reward |
Price Affects
•Overall market perception of cryptocurrency price movement
•Adoption and real-world use cases of a specific altcoin’s supply and demand dynamics
•Regulatory actions and policy changes affecting cryptocurrency
•Other altcoins and traditional financial markets pose competition.
•Project’s development progress, updates, and partnerships
•Security concerns and cryptocurrency exchange or wallet hacks
•Inflation, interest rates, and global economic events are examples of broad economic factors.
•Received media attention and social media activity.
Altcoins future
The future of altcoins is difficult to predict and is influenced by a number of factors. It is true that the performance of Bitcoin can have a significant impact on the value of many altcoins, and if Bitcoin performs poorly for an extended period of time, the overall cryptocurrency market, including altcoins, may suffer.
However, it’s important to remember that the cryptocurrency market is constantly changing, and there are numerous factors that could influence the future of altcoins.
The emergence of new use cases for cryptocurrencies, for example, as well as the entry of institutional investors into the market, could all have a significant impact on the value and adoption of altcoins.
Our analyses legacy
•Polygon: $0.76 -> $1,49
•Quant: $111 -> $140,97
•Lossless: $0.12 -> $0.2795
FAQ
How to trade altcoins
1. Choose a cryptocurrency exchange: There are numerous exchanges to choose from, so do your homework and compare them to find one that meets your requirements in terms of fees, security, user interface, and available altcoins. Binance, Coinbase, Kraken, and Gemini are some popular options.
2. Create your account: Create an account and complete the verification process after you’ve decided on an exchange, which may require you to provide personal identification documents and other information.
3. Fund your account: In order to trade altcoins, you must first fund your exchange account. Most exchanges accept bank transfers, credit/debit cards, and other payment methods, so select the method that is most convenient for you.
4. Select your altcoins: Explore the exchange’s offerings and conduct research on the altcoins you want to trade to understand their potential risks and rewards. Consider variables such as market capitalization, trading volume, community involvement, and development activity.
5. Chose trading pair: Once you’ve decided on your altcoin(s), choose a trading pair (e.g., BTC/ETH, ETH/ALT) and place a buy order. You have the option of placing a market order, which executes at the current market price, or a limit order, which executes at a specific price you specify.
6. Determine sell price: After your order has been filled, monitor your trade to determine when to sell. Setting stop-loss orders to limit potential losses and take-profit orders to lock in profits is critical.
7. Withdraw your funds: When you’re ready, click the withdrawal button and follow the prompts to transfer your altcoins to a personal wallet or another exchange.
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