Bitcoins were first introduced in 2009, along with blockchain technology. Alternative cryptocurrencies were quick to follow and in many ways the technologies of these altcoins have surpassed those of Bitcoin.
Bitcoin, however, remains the biggest and most watched cryptocurrency. Its 18 million coins are valued at more than $196 billion. These numbers vastly outnumber any of the altcoins. The biggest altcoin producer, Ethereum has a market value of just over $38 billion. This followed a recent steep decline in price. There are plenty of other worthwhile crypto alternatives which is why the markets see continued growth in Ripple and EOS trading among others. You can read more of this online, and PrimeXBT can help you to choose the best performers.
While Bitcoin is the most popular of the cryptocurrencies it does have some shortcomings listed below:
- Bitcoin has a broad following backed by many financial institutions, but the transaction fees are not as low as initially intended and it is, therefore, often cheaper to transact using altcoins. That being said, Bitcoins are widely accepted as a form of payment, which is not always the case with altcoins.
- While Bitcoins were intended to offer traders anonymity, it has failed in this promised feature as transactions are traceable to the address of origin. So, they’re identifiable to anyone who would care to check. This is because the blockchain records the transaction. Developers of some of the available altcoins have overcome these problems and offer alternatives that really do hide transaction history.
- Bitcoin mining is energy intensive so impacts negatively on the environment.
The risks and rewards of trading in altcoins
Investors wanting to trade in altcoins are spoiled for choice. As of January, 2024, there were more than 2000 altcoins available on the market. Bitcoin has become synonymous with the rise of many Bitcoin millionaires, but it isn’t the only cryptocurrency to offer investors good gains. NEO and Ether have both generated superior returns on investment following their initial coin offering.
Altcoins also offer investors a chance to diversify, reducing their risk. The risk mitigation is based on the premise that losses in one asset can be offset by gains in another. When considering diversification, it is a good idea to research the relationships between prices of one cryptocurrency and others. The price relationship between Bitcoin and altcoins is often quite complex and any diversification strategy should be based on careful analysis of correlations and trends.
Investment in altcoins remains a risky business. Cryptocurrencies are volatile and investors should do their research before buying. By and large, altcoins don’t have the same following as Bitcoin. Though the big players like Ethereum and XRP have plenty of support.
Outlets for using lesser known altcoins may present a problem so you should take this into consideration when making your investment decisions. PrimeXBT can help you to make the right choices. Altcoins are often easier to mine than Bitcoins, but the trade-off is lower value, and reduced acceptance and liquidity.
Altcoins to watch
Ethereum was launched in July 2015. The largest provider of altcoin, Ethereum uses opensource block chain technology to offer users a system that features an integral smart contract function. This function ensures that the contracts run as programmed. There is no downtime, fraud or interference by third parties. Ethereum is like Bitcoin but when you buy into Ethereum, you invest in the network.
Ripple was designed to enable secure, cheap and speedy financial transactions across the globe. Ripple produces its own currency, XRP. Holders of XRP can exchange their assets for other cryptocurrencies or for fiat. With Ripple there is no mining required. The organisation controls the supply of coins in the system. Unlike Bitcoin and Ethereum Ripple does not use blockchain technology. It has patented its own technology. Ripple has the support of many of the large financial institutions.
A private company known as block.one developed EOS. It was released in June 2018 as an open source network and allows transactions on the EOS.IO network using the EOS token. EOS performs millions of transactions every second, while charging no transaction costs. Users receive an allocation of transactions depending on how many tokens they have. When the user completes their allocation, they can buy more tokens or help to build the blockchain. EOS is traded against Bitcoin or the US dollar. In market capitalization EOS is one of the top five cryptocurrencies.