Altcoins are a popular term in cryptocurrency, and it means cryptocurrencies that were created as alternatives to Bitcoin, hence the name "alt" (short for alternative) coins.
Put side by side with Bitcoin, they share the same fundamental concept of utilizing blockchain technology but often offer unique features and improvements different from BTC, such as faster transaction speeds, lower fees, or greater scalability.
In other words, altcoins offer a diverse landscape of cryptocurrencies, each with its unique features and purposes, aiming to complement or compete with Bitcoin while contributing to the evolution of blockchain technology.
- Altcoins are often considered more experimental and riskier than Bitcoin.
- Some of the most popular altcoins include Ethereum, Ripple, and Litecoin.
- The market for altcoins is highly volatile, just like Bitcoin, with prices fluctuating wildly.
- Many altcoins are built on blockchain technology, just like Bitcoin.
Bitcoin may be a household name, but it's only the tip of the digital iceberg. Altcoins, or alternative coins, have emerged as a diverse and intriguing class of cryptocurrencies with different applications, from utility tokens to silly and famous meme coins as well as stablecoins, etc.
While Bitcoin paved the way for digital currency, altcoins have taken the concept and introduced various innovations and modifications. These coins offer seamless services such as improving transaction speed and privacy to enabling smart contracts and decentralized applications (DApps).
Types of AltCoins
Here are some common types of altcoins with examples:
- Forked Coins: These are cryptocurrencies created by copying the codebase of an existing blockchain, often Bitcoin. They may make slight modifications or improvements. Examples include Bitcoin Cash (BCH) and Bitcoin SV (BSV), both forks of Bitcoin.
- Smart Contract Platforms: Altcoins like Ethereum (ETH) enable developers to build decentralized applications (DApps) and smart contracts on their blockchain. These coins are valuable for their versatility and programmability.
- Privacy Coins: These focus on enhancing the privacy and anonymity of transactions. Monero (XMR) and Zcash (ZEC) are notable examples that use advanced cryptographic techniques to achieve privacy.
- Utility Tokens: Some altcoins, like Binance Coin (BNB) or Chainlink (LINK), have specific utilities within their respective ecosystems. BNB, for example, is used to pay for transaction fees on the Binance exchange.
- Stablecoins: Designed to minimize price volatility, stablecoins are often pegged to a stable asset like the US dollar. Tether (USDT) and USD Coin (USDC) are examples used for trading and as a store of value.
- Security Tokens: These represent ownership of an underlying asset, like real estate or company shares, and are often subject to securities regulations. Polymath (POLY) is an example used to create security tokens.
- Gaming and NFT Tokens: Altcoins like Axie Infinity (AXS) and Decentraland (MANA) are used within blockchain-based games and for trading non-fungible tokens (NFTs), which represent unique digital assets.
- DEX Tokens: Some altcoins are native to decentralized exchanges (DEXs) like Uniswap (UNI) and SushiSwap (SUSHI) and play a role in governance or liquidity provision.
- Cross-Chain Platforms: Projects like Polkadot (DOT) and Cosmos (ATOM) aim to connect different blockchains to enable interoperability, allowing assets to move seamlessly between them.
- Community Coins: These are often small-cap altcoins with dedicated communities and niche use cases. Examples include Dogecoin (DOGE), originally created as a meme but gained popularity as a "fun" cryptocurrency.
Where to Buy Altcoins
Just like the Bureau de Change prominent in Africa or tax collectors in the Roman Empire, altcoins are cryptocurrencies, and like every cryptocurrency, you can purchase and trade them on platforms known as cryptocurrency exchanges.
These exchanges serve as a marketplace where you can buy, sell, and trade different altcoins. However, there are two types of exchanges which exist. They are centralised exchanges and decentralised exchanges.
Step-by-Step Guide to Purchasing Altcoins
- Choose a good exchange and sign up.
- Complete the verification process.
- Deposit fiat currency (e.g., NGN, USD) or other cryptocurrencies.
- Browse the available altcoins and select the one you want to purchase.
- Place an order specifying the amount you want to buy.
- Confirm the transaction and wait for your altcoins to appear in your wallet.
Hardware Wallet for Altcoins
A hardware wallet is like a digital safe for your cryptocurrencies. It's a physical device designed to securely store your digital assets, such as Bitcoin, Ethereum, or altcoins, offline.
This offline storage reduces the risk of theft from online hacks or malware. Choosing the right hardware wallet for altcoins involves both technical considerations and a human touch.
A hardware wallet is considered a go-to if it has these checks in place:
- Security: Look for a wallet with strong security features. Ensure it has PIN protection, secure element chips, and passphrase support for added layers of protection.
- Supported Altcoins: Check if the hardware wallet keeps the specific altcoins you intend to store. Not all wallets support all altcoins, so this is crucial.
- User-Friendliness: Consider your comfort level with technology. Some wallets are more user-friendly than others. If you're new to cryptocurrencies, opt for one with an intuitive interface.
- Community and Reviews: Research online forums and reviews to gauge the experiences of other users. A strong and active community can provide valuable support when needed.
- Backup and Recovery: Understand the wallet's backup and recovery process. It should offer a clear and simple way to recover your assets in case your device is lost or damaged.
- Company Reputation: Investigate the company behind the wallet. Trustworthy companies with a track record of security are safer choices.
- Price: Hardware wallets come in various price ranges. While it's essential to stay within your budget, prioritize security and features over price.
- Updates and Support: Ensure the wallet receives regular updates to protect against emerging threats and is backed by responsive customer support.
- Physical Durability: Consider the durability of the device itself. It should withstand wear and tear over time.
- Personal Preferences: Finally, trust your instincts. Choose a wallet that aligns with your personal preferences and values. Sometimes, the right choice is the one that feels the most comfortable to you.
Using a hardware wallet is one of the safest ways to store your cryptocurrencies, but it's also crucial to keep it safe physically and ensure you have backups of your recovery phrases. Balancing security with ease of use is key to making the right choice for your altcoin storage needs.
While exchanges are convenient for trading, it's essential to store your altcoins securely. Hardware wallets, like Ledger Nano S or Trezor, provide an extra layer of protection because, as the saying goes, "not your keys, not your coins."
Which Altcoin to Invest In
Before going into the altcoins you should invest in, let’s discuss the necessary factors to consider to help your research:
- Use Case: Understand the specific purpose of the altcoin. Does it solve a real-world problem or offer unique features?
- Team and Development: Research the team behind the altcoin. Are they experienced and transparent? Is the project actively developed?
- Market Demand: Analyze market trends and demand for the altcoin. Is there a genuine interest from users and investors?
- Technology: Assess the technology and innovation behind the altcoin. Does it bring something new to the table?
- Community and Adoption: A strong community and widespread adoption can indicate a promising future for an altcoin.
The next step after research is to choose your Altcoins. This is not financial advice, but we have 5 popular altcoins that have gained recognition for their potential:
- Ethereum (ETH): Known for its smart contract capabilities, Ethereum powers many decentralized applications.
- Binance Coin (BNB): Developed by Binance, it's used within the Binance ecosystem and has various utility cases.
- Cardano (ADA): Known for its focus on sustainability and smart contract functionality.
- Polkadot (DOT): Aims to enable multiple blockchains to interoperate and share information.
- Chainlink (LINK): Provides secure, tamper-proof data for smart contracts.
Since exchanges are your first contacts in buying, selling or hoarding your altcoins, it is important you pick one which is both safe and easy to use, such as BitBarter. Get started today.