Understand altcoins in just 3 minutes

In the cryptocurrency market, there would be currently more than 6000 existing altcoins. Covering very diversified projects, regarding the world top 10 in terms of market capitalization, the main altcoins are: BNB (binance), XRP (Ripple), ADA (Cardano), SOL (Solana), DOGE (Dogecoin), DOT ( A pois).

What are altcoins?

This term corresponds to all cryptocurrencies other than the main one, Bitcoin. There are therefore tens of thousands of these “alternative currencies” currently in circulation in the cryptocurrency ecosystem.

The stable coins (such as Tether’s USDT) are a separate category in the altcoin nomenclature as they are cryptocurrencies whose only function is to replicate the value of a fiat currency such as the US dollar.

How do these altcoins work?

Despite the diversity of these alternative cryptocurrencies and the projects built around them, their functioning remains relatively similar to that of bitcoin. It is possible for some of the ” pointer “, They ” farmer “, Speculate on their value, transfer them to” wallet ” Where is it ” exchange “.

Furthermore, altcoins are regulated by the blockchain which ensures registration, transactions so that exchanges can neither be modified nor refused, even falsified.

The different types of altcoins?

Although an altcoin can belong to multiple categories at the same time, the following categories can be highlighted:

  • Payment token: serves as currency for exchange and transfer. Bitcoin is the prime example.
  • Governance token: these altcoins offer their holders certain rights within a blockchain. This is often the right to vote for protocol changes or to participate in the decisions of a decentralized autonomous organization (DAO).
  • utility token: Aims to provide services within a network in order to pay commissions or even redeem rewards. These tokens are used in the blockchain network to make it work. For example, the ether (ETH) is specifically designed to be used to pay for transactions.
  • Security Token: They are regulated by the Securities and Exchange Commission (SEC) because they are designed to act like securities. These altcoins are widely used in Initial Coin Offerings (ICOs).
  • stable currency: these are cryptocurrencies that are linked to the value of a currency (dollar) or a precious metal (gold). They allow you to avoid market fluctuations.
  • Meme Coin: These are joke-inspired cryptocurrencies generally with no real intrinsic value. The gains and losses can be dazzling on these altcoins. The Doge or shiba are examples.

Read also Understand Centralized Exchanges (CEX) in just 3 minutes!

What are the advantages and disadvantages for altcoins?

Just like the benchmark cryptocurrency, bitcoin, there are many benefits to these alternative currencies:

  • These currencies follow a purpose or serve a well-defined plan.
  • These altcoins overcome the weaknesses of bitcoin making improvements to the cryptographic ecosystem.
  • Be connected to decentralization and blockchain, altcoin they do not depend on a monetary authority or institution.

However, there are some drawbacks to these altcoins:

  • Thousands of altcoins launched also result in many projects that do not emerge.
  • Alternative currencies traded on unregulated markets. The investor is therefore vulnerable to price manipulation, fraud and scams.
  • Altcoin they often have particularly low market capitalizations compared to the ubiquity of bitcoin.

Conclusion: what future for these alternative currencies?

The the vast majority of these alternative currencies will disappear within a few years. The best blockchain projects, the strongest communities will ensure the survival of some.

Furthermore, the future of altcoins remains dependent on the emergence of international regulation at both the state and central bank levels. All of this will contribute to greater market concentration.

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