Everything you Need to Know about Altcoins

Any cryptocurrency that’s not bitcoin is known as altcoins. These were introduced after the pioneer cryptocurrency and are advertised as better alternatives to bitcoin. According to the data provided by Coin Market Cap, almost 40% of the cryptocurrencies in the market are altcoins. As there are more than 5,000 altcoins that exist, it can be said that majority of them will not really materialize into something useful, or give substantial profits in the long run. But, this doesn’t hold true for all the altcoins that exist in the market. Some of them are very promising that help in facilitating exciting and new advances in blockchain technology.

With that said, you have to bear in mind that altcoins can prove to be risky investments. If you don’t do proper research, there is a good chance you might lose your investment. It is essential to know everything relevant about altcoins before you decide to put your hard-earned money at risk.

Should you Invest in Altcoins?

There is no doubt that there is a certain allure in investing in cryptocurrencies. Altcoins are often considered a great opportunity because they have the potential of offering a higher upside when it comes to percentage gains. However, the risk is also higher. Dogecoin is a good example, as the crypto saw its value surge in January 2021 simply because people had begun buying it and it went viral. But, it is important to remember that these investments can fall out of favor just as quickly.

Hence, instead of jumping into a cryptocurrency just for riding the popularity train is not a wise move. Investing in something you believe in is much better because otherwise you will lose significantly if and when the pullback happens. When you decide to invest in altcoins, you should opt for one you can believe in. Otherwise, it is nothing more than gambling. You need to do your homework to ensure that the altcoin you are considering is not a crypto scam because many of those have happened.

It is essential to bear in mind that there is no formula that will tell you which altcoin is the best investment. Anyone who tries to convince you into investing in one is just leading you on. With altcoins, you have to consider what protections are in place before you opt for it. You have to do your due diligence, which means finding out who is behind the coin along with its value proposition. Any altcoin that provides a service that’s unique should be considered a worthy investment.

If you want to make a safer investment, but don’t want to stick to bitcoin and prefer to check out altcoins, then it is best to begin with the top five or top 10 altcoins that exist in the crypto market. These include options like Ethereum and Litecoin. Altcoins that have smaller capitalizations are something you should be careful with. Yes, some of them may bring some exciting use of blockchain technology forward, their small capitalization makes them vulnerable to hacks and market manipulation.

What to Know before Investing in Altcoins?

Once you have decided to go ahead and invest in altcoins, you need to ask some important questions before doing so. As mentioned before, due diligence is important, which means checking the team behind the altcoin you are considering. You also need to check where your money is going and how it will be used. Make sure you can buy the altcoin easily and find a cryptocurrency wallet to store it. It is also necessary to ensure that you can sell it just as easily and get a good price for it.

Check out the legal protections you are offered in the case of fraud, malware or hack. Find out who will refund your money in case something goes wrong and understand the rights that you are granted with the investment you make. Having this information can help you make the right decision.