Understand altcoins in just 3 minutes

In the cryptocurrency market, there would currently be over 6000 existing altcoins. Covering very diverse projects, with respect to the world top 10 in terms of market capitalization, the main altcoins are: BNB (binance), XRP (Ripple), ADA (Cardano), SOL (Solana), DOGE (Dogecoin), DOT (Lunar ).

What are alternative currencies?

This term corresponds to all cryptocurrencies except the main one, Bitcoin. In the crypto ecosystem, there are tens of thousands of these “alternative currencies” currently in circulation.

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

How do these altcoins work?

Despite the diversity of these alternative cryptocurrencies and the projects built around them, their operation remains relatively similar to that of bitcoin. It is possible that some of the ” gambler “, to them ” farmer “, speculate on their value, transfer them to “ purse ” Where ” exchange “.

Furthermore, altcoins are governed by the block chain which secures the record, the transactions so that the exchanges cannot be modified or rejected, even falsified.

The different types of altcoins?

Even if an altcoin can belong to several categories at the same time, it is possible to highlight the following categories:

  • card payment: serves as currency of exchange and transfer. Bitcoin is the best example.
  • Governance Sheet: These altcoins offer their holders certain rights within a blockchain. This is often the right to vote for protocol modifications or participate in the decisions of a decentralized autonomous organization (DAO).
  • utility tab: Aims to provide services within a network to pay fees or even redeem rewards. These tokens are used in the blockchain network to make it work. For example, ether (ETH) is specially 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 coin: They 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 usually with no real intrinsic value. Profits and losses can be dazzling on these altcoins. The dogo or the shiba are examples.

read also Dogecoin (DOGE): 5 fundamental points you should know before thinking about investing in DOGE

What advantages and disadvantages for altcoins?

Like the benchmark cryptocurrency, bitcoin, there are many advantages to these altcoins:

  • These coins follow a purpose or serve a well-defined project.
  • These alternative currencies overcome bitcoin weaknesses by making improvements to the crypto ecosystem.
  • Being linked to decentralization and blockchain, altcoins not depend on a monetary authority or institution.

However, there are some drawbacks to these altcoins:

  • The thousands of altcoins launched also result in many projects that do not come up.
  • alternative currencies traded on unregulated markets. Therefore, the investor is vulnerable to price manipulation, fraud and scams.
  • alternative currencies often have particularly low market caps compared to the ubiquity of bitcoin.

Conclusion: what future for these altcoins?

the the vast majority of these altcoins will be gone in a few years. The best blockchain projects, the strongest communities will ensure the survival of some.

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

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