Investing in cryptocurrencies is exciting, not in the least because of the amazing money-making opportunities. As you probably already know, Bitcoin (BTC) and Ethereum (ETH) have created millionaires. This doesn’t mean that you’re going to be a millionaire. But it does mean that the possibility to make big returns does exist. The question is, of course, which crypto should you invest in for the biggest returns? The problem is that buying even a single Bitcoin now costs a fortune, limiting investment opportunities. But what if you’d bought into Bitcoin when it was still cheap?
Early investment is a great idea, which brings us to altcoins. Altcoins present a real but risky investment opportunity, giving you the chance to buy into a cryptocurrency early. There is, of course, absolutely no guarantee that any altcoins will be worth the investment. On the other hand, there is also a chance that your investment returns a fortune.
Check out this cryptocurrency guide on what altcoins are, how they work, and if they’re worth your time. This guide is not insisting that you invest in altcoins or buy altcoins. It simply exists to give an unbiased look at the available investment opportunities.
Before we get to whether you should invest in altcoins, let’s first take a look at what they are. You may be confused as to what altcoins are given how chaotic the crypto landscape is. But, to put it simply, altcoins are every other crypto besides Bitcoin. Since Bitcoin was so early in the crypto sphere it became the most commonly known coin, thereby also establishing itself as the default.
Hence when other cryptocurrencies came along after Bitcoin they were, understandably, regarded as alternatives to what already existed. So, the term altcoin was born, otherwise known as alternatives to Bitcoin. Ethereum was first after Bitcoin, technically making it the first altcoin. Many other coins quickly followed and now, the term altcoin refers to hundreds if not thousands of cryptocurrencies.
For many traders, the term altcoin is almost derogatory. This is because, as the crypto-sphere has expanded, there has also been an enormous influx of poorly thought-out, often worthless coins. These numerous coins are also technically altcoins, creating an association between garbage cryptos and everything besides Bitcoin. But this association isn’t true at all. Many altcoins are not only worth taking a look at but have also created many millionaires in their short lifetime.
To put it bluntly, if you invest in altcoins you could make a fortune. As with all investment opportunities, getting in early is the best possible option. Imagine if, for example, you had bought a thousand Bitcoins when the crypto first launched. You’d be a multi-millionaire today. The same is true for altcoins.
When it comes to altcoins there is no shortage of versatility and availability. New coins are being launched regularly, with some being based on sound technological and economical principles. You can head off now, investigate, and find more than a few that deserve a closer look. If you decide to buy altcoins or not is up to you, but there is always plenty to investigate.
If you invest in Bitcoin there is no question you’re going to have to cough up a fortune. Even then, there is no guarantee you’re going to see any returns. On the other hand, you can invest in altcoins for next to nothing. There is also no guarantee that any of these investments will see returns, but at least the bar to entry is extremely low. If an investment does strike it big, the returns could be the equivalent of winning the lottery.
There is nothing more to understand other than that if you invest in altcoins you’re taking a big risk. Depending, of course, on how you buy altcoins. If you invest in Ethereum the risks are going to be lower, but the investment costs are higher. If you decide to invest in lesser-known altcoins you can expect to face enormous risks.
Understanding what altcoins are and why they exist is complicated. To put it another way, many altcoins exist for numerous different reasons. If using Ethereum as an example, ETH exists because an innovative group saw ways in which Bitcoin could be improved. Ethereum was launched because Vitalik Buterin thought he could create a better cryptocurrency, thereby creating the Ethereum blockchain. So in that example, the altcoin exists because someone wanted a better blockchain.
Either way, it is best to say that most altcoins exist because a group wanted to solve a problem in the crypto-sphere. In that regard, altcoins can be classified as native coins, stablecoins, tokens and forks. Each category has become a genre of its own, attracting even more innovators to create even more cryptos. Let’s take a look at each genre and learn more about why it exists.
First and foremost, each blockchain has a native cryptocurrency. It is important to understand that as each blockchain was created, a cryptocurrency was also designed specifically to run on that blockchain. For example, the Bitcoin blockchain is specifically designed to work with BTC. However, other cryptos also use the same blockchain. But BTC is the only native coin to that blockchain, according to what the creators intended. The Ethereum blockchain is separate from Bitcoin and Ether is the native cryptocurrency of the Ethereum blockchain.
Tokens are a type of altcoin that causes some confusion. Some blockchains generate tokens that are designed to be used within that blockchain. Since blockchains are a mini-economy of their own, it is often necessary to have an internal currency that fuels the workings of the system. In this case, tokens are generated and used to ensure that a blockchain functions properly. In most cases, tokens don’t hold value outside of the blockchain they were designed for.
If you decide to buy altcoins you’ll be hoping that the crypto gains value. On the other hand, it is just as likely that the altcoin will lose value. Yes, crypto value tends to fluctuate dramatically. These fluctuations are, however, exactly what makes them an interesting investment opportunity.
On the other hand, many traders also demand some sort of stability. It is, after all, a good idea to put value where you know it will be safe for the time being. Thus stablecoins were created. Stablecoins, as the name suggests, are cryptos designed to hold their value. Most stablecoins are tied to the value of a fiat currency, such as the United States dollar. USD Coin is the best example. If you buy USD Coin today it should still have the same value in a week or a year. Check out another cryptocurrency guide for more information on how stablecoins work.
Forks are seen by most traders as an unnecessary complication in an already complicated market. If you didn’t already know, the Ethereum blockchain is, technically, divided up into Ethereum and Ethereum Classic. When the Ethereum blockchain was updated a certain section of the blockchain chose to not accept the upgrade. Hence, while most of the blockchain moved on, that remaining section was turned into Ethereum Classic. Similar forks have occurred in other blockchains, sometimes giving rise to a completely new cryptocurrency.
If you’ve decided that you’d like to invest in altcoins, you’re probably now wondering where to make the transactions. Altcoins, like all cryptocurrencies, can be bought and traded at exchanges or brokers. Both platforms have their pros and cons, so let’s take a closer look and get a better idea of what you’ll be dealing with.
Exchanges are platforms that simply match traders with one another. If you want to investigate altcoins you can head to an exchange, see what’s on offer, and invest as you see fit. Of course, not all altcoins will be available at all exchanges, meaning that you may have to do some searching to find what you’re looking for.
Though, in most cases, you can be sure that any altcoins worth looking at will be available at most exchanges. Even still some exchanges won’t even list altcoins unless they’ve received some public interest. It is therefore a matter of how far and how deep you’re willing to look for big investment opportunities.
Brokers are similar to exchanges but come with benefits and drawbacks of their own. A broker deals with you directly, meaning that you’re transacting with an organisation rather than another trader. As such brokers generally have limited investment opportunities in comparison to an exchange.
However, brokers tend to be far more selective about the markets they’re willing to deal in. So if you’re investing in altcoins at a broker, chances are it’s for a cryptocurrency that is already fairly established. Brokers also tend to provide more stable pricing as far as altcoins are concerned.
You can find out more about the most reputable brokers in our dedicated cryptocurrency guide.
Let’s now take a look at how to buy Altcoins in a step-by-step guide. These steps may not apply to every exchange and broker as they’re written here but will be relevant for the most part. You can always contact customer support on a platform if you need further assistance.
No matter what you decide to do in the crypto sphere, you’re going to need an EWallet. EWallets are essential online storage that allow for the easy handling of cryptocurrencies. If you don’t already have an EWallet, sign up for one before you get started. In most cases, signing up for an EWallet takes just a few seconds.
Now that you have a Wallet you’ll need to sign up at your chosen broker or exchange. This sign-up process will take more or less time depending on the platform. If the site requires that you complete the Know Your Customer (KYC) process you can expect a longer registration. KYC will demand that you present a validated identification document.
Once you finalise registration your account will be active. You now need to deposit fiat currency into the account if you intend on buying altcoins directly. You can also trade for altcoins with other cryptos. Either way, you’ll need to deposit into the account to get started.
Once you’ve got the desired altcoin you should withdraw it to your wallet for safe storage. Head to the wallet, generate an address and then enter the address on the withdrawal page of the trading platform. The altcoin will appear in the EWallet instantly.
Altcoins are any cryptocurrency other than Bitcoin. Since Bitcoin was the first crypto any coin that came after is seen as an alternative. Ethereum, Tether and Dogecoin are all altcoins.
If you should or shouldn’t invest in altcoins is a matter of opinion. As with all cryptocurrencies, there are investment risks. However, most traders feel that investing in a cryptocurrency other than Bitcoin comes with more risk.
The most commonly invested in altcoin is Ethereum. In comparison to Bitcoin, the Ethereum blockchain has many advantages, including the addition of automated smart contracts. However, Bitcoin is still the more valuable crypto. Apart from Ethereum, there are dozens of other altcoins that you can investigate as investment opportunities.
