Cryptocurrencies have come a long way since the emergence of Bitcoin in 2009. Over the past decade and a half, the crypto market has evolved tremendously. Over the years, the emergence of new cryptocurrencies that offer different features, use cases, and advantages over Bitcoin has grown dramatically. These new cryptocurrencies are known as altcoins, and currently there are over 22,000 cryptocurrencies in existence. While most altcoins offer little to no value, functional use cases, or long-term growth potential, many are in fact very much worth looking into and hold promise to be major players as cryptocurrencies in the years to come.
Altcoins are defined as alternative cryptocurrencies that were created after Bitcoin, with the term first coming into use in 2011. As mentioned, most altcoins offer very little, if any value, though many hold notable advantages. One of the most significant advantages of altcoins is that many of them offer more privacy and anonymity than Bitcoin. For example, Monero and Zcash are two altcoins that use advanced encryption techniques to keep users’ identities as well as transaction details private. This privacy feature makes them attractive to individuals who want to keep their financial transactions private. However, every advantage comes alongside disadvantages, and in the case of Monero and Cash the privacy comes at the cost of lowered ability to scale, making these coins less likely to become as mainstream as Bitcoin.
Another advantage of altcoins worth mentioning is that they are often designed to solve specific problems that Bitcoin cannot. For example, Ethereum, the second largest cryptocurrency following Bitcoin, is an altcoin that uses smart contracts to automate the execution of contractual agreements. This feature makes it attractive to businesses and individuals who want to automate their financial transactions while reducing transaction costs.
Altcoins can also offer faster transaction speeds and lower fees than Bitcoin. For example, Litecoin is an altcoin that processes transactions four times faster than Bitcoin while charging lower transaction fees.
Because there are now so many altcoins on the crypto market – and more every day, altcoins have created new investment opportunities for cryptocurrency enthusiasts. Individuals can invest in altcoins and earn profits from their price appreciation – risky as it may be. Many altcoins have performed well in the market, with some actually outperforming Bitcoin in terms of price growth.
However, the emergence of altcoins has also created some challenges for the cryptocurrency market. The proliferation of altcoins has led to a lack of standardization and regulation in the market. This lack of standardization makes it difficult for investors to evaluate the potential of different altcoins, while at the same time creating opportunities for fraudulent projects to defraud investors. While fraudulent activities can certainly occur on the Bitcoin network too, because there are so many unregulated and non-standardized altcoins, this makes fraud all the more possible. Unlike Bitcoin, which has a more well established and more well regulated market, many altcoins are untested and have no established market or regulatory oversight. This lack of regulation makes altcoins a more potentially high-risk investment that can result in significant losses. It is important to note that Bitcoin is also a potentially high-risk investment that can result in significant losses as well.
Another notable downside of altcoins is their susceptibility to market manipulation. Since many altcoins have relatively low market caps, they are more vulnerable to price manipulation by a smaller number of influential investors. These manipulations can cause significant price swings and create volatility that can negatively impact the value of the altcoin.
Additionally, the technology behind many altcoins is still developing and untested. While some altcoins offer unique features and benefits, many others are little more than speculative investments based on hype and marketing. Investors need to always do their research and be careful and cautious when investing in altcoins, as there is oftentimes little or no evidence to support claims made by the altcoin’s developers.
Many altcoins offer functional uses and are valuable, while many more are probably not worth the time. It is important to always research before investing capital in any cryptocurrency — Bitcoin or altcoin. The crypto market is a very high-risk and volatile market and should not be approached in a careless manner. Altcoins have played a crucial role in expanding the crypto market to the global phenomenon that it is today. Without altcoins, it is possible that Bitcoin would not be where it is today. As the cryptocurrency market continues to expand and evolve, altcoins will likely remain an essential part of crypto’s growth and development.
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