Altcoins are cryptocurrencies other than bitcoin. Bitcoin was known to be invented in 2009 by the legendary Satoshi Nakamoto. It was the first time when people of the world saw and experience digital currency systems that has no physical presence. After that, followed by this model numerous other cryptocurrencies have been created. All of them are known as bitcoin excluding the first crypto bitcoin.
However, another cryptocurrency known as ether is also sometimes excluded from this list of an altcoin. It is because Ethereum, the network of the crypto coin ether is the second most popular cryptocurrency after bitcoin being the first one.
Here in this article, we have described the various types of altcoins and their utilizations with their advantages and disadvantages so that you can get a clear idea of the topic.
Types of Altcoins:
- Stablecoin: Stablecoins are altcoins that are not much vulnerable in terms of price or you can say they are not as volatile as bitcoin or other altcoins. It is because they are backed by stable currencies like fiat currencies and commodities. As their value is backed, they don’t much change their price position.
- Payment tokens: These altcoins are made for payment purposes and that is why they are known as payment tokens. These altcoins are used to exchange values between two parties.
- Security tokens: Security tokens are like stocks, bonds, and real estate can be tokenized and given to investors. The investors buy those tokens and invest or utilize them. These tokens are secured and held properly and that is why they are known as security tokens.
- Utility tokens: Utility tokens are made to pay for services provided by any network. You can use these tokens to pay for any purchased service, to pay a network fee, or redeem a reward.
- Meme coins:Meme coins are made as joke to certain things like the popular meme coin Dogecoin was created as a joke to answer the speculations that started spreading about the utilization of bitcoin after its creation.
- Governance tokens: These tokens give you some governance or power like when you own a token you have the power to vote for some decision or protocols that are being taken within the respective network.
Advantages of Altcoins:
- Altcoins are updated versions of cryptocurrencies. If we take the example of bitcoin cash, it is a forked version of bitcoin that is created with the help of the bitcoin network. So, these advanced coins are improved as per the functionality.
- As these coins are advanced, they have more utility than normal crypto coins. As a result, the chance to survive for a long time is there. Altcoins are nowadays accepted by people more than bitcoin as they are performing well as well as expected to perform better in the future.
- The performance of altcoins is better than bitcoin or another normal crypto coin. Some altcoins can complete transactions faster than bitcoin so, they are being chosen by the investors more.
Disadvantages of Altcoins:
- Altcoins are made following the model of Bitcoins and also performs better than bitcoin in certain aspect, they are not as popular as bitcoin.
- The market capitalization of altcoins is also not as large as bitcoins. Even now, bitcoin known to be the most popular form of cryptocurrency.
- Values of altcoins are not also as high as bitcoin. Though, some of them are rising currently, they haven’t reached bitcoin yet.
- Altcoins have comparatively fewer uses in the crypto investment market. Companies are accepting more and more bitcoins and a very less number of altcoins they are welcoming.
- In the investment and trade market, altcoins have less preference. They are used to diversify a portfolio in bitcoin trading.
- Distinguishing between roles of altcoins in the different financial area are different. They are not properly defined and divided.
Conclusion
Altcoins are recently being famous as they are performing well in the market and investors and traders are also buying these coins. You can also buy them in bitcoinscircuit.app. If you are a bitcoin trader these altcoins are best for making your portfolio well diversified.
