The growth in the crypto markets has been driven by not just Bitcoin, it is the alternative coins or altcoins that have been at the forefront. The global altcoin market cap touched $1.6 trillion in November 2021 and is currently at $600 billion. The crypto space is dominated more by altcoin news these days than Bitcoin.
People who have invested in altcoins in recent years have earned massive amounts of profits as they have much more upsides than BTC. If you have been wondering whether altcoins are worth investing in and want to earn huge profits, then read our detailed guide below.
What Are Alternative Coins or Altcoins?
Bitcoin was the first cryptocurrency ever to exist; since then, thousands of others have come into existence. These other cryptocurrencies that are not Bitcoin are commonly known as altcoins or alternative coins. The world’s first altcoin was forked from the Bitcoin blockchain in 2011 and was called Namecoin.
There are currently more than 20 thousand altcoins in circulation, with new altcoins being launched every day. Some of the most popular alternative coins in the market are ETH, DOGE, SOL, ADA, XRP, APT, MATIC, etc. People who invested in these tokens in their early phases have made millions of dollars.
Possible Risks When Investing in Altcoins
Reputation Risk
Since crypto is unregulated, how an altcoin will perform depends on the basis of the reputation of the protocol it belongs to and its founders. In such a scenario, people behind the project and things like their whitepaper and roadmap become very important. A lot of rug pulls, scams and frauds have occurred due to projects that were obscure. Thus, reputation is one of the very first attributes to look at before investing.
Technical Risk
A lot of alternative coins are created using the source code of existing coins, such as BTC, LTC, ETH, etc. A very big example is the popular meme coin DOGE which was developed using LTC code. If a token is listed on one of the major centralized exchanges, then, in all probability, it is legitimate, as exchanges perform due diligence before listing. But there are times when a project and its token can be technically flawed and have risks associated with them.
Market Access Risks
Not all crypto tokens can be traded on top crypto exchanges. Most of the new tokens are launched through decentralized exchanges and are not easily available to trade.
A lot of these tokens can also be a scam or a rug pull like the Squid Game Token. Moreover, some tokens are not available to be traded in some countries as the exchanges they are listed on are not allowed to operate there.
Questions to Ask before Investing in Altcoins
There are a few questions that should be clarified before investing in an altcoin, such as:
- Who is the team or the people associated with the token and the protocol?
- How does the token work, and what are its use cases?
- What will its developers use the money for If you invest in their token?
- How much are you willing to invest, and how much profit do you wish to make from it?
- Are there any protections or remedies available in case of a scam or other malicious activities?
Conclusion
According to the latest crypto altcoin news, the prices have started to climb again recently after being down for more than a year. This presents a wonderful opportunity for you to invest in them. If you follow all the suggestions mentioned above and consider the risks, then you can earn good profits from them.
It is, however, important to understand that not all the tokens will make a full recovery or reach new all-time highs. So have a look at what the teams behind these tokens are doing and the future roadmap they wish to take before investing in them.
