The market of Cryptocurrency is dominated by Bitcoin. Despite a high competency rate digital assets like alternative coins are available in the market. With the growing availability of Altcoins and Bitcoins, it is important for the investors to get a clear concept of how they differ from each other and their effect on the portfolio.
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What are altcoins?
Altcoins are considered to be an alternative Cryptocurrency to Bitcoin. Since Bitcoin was the first ever Cryptocurrency launched, Altcoins use it as their benchmark. Bitcoin is seen to be dominating the Cryptocurrency market, accounting maximum market capitalisation.
Both Altcoins and Bitcoins use the blockchain technology. These digital assets are different in their features, purpose and operations from Bitcoins. Some of the most popular Altcoins are Ethereum, Ripple, Litecoin, Cardano, Solana and Dogecoin.
On the basis of missing features from Bitcoin’s platform, the developers of Altcoins thought of creating different and better versions of Altcoins. The technology of Ethereum enables the users to send Cryptocurrency. Apart from this it can also be used as a tool for developing applications to build new tokens.
The list of Altcoins is endless. These Altcoins do not compete with Bitcoin, instead it provides alternative use cases to conventional financial systems and huge technology companies.
Why to choose altcoins?
The investing fundamentals of Bitcoins are far more vast in comparison to Altcoins. A strong practical case of Altcoins can help in competing with the vast market capitalisation of Bitcoin. Some Altcoins that are created for experimentation also hold strong fundamentals to stay upto the mark like the standard of Bitcoin. Despite secured and strong fundamentals, the popularity of Bitcoin is growing more as compared to Altcoins.
Investing in altcoins
The rise and fall in the price of Altcoins is seen to be much more volatile than that of Bitcoins. When the price of Bitcoin rises, the price of Altcoins also goes up and when the price of Bitcoin falls, the price of the latter also falls. In spite of so much volatility, many investors are taking keen interest in Altcoins.
Cryptocurrency investors who are planning to expand on Altcoins should take in consideration the risk factors associated with the Alterna coins. The versatility of Altcoins help the Crypto investors to tailor their risk. The smaller Altcoins have the potentiality to give out a return at an exponential rate on the initial investment itself.
Altcoins have high risk associated with them. To get the best alternative of high quality and strong fundamentals, prospective investors should check out Altcoins which guarantee to give diversified utility for the future along with considerable size of market capitalisation.
The bottom line
Few Altcoins like Dogecoin are community driven and provide exponentially high returns. But these returns at an exponential rate are very short lived as compared to Bitcoin. However with strong fundamentals and better features which miss out from Bitcoin, Altcoins have made their room in the Cryptocurrency market. Trading Altcoins should be done very wisely and carefully as they are highly volatile and risky.