What are altcoins?
Altcoins as the name suggests are alternative coins. This is an alternative to the cryptocurrency giant Bitcoin. As of 2021, the cryptocurrency market holds a market capitalization of $2 trillion. While Bitcoin held 70% investment in 2020, this has significantly come down to 35% in 2021. Altcoins today holds a market share of more than 60%. Other market players like Ethereum, Polkadot, etc. did challenge the global position of Bitcoin. But, the impact was felt with altcoins coming into existence.
Why altcoins?
Altcoins do share similar characteristics as that bitcoin. But, the key difference lies in developing blocks and validating transactions. Compared to bitcoins, these altcoins deploy different consensus models. In other words, altcoins provide simpler solutions to investors at lower costs. Going by market analysis and predictions, the altcoin will become independent from the bitcoin ecosystem. Price hikes and dips on bitcoin will stop impacting the market performance of altcoins. Altcoins are currently available as stable coins, tokens, and cryptocurrencies. As of November 2021, Solana and Binance Coin have the highest market capitalization. These two are the leading players in the industry today.
Let us carefully study and understand why altcoins will gain more popularity than bitcoins.
Expansion and increase in users: Users of cryptos have increased. As per the recent market survey, the total number of crypto users has increased by more than 20% in 2021. The crypto market saw an all-time high in investors during this year. Different industrial sectors are showing their interest in crypto payments. Smart contracts, decentralized finance model, rewards for games, and non-fungible tokens are added factors attracting investors.
Growing investment in altcoins by institutions: Institutional investors acknowledge the need for a digital form of investment. This is a guiding factor towards the increased use of altcoins. Investment institutions do possess a greater risk appetite of investors. This allows for investment to grow multi-fold enabling market expansion.
Changes in fundamentals of crypto investments: Every cryptocurrency has its predefined protocol. This protocol is followed while buying and selling. In the case of bitcoin, investors can buy and sell through digitally signed coins. On similar lines, altcoins also have a defined set of protocols. This protocol helps in establishing the blockchain structure. Considering the number of users and activity the value for the same increases. The altcoin has a strong infrastructure allowing for greater adoption amongst investors. You can visit bitcoinaussiesystems.com for more details on cryptocurrencies.
An altcoin is cheaper: The price of bitcoin hit $43000 in January. Long-term investors found this price hike potential. It needs acceptance that bitcoin is becoming costly day by day. Any new investor finds it difficult to make this bitcoin investment. On the other hand, altcoins are comparatively cheaper. It also allows for better investment opportunities. The craze for cryptocurrencies and their investment model continues. New and young investors are also on the lookout for alternate coins for investment. A significant example is Litecoin. The price has fluctuated between $4 to $347 in the last five years. This has contributed significant gain to investors.
Constant innovation: Altcoins are here as an alternate investment option for bitcoins. These coins provide better functionality and security as compared to bitcoins. Ethereum for example provides its investors with better functionalities on the blockchain infrastructure. There is a possibility for automation and communication between networks. Solana, on the other hand, was created to provide a scalable and secured platform in comparison to Ethereum and Bitcoin. The creation of new altcoins to address the shortcoming of existing is an added advantage. This will attract investors to altcoins and considerably reduce the demand for bitcoins.
Are altcoins a good investment option?
The market is promising. There is no comparison of altcoins to bitcoins. A notable factor here is the number of altcoins that are listed in any exchange. There are more than 14000 altcoins and investors are finding it easy to invest in these altcoins. There is speculation around altcoins and impact prices. Several cryptos have entered the market with promising returns. But they have also vanished overnight after taking investors’ money. Since there is no regulation guiding crypto investments, investors cannot claim their loss.
The promising factor about altcoin is its variety. And the primary factor is that they function differently from bitcoins.
