Introduction to Altcoins for beginners
The term Altcoin is a combination of two words. Alt is an abbreviation of Alternative, and the coin is an acronym for cryptocurrency.
In 2009 Bitcoin introduced the world to blockchain technology and greatly influenced the cryptocurrency industry. Altcoins are all cryptocurrencies that came after Bitcoin. Lite coin, Solana, Tether, and even the meme coin Shiba Inu are all examples of altcoins. There are over 10,000 altcoins that have been introduced to the cryptocurrency market to date.
The first known Altcoin is called Name coin. Satoshi Nakamoto designed Bitcoin to be a decentralized currency in the blockchain that runs on a peer to peer network. Peer to Peer means it can be bought and sold from person to person like the trade of Barter. Decentralized means that no one person controls Bitcoin. In most countries, such as Nigeria, the currency is controlled by a government agency such as the CBN.
Namecoin was created to put data directly into the Bitcoin blockchain. However, the cryptocurrency has since changed direction and now acts more as a platform for you to register domain names in the blockchain.
Types of altcoins
There are many types of altcoins, such as:
Stable coins: These are coins that are tied to real-world money. So for every one of the virtual currencies that you see in the cryptocurrency market, there is a paper or fiat currency that it represents. These types of coins are called stable coins. This is what contributes to their stable prices. An example of a stable coin is USDT (Tether). One Tether coin is equal to one dollar.
DeFi altcoins: DeFi stands for decentralized finance. DeFi aims to give users complete control over their money and eliminate the room for errors or delays that traditional financial services harbor. You won’t have to jump through hoops just to be denied the aid of financial services. Many DeFi projects have their own token or currency.
Meme coins: These are cryptocurrencies inspired by memes or jokes on the internet. Dogecoin was the first meme coin. It was made after a famous dog on the internet in 2013. It gained a lot of investors due to frequent tweets from billionaire inventor and Entrepreneur Elon musk.
Utility Tokens: These types of tokens are designed to perform specific functions on a blockchain. Ether is considered one of the most versatile utility tokens. This is because when you use ether, you can mint currencies, digital art, and much more on the Ethereum blockchain.
Security tokens: Similar to stable coins, these tokens represent real-world assets. Buying a security token is similar to buying a fraction of a real-world asset like real estate, bonds, stocks etc. This is a way of recording an ownership stake in an asset.
Forks: A fork is an altcoin formed as a result of iteration or changes being made to a blockchains protocol. There are soft and hard forks. They affect how the cryptocurrencies are traded, recorded and received. Forks can either make small changes and become something new or upgrade the blockchain system and render old forms of transaction useless. An example of a fork is Bitcoin cash.
How to buy altcoins?
Determine how much you want to buy: You can decide to buy a whole coin or fractions of one. It all depends on your level of risk tolerance and faith in the coin.
Do research: As an investor, knowledge is paramount if you want to make significant investments in your lifetime. Do your research on every investment you plan to make, including cryptocurrencies. There is no such thing as a done deal. Learn about it, Understand it, and then invest in it when you are certain this is a course you want to chart.
Find an exchange: This point is pretty straightforward. You can buy altcoins like Ether and Tether on Valorexchange.
There are many altcoins to choose from and more to come. If you find one you’re interested in, do the research and learn to understand. Some altcoins offer relatively secure and stable opportunities for you to invest in. However, you can’t be too safe.