Altcoins are cryptocurrencies that have similar characteristics to Bitcoin, but also offer unique features that set them apart from Bitcoin. For example, altcoins use different consensus mechanisms to validate transactions or generate blocks.
There are different types of altcoins, and they can be defined based on their consensus mechanism and unique functionality. This article will discuss some steps and tips that you can use to find altcoins that suit your goals.
Understanding Altcoins
The word "altcoin" comes from "alternative" and "coin". Altcoin refers to all cryptocurrencies other than Bitcoin. Altcoins are alternative cryptocurrencies to Bitcoin that have various characteristics and functions. There are thousands of different types of altcoins circulating in the crypto market, and each has the potential to provide profits for investors and traders.
However, not all altcoins have good quality and prospects. Therefore, it is important that you know how to choose and analyze the right altcoin before deciding to invest or trade. Before that, let's get to know the types of altcoins first.
Common Types of Altcoins
Here is an explanation of the types of altcoins:
Mining-Based
Mining-based altcoins use the proof-of-work (PoW) method, which allows the system to generate new coins through mining. Mining involves solving complex mathematical problems to create blocks. Monero (XMR), Litecoin (LTC), and ZCash (ZEC) are examples of mining-based altcoins. According to data from CoinMarketCap, the mining-based altcoin has a market capitalization of around $31 billion as of February 13, 2024.
Stablecoins
Stablecoins aim to reduce the volatility that often occurs in the crypto market. The value of stablecoins, therefore, is tied to the value of other assets, such as fiat currencies, precious metals, or other cryptocurrencies. The asset serves as a backup in case the cryptocurrency runs into problems. Dai (DAI), USD Coin (USDC), and Tether (USDT) are examples of stablecoins. According to data from The Block, stablecoins have a daily transaction volume of around $100 billion as of February 13, 2024.
Securities Token
Security tokens are similar to traditional securities traded on the stock market. They resemble traditional stocks and represent equities, both in the form of ownership and dividends. Securities tokens attract investors due to their potential for price increases and high returns. Polymath (POLY), tZERO (TZRO), and Harbor (R-Token) are examples of securities tokens. According to data from STO Market, the securities token has a market cap of around $700 million as of February 13, 2024.
Memecoin
Memecoins are so called because they are funny or silly versions of well-known cryptocurrencies. They are usually hyped by popular celebrities and influencers in the crypto space. Popular memecoins like Dogecoin (DOGE) and Shiba Inu (SHIB), for example, often have prices driven by Elon Musk, Tesla CEO and well-known crypto enthusiast. According to data from CoinGecko, memecoin has a market capitalization of around $9 billion as of February 13, 2024.
Utility Token
Utility tokens are used to provide services such as rewards, network fees, and purchases within a given network. Utility tokens do not offer equity, unlike securities tokens. Filecoin (FIL), Binance Coin (BNB), and Uniswap (UNI) are examples of utility tokens. According to data from CoinMarketCap, utility tokens have a market cap of around $200 billion as of February 13, 2024.
How to Analyze Altcoins
1. Whitepaper Analysis
Examining the token's whitepaper will provide a wealth of relevant information such as its use case, goals, and team's vision for the project. The white paper should give you a good idea of how altcoins will provide value to their users.
2. See Market Demand and Coin Supply
Looking at supply and demand is one of the best ways to assess your next crypto investment. Now that you have a clear picture of what the project can offer, it's time to look at how the altcoin navigates supply and demand. You can see the number of coins in circulation, the maximum number of coins, and the inflation or deflation rate of that coin.
3. Review the Team and Stakeholders Behind the Project
Now that you have a good understanding of what the project can offer, it's also important to thoroughly assess the team behind the project. You can find information about the team in the project's white paper, but try to do independent research about them as well.
You can see their background, experience, and reputation in the crypto industry. You can also see who supported or partnered with the project, such as investors, developers, or other organizations.
How to Buy Crypto on Bittime
You can buy and sell crypto assets in an easy and secure way through Bittime. Bittime is one of the best crypto applications in Indonesia that has been officially registered by Bappebti.
To be able to buy crypto assets on Bittime, make sure you have registered and completed identity verification. In addition, also make sure that you have enough balance by depositing some funds into the wallet. For your information, the minimum asset purchase at Bittime is Rp10,000. After that, then you can make a crypto asset purchase in the application.
Monitor the price chart movements of Bitcoin (BTC), Ethereum (ETH), Solana (SOL) and other cryptos to find out today's crypto market trends in real-time on Bittime.
Also Read:
3 Most Potential Altcoins of the Week
What Is Altcoin Season: Get to Know Its Signs and Effects On The Crypto Market
DISCLAIMER: This article is informational in nature and does not constitute an offer or solicitation to sell and buy any crypto asset. Trading crypto assets is a high-risk activity. Crypto asset prices are volatile, where prices may change significantly from time to time and Bittime is not responsible for fluctuations in crypto asset exchange rates.
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