When we talk about cryptocurrency, the first term that comes to our mind is Bitcoin. Although it is arguably the most popular crypto coin, it isn't the only one in the market. After the success of Bitcoin, new alternative coins were developed using better technology. The majority of altcoins are created keeping in mind the shortcomings of Bitcoin.
This has resulted in helping altcoins develop and create a global market share. They are increasingly becoming popular because of their updated and advanced features. They are being promoted as a digital currency to use for everyday transactions. They are said to have an increased rate of transitions, lower costs and low energy consumption. These characteristics have made them a rising cryptocurrency in India. If you are looking to know more about them, we have prepared a guide to help you out before you start investing in them.
What is an altcoin?
An altcoin, with its meaning originating from its name, alt stands for alternative, suggesting that the cryptocurrency is different from bitcoin. Although they do share some similar features, they are essentially made with new and updated technology to distinguish them. They offer smart contracts, low volatility and different mechanisms of transactions. Currently, bitcoin and ether make up about 60% global share in the crypto market and the rest is taken up by altcoins.Different types
1. Mining coins
The most popular and prevalent altcoins in the market are the ones that are mined. These crypto coins are developed by the process of mining and use proof of work. It is a method in which the system will create new coins after solving some problems. Litecoin, Monero and Zcash are some of the most popular examples.
2. Stablecoins
It is no secret that cryptocurrencies are volatile in nature and that has been the top reason for people to stay clear from them. However, stable coins as per their name, are created to reduce market volatility. These are linked to an established and eligible financial asset such as the U.S. dollar or gold. It means that its value will depend upon the fluctuations of these external sources.
3. Meme based coin
As the name suggests these coins are inspired and made from a meme or a joke prevalent globally. These coins have witnessed a high surge in their value and prices in a small amount of time because of high traction. One of the most prominent examples is of the Tesla CEO, Elon Musk who continuously posts tweets on crypto memes. Dogecoin and Shiba Inu. The price of Shiba Inu increases 91% within a day just because of a tweet. These coins are very fluctuating and it is hard to predict their price.
4. Security token
These act similarly to the way securities act in a stock market. Tokenized Stocks provide equity and dividend options to investors. The reason for their popularity is the hope that their prices will appreciate in the future. Recently, in the year 2021 Exodus completed the first security token offering in the market and sold $75 million shares of a crypto share making it a success.
Pros of altcoins
- Altcoins offer investors a wide range of options to choose from to put their money in.
- Its technology enables its use for day to day transactions.
- They are said to be better than bitcoin as they are developed to overcome the shortcomings of their predecessor.
Cons of altcoins
- The market share investment of altcoins is still relatively low compared to bitcoins.
- There are no regulatory standards that make this investment a risky one.
- Investing in an altcoin needs deep knowledge and understanding because of its diverse types and uses.
Conclusion
Now that you have gained knowledge about the various types and uses of altcoins, you can start investing accordingly. When choosing a cryptocurrency exchange in India, it is advised to opt for a reliable platform that offers secure transactions such as Wazirx. Additionally, it also has all the trending crypto coins in the market. Just ensure to research first before you start investing.
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