If you have already invested a fair share of your money in the most prominent cryptocurrency in terms of market cap, Bitcoin, and had a fair share of losses and gains through trading on it, and now if you are looking to invest some of your money in some altcoins but are not exactly sure of what they are then the points mentioned in the article below will help you get a clear idea about it! If you are interested in crypto trading, you may consider knowing the Practical Tips To Trade Bitcoin.
Altcoin referred to each and all the cryptos except Bitcoin. Ethereum is the most popular of all the altcoins present in the ecosystem; it takes up nearly a quarter of the total cryptocurrency market cap, whereas Bitcoin makes up almost half. Altcoins occupy nearly 40% of the remaining market share.
- Most Popular altcoins in the market
- USD Coin
Now, let us take a look of what are the types of altcoins in the crypto ecosystem: –
Stablecoins is a type of cryptocurrency that resembles the fiat currency such as the US dollar. Stablecoins have their value pegged to the less volatile asset. Comparatively, those are little less in volatility. Tether is the first known stable coin; it is a very popular altcoin used by crypto traders on various platforms when trading their crypto on exchanges since it cuts down the transaction’s fees compared to the US dollars by each transaction. Nowadays, it could become possible that stablecoins would be used by everyday consumers to buy and sell things with crypto.
Memecoins are the type of cryptocurrency which are the most volatile in terms of price and are opposite to stablecoins. They are the most popular altcoins whose value depends mainly on community buy-in and exposure. They have almost zero usage in the outside world.
In most cases, when BITCOIN and other altcoin’s value goes up and down through some fundamentals they provide and in terms of their use cases, meme coins in the crypto ecosystem often gets brought up by mostly the trend followers and influencers in the society who have zero knowledge about the crypto world. The most popular meme coins are DOGECOIN or ‘doge,’ based on the popular viral meme of the Shiba Inu dog. These types of altcoins investors have a get-rich-quick mentality that is harmful to the investor and, in the long run, to the crypto ecosystem.
- Utility tokens
These types of altcoins are somewhat different from the other types when users need to pay transaction fees, including publishing art within any blockchain network, where utility tokens’ function is mentioned. Ether is the most versatile utility token of all. It lets users pay for mint currencies, digital art, and others on its Ethereum blockchain; it also covers the gas fees charged on the blockchain for the data processing taking place through each transaction. Filecoin is another example of a utility token used in the file coin blockchain network for storage.
- Governance tokens
These types of altcoins hold a more significant deal of power than the other types of altcoins; they are a type of utility token that has purchased some voting privileges and lets the users participate in blockchain polls. Governance tokens allow users to vote on the changes that could take place in the blockchain and on deciding new proposals or changing the governance system within the blockchain itself. The most famous example of a utility token is MAKER, which allows users to vote on decisions regarding the decentralized financed (DEFI) protocol on which the decentralized stable coin DAI runs.
These are the type of altcoins spun off or somewhat like the parent coin. These are designed when coders make significant changes to the blockchain’s protocol, like how they are recorded, traded, and received by different users. The most common example is bitcoin cash, which was created when many users wanted an alternative for better regular payments. However, the plan failed considerably, and bitcoin cash is too volatile for making such payments nowadays.
So, hopefully, after reading the above article, you have gained quite a bit of knowledge of what altcoins are and which could be the best type of altcoin to invest your money next.