What are altcoins? A guide to the cryptocurrencies beyond Bitcoin
We all know what bitcoin is, but you can face the term altcoins as often as bitcoin. You will learn what altcoins are and how different they are from bitcoin from this article. In a nutshell, altcoins are all types of cryptocurrencies that are not Bitcoin. The name altcoins mean "different from Bitcoin," as they were created to improve Bitcoin's transaction speed and energy efficiency.
Altcoins have their advantages and disadvantages as everything in our world. They not only improved several aspects of Bitcoin, but they also offered higher potential rewards. Plus, as I said before, there is a wide variety of altcoins.
What about the negative aspects of altcoins? I would name the risk of scams or project failure. Some altcoins are hard to buy because they're only available on certain altcoin exchanges. Another thing that differentiates altcoins from Bitcoin is that altcoins are younger cryptocurrencies released regularly. Also, altcoins have more room to grow, but they also have a higher chance of failure.
Anyway, if you want to diversify your investments, look at the variety of altcoins to choose from. Luckily, hundreds of them exist, so let's start with the best altcoins to invest in.
Best altcoins to invest
There are thousands of cryptocurrencies on the crypto market, so you can choose coins that suit your investment strategy best. Altcoins have various categories and types, such as payment tokens, stablecoins, security tokens, meme coins, and governance tokens.
Which one to choose? Before buying one, ask yourself what your investing goals are, how risky you are, what your beliefs are, and, more important, how much money you can invest in altcoins.
If we judge by the market capacity, the top three altcoins would be Ethereum, USD Coin, and Tether (USDT). A few words about each of them before we go any further:
Ethereum
This coin was designed in 2014 to be programmable, secure, and decentralised. The founder of Ethereum realised the potential of blockchain technology and how helpful it will become in the future. Well, his creation became the world's second significant market value cryptocurrency after Bitcoin. If Bitcoin was created only as a payment method, Ethereum also focused on enlarging the cryptocurrency applications.
Ethereum uses the proof-of-work protocol, where a network of participants runs software that attempts to prove that an encrypted number is valid. This is called mining, and the first miner to confirm the number is rewarded in ether.
USD Coin (USDC)
Another broadly popular altcoin was launched in 2018 by Circle. USD coin (or USDC) is a stablecoin pegged to the U.S. dollar. But, USD Coins are not issued by the U.S. government.
Ok, now you ask me, if the U.S. Government does not issue USD coins, how does it maintain the 1:1 peg with the U.S. dollar? It's simple! If you want to buy one USD Coin using fiat currency, then that fiat currency is deposited and stored as one U.S. dollar, and the new USDC is minted. If you sell a USD Coin in exchange for fiat currency, the USDC is "destroyed" when the fiat money is transferred back to your bank account. Smart, right?
This hedge against volatility, which crypto is well-known for, makes USD coins attractive to investors—especially the ones who can't tolerate many high risks. USD coin is also highly used among startup owners and nonprofit organisations so they can raise money from investors.
Tether (USDT)
The idea of Tether as a stablecoin is similar to the USD coin. They are both relatively "safe" digital assets that can maintain a stable valuation. One more stablecoin pegged to the U.S. dollar launched in 2014, and thousands of investors use it to leverage their cryptocurrency trades.
If you deposit fiat currency into Tether's reserve, selling fiat to buy USDT, Tether then issues the corresponding digital amount in tokens. After that, you can send, store or exchange this altcoin.
Altcoins with the most potential
Now that we know the top three best coins to buy, let's look at the most potential altcoins in 2022.
Binance Coin (BNB)
If you are not a newbie in the crypto world, you heard about Binance, the largest cryptocurrency exchange with a volume of $7.6 billion. So, Binance launched its coin called Binance Coin in July 2017. Is this coin worth having in your wallet? You bet! The currency is used to pay transaction fees on Binance.com, Binance DEX, and Binance Chain. Binance coin has an even much broader scope of application. Thus, you can use it for payments at places like Crypto.com or Monetha. You can book travel accommodations or pay for virtual gifts, card packs, or lotteries). You can even pay for online services such as BitTorrent, Canva, or Storm). Donation to charity is also possible with the help of BNB.
XRP
Being one of the most popular cryptocurrencies, XRP stands out from the rest. Its transactions are confirmed in seconds with little cost. XRP was developed by Ripple Labs and quickly became very popular. Many big banks use XPR for their needs, such as payment settlement, asset exchange, and remittance systems. The significant difference from Bitcoin is that XRP is pre-mined and uses a less complicated mining method.
Cardano (ADA)
Cardano has one of the most reliable technologies on the market, similar to Ethereum and Solana. This altcoin is the third-generation crypto, taking the best features from Bitcoin and Ethereum. It has a continuous development of technology stemming from its solid partnership with IOHK. Cardano also has strong bonds with companies and governments like Africa. Finally, the network has been pretty reliable throughout its history.
Avalanche (AVAX)
Avalanche, like other stablecoins, uses smart contracts to support various blockchain projects. The coin was launched in 2020 and was promoted as a safe, affordable, and secure altcoin. The Avalanche blockchain is so fast that it can process 4,500 transactions per second! Avalanche's more significant feature is that it can support many blockchain-based projects. What about the cons? Well, first, Avalanche validators must stake 2,000 AVAX tokens. One more is the absence of punishment for careless validators who have lost their AVAX.
Decentraland (MANA)
One more super popular altcoin. This token is behind an Ethereum blockchain-based virtual reality game by the same name. This game is a 3D virtual world where users buy property, goods, and services. When JP Morgan invested in Decentraland, many investors immediately became interested in this cryptocurrency.
Dogecoin (DOGE)
Dogecoin is one of the most exciting coins, especially with Elon Musk spearheading the conversation on Twitter every time. It is backed by one of the most influential futures in crypto, and the community behind it keeps pushing. DOGE has to be one of the top cryptocurrencies to buy this 2022. Additionally, it has a lower transaction fee than the top cryptocurrencies in the market– BTC, ETH, etc.
Shiba Inu (SHIB)
This altcoin was created in 2020 and named after the dog breed Shiba Inu. Yep, quite unusual. This altcoin is a decentralised, community-building cryptocurrency that was first used for some experimental purposes. And just like many other cryptocurrencies, Shiba Inu was built on top of the Ethereum Blockchain Network. Do you know who helped to promote this coin on the market? Elon Musk! The Tesla founder tweeted that he would like to buy this coin, skyrocketing the price by 300%!
Where to buy altcoins. 5 Best places to buy altcoins
Ok, now you know the most promising altcoins circulating on the market. Their price can vary from a couple of cents to a thousand dollars. And now, let's check where you can buy altcoins. But before that, I want to warn you that if you wish to buy some altcoins safely, you should use a regulated cryptocurrency exchange and then choose a safe crypto wallet to store your coins in. Now, let's go to the crypto exchange platforms without further ado!
Binance
Binance was founded in 2017 and has become the largest crypto exchange platform since then. This platform does care about the safety and security of users' finances, using high-security standards. This is an excellent platform to buy some altcoins! You can trade more than 500 altcoins, including Ethereum, XRP, and Dogecoin. The trading commission is relatively low, starting from 0.1%. Binance has an NTF marketplace, so if you are a collector or a creator, this platform suits you well. As for the disadvantages of Binance, I would mention the 2% fee it charges for credit/debit card deposits and that customer service response may not be as quick as you wanted.
Coinbase
This exchange platform is excellent for beginners. It has a user-friendly interface, making trading intuitively easy. Plus, Coinbase stands for the security and safety of its users' information on its platform. Another good thing is that you don't need much money to start trading. Coinbase requires a minimum deposit before users can trade. As for the disadvantage, again, like Binance, customer service response may not be as quick as you wanted.
eToro
This is a highly secure platform with numerous regulations. It has licences from the FCA and CySEC in the U.K. and also holds licences from other Tier-1 regulatory agencies in other countries. That means you can invest in eToro feeling protected. Apart from its security, eToro is also a user-friendly platform for beginners. eToro offers cryptocurrency derivatives in certain areas and has low commission fees. The only disadvantage I can mention here is that eToro is unsuitable for advanced charting or technical analysis.
Conclusion
I have mentioned several promising altcoins to buy in 2022, but I recommend you do your research on altcoins. This research helps you find and invest in the altcoins you believe will boost in the future. Good luck in choosing altcoins, and see you soon!
