Top 4 Altcoin Investment Strategies
Introduction to Altcoin
Alternative cryptocurrencies to Bitcoin are known as altcoins. They have some similarities with Bitcoin, but they differ in other aspects. Most altcoins are attempting to address any perceived Bitcoin challenges by developing competitive advantages in newer versions.
The phrase “altcoin” is made up of two words: “alt” and “coin,” with alt meaning “alternative” and coin meaning “cryptocurrency.” They denote a type of cryptocurrency that is an alternative to the digital Bitcoin currency when used together. Following Bitcoin’s breakthrough, a slew of alternative peer-to-peer digital currencies has sprung up to try to replicate it.
Many altcoins are constructed on the same basic structure as Bitcoin. As a result, most altcoins are peer-to-peer, necessitate a mining process in which users solve complex issues in cracking blocks, and enable safe and low-cost ways to conduct web transactions. Even though they share many characteristics, altcoins differ significantly from one another.
The growing relevance and importance of altcoins
There are primarily two reasons to invest in altcoins. For starters, one can keep Altcoins in his/her wallet for an extended period to hope that their value will skyrocket. Second, one can boost their BTC holdings by selling Altcoins as their value rises. In addition, there are many other benefits to investing in Altcoins in 2021, which are listed below:
- There is room for advancement: Since the future of this system and processes is unique, there is a diverse range of possibilities for evolution.
- More potential for gains: Altcoins have been doing exceptionally well in the market too. ADA has outperformed BTC by 626.0% between May 2020 to May 2021. MATIC has also outperformed BTC by 2238.0% between May 2020 to May 2021.
The altcoins of many of the best blockchain projects and companies will become more valuable in the future. Hence, one piece of advice for investors would be to make sure not to fall for those marketing shill-based coins like Safemoon, as such coins don’t really have a purpose and can collapse quickly. Crypto investors should place a premium on altcoins based on their utility in real-world applications.
When it comes to Cardano, there is massive potential to issue tokens that may represent real assets. Cardano will make it possible to write smart contracts and will handle the execution. It enhances the transaction system’s capabilities. People can trade money for stocks, and Cardano will handle the transaction and record both the money and the stock holdings in the blockchain.
Polygon (MATIC) also has many real use cases. The Polygon crypto platform is designed to help dApps speed up payments by integrating a specialized application programming interface (API) and software development kit (SDK) that allows for near-instant payment settlement. This process enables dApps, merchants, and users to accept and pay in any cryptocurrency, most commonly ERC-20 tokens or ETH.
Polygon is also developing a system that will allow merchants to assess the credit ratings of users who have registered to use the platform by looking at their transaction history. Polygon can also be used for various use cases, such as assisting with the fast settlement times required by decentralized exchanges (DEXs) to provide users with quick and efficient trading.
Different Types of Altcoins:
- PoW-based altcoins
These altcoins are built after bitcoin’s mining procedure, which involves solving complicated cryptographic equations to unlock blocks and create new coins. Some of the most popular cryptocurrencies on the market, like Ethereum, are dependent on mining.
2. Security tokens
These are comparable to ordinary stocks in that they frequently promise dividends, as well as business ownership or a payout. They are frequently linked to businesses and created as part of an Initial Coin Offering (ICO).
Stablecoins’ primary purpose is to eliminate the volatility that comes with cryptocurrency. They reduce volatility by connecting the coin’s value to real-world assets such as fiat currencies (such as the US dollar or the Euro), natural resources (such as gasoline), and precious metals (like gold).
Examples of some Altcoins doing very well in the crypto market are:
Ethereum is the second-largest cryptocurrency on the market, and it would probably be inaccurate to label it an altcoin now. It is successful for two primary reasons. One, it has the second-largest market capitalization of any cryptocurrency. This demonstrates its market dominance in the crypto realm. It also suggests that acceptance and popularity are widespread. Second — it solves some real challenges by enabling a decentralized blockchain for almost any kind of computation.
2. Ripple (XRP)
Ripple, or XRP, is regarded as the “most efficient settlement choice for financial institutions and liquidity providers” because it allows for quick transactions and governance, as well as accessibility, global reach, and quick settlements.
3. Tether (USDT)
Tether is, as previously stated, one of the most popular stablecoins (and even among cryptocurrencies in general — it ranks fourth among all coins). USDT is a cryptocurrency that mimics the US dollar’s value to provide a stable cryptocurrency (free of volatility) that can be seen as “digital dollars.” The Omni, TRON, and Ethereum blockchains are also used to issue it.
Litecoin (LTC) is a cryptocurrency founded by Charles “Charlie” Lee in October 2011. Litecoin is a Bitcoin alternative. Litecoin, like Bitcoin, is based on an open-source global payment network that is independent of any central authority. Litecoin varies from Bitcoin in several ways, including its higher block creation rate and its usage of the Scrypt proof-of-work algorithm.
Top 4 Altcoin Investment Strategies
- Buy and HODL
The term “HODL” is frequently used in the Cryptocurrency investment community. It is not only a well-known term but also an investment strategy.
The buy-and-hold approach is referred to as “hodling.” Buy-and-hold investors like to keep their assets for a long time to benefit from long-term value growth. On the other hand, traders are far more active in transactions and seek profits by buying low and selling high.
Altcoins present attractive opportunities for traders to build up long and short positions, often because of their highly volatile nature. Hodling, on the other hand, might give investors more security because they are not exposed to short-term volatility and may avoid the risk of buying high and selling low.
- Cryptocurrency Trading
One may profit long and short term on a controlled or decentralized exchange with excellent automated trading tools. A trader tries to profit from price swings and trends by buying low and selling high. Arbitrage trading, swing trading, and scalping are examples of alternative ways to cryptocurrency trading.
- Cryptocurrency Mining
Solo mining rewards are now challenging to come by. One can still make money by using cloud mining or joining an in-person mining pool. One can pay a monthly subscription fee and receive dividends at regular intervals with cloud mining. There is no need for people to maintain mining machines or install the software. People can mine blocks as a group with other mining devices in a mining pool.
- Staking and Saving
As investors seek a way to earn passive income from their idle cryptocurrency, staking is becoming one of the trendiest topics in crypto. Staking is more than just a technique to make quick money. Staking is the process of maintaining funds in a cryptocurrency wallet (or staking pool) to aid the operation of the underlying proof-of-stake blockchain network (for a specific project).
A stake is a voting right in a specific project gained after a certain amount of coins is purchased. As a result, the more coins one has in a staking pool, the more voting rights he/she gets. A reward is paid out because keeping the coins helps the underlying proof-of-stake network operate more effectively and safely.
Staking can be done in many ways, but using an exchange makes it straightforward and eliminates many of the hazards of staking. Giottus is a good option for those seeking a quick and uncomplicated way to start earning staking benefits without dealing with risky and sophisticated staking procedures.
It is critical to understand that cryptocurrency is more than just Bitcoin. We cannot deny its enormous impact on the ecosystem, but we now have a thriving altcoin community as well. With the current media attention and popularity of altcoins, now is a perfect moment to learn more about what is available.
One of the best exchange platforms to start investing and using these investment strategies in altcoins is Giottus, which has the standout features to give the best investing experience! You can start your investing journey by clicking here!