Many of you may be interested in altcoins but feel unsure about them. This article provides an easy-to-understand overview of altcoins for beginners, including a basic overview of altcoins, stocks to look out for when investing or gambling, and the risks and precautions to take. Please take a look at this article before you start investing in altcoins.
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What is an altcoin?
Definition of an altcoin
Altcoin is a general term for cryptocurrencies other than Bitcoin.” Short for “Alternative Coin,” it was developed as an alternative to Bitcoin. There are currently thousands of different altcoins, each with its own unique characteristics and purpose.
Altcoins build on Bitcoin’s technology with improvements or adopt entirely new technologies to compensate for Bitcoin’s shortcomings or explore new possibilities. Examples include increasing transaction speed, introducing smart contract features, and enhancing anonymity.
Differences between Altcoin and Bitcoin
The main differences between bitcoin and altcoin are as follows.
- Development Purpose
- Bitcoin: Creation of a decentralized payment system
- Altcoin: compensating for the shortcomings of bitcoin, adding new features, etc.
- Technical Features
- Bitcoin: Consensus algorithm with Proof of Work (PoW)
- Altcoin: various consensus algorithms, including improved versions of PoW and Proof of Stake (PoS)
- Market Share
- Bitcoin: accounts for about 50% of the cryptocurrency market
- Altcoin: the remaining 50% is shared by thousands of different altcoins
- Price Fluctuations
- Bitcoin: relatively stable
- Altcoin: Linked to bitcoin, but can fluctuate widely depending on individual factors
Altcoins complement bitcoin and serve to expand the potential of cryptocurrencies. On the other hand, it should be noted that they are more volatile in price and risky than bitcoin. Investors are required to have a good understanding of the characteristics and purpose of each altcoin and make decisions at their own risk.
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Types and characteristics of altcoins
There are many different types of altcoins, each with its own unique characteristics. Here are some typical altcoin types and their characteristics.
Platform-type altcoins (Ethereum, Cardano, etc.)
Platform-type altcoins provide a platform for the development and execution of decentralized applications (DApps) with smart contract functionality. This enables applications in a variety of fields.
- Ethereum (ETH)
- Most representative platform-based altcoin
- Has a rich DApps ecosystem
- Currently transitioning to Proof of Stake (PoS)
- Cardano (ADA)
- Developed with an academic approach
- Energy efficient with PoS
- Steadily expanding functionality with incremental updates
Anonymity-oriented altcoins (Monero, Zcash, etc.)
Anonymity-oriented altcoins specialize in making transactions anonymous. This meets the needs of users who value their privacy.
- Monero (XMR)
- Most well-known anonymity-oriented altcoin.
- Uses ring signature and stealth addresses
- Very difficult to trace transactions
- Zcash (ZEC)
- Anonymity is achieved using zero-knowledge proof
- Transparent transactions possible if necessary
- Allows selective disclosure of information
DeFi related altcoins (Uniswap, Aave, etc.)
DeFi (decentralized finance) related altcoins aim to bring traditional financial services onto a decentralized network. This is expected to expand access to financial services and reduce intermediary costs.
- Uniswap (UNI)
- Typical decentralized exchange (DEX)
- Provides liquidity using automated market makers
- Anyone can freely create token pairs
- Aave (AAVE)
- Decentralized lending platform
- Crypto assets can be borrowed by providing collateral
- Interest is paid to liquidity providers
These are just a few examples; many other types of altcoins exist. Since each altcoin has a different direction and employs a different technology, it is important for investors to choose the altcoin that best suits their goals and values.
Introduction of well-known altcoins
This section introduces some of the altcoins that are highly known in the market and their uses and characteristics.
Ethereum (ETH)
Usage:
- Execution platform for smart contracts
- Development of decentralized applications (DApps)
- Provision of DeFi (decentralized finance) services
Features:
- Most representative platform altcoin
- Has a rich DApps ecosystem
- Currently transitioning to Proof of Stake (PoS) to improve scalability and environmental impact
Binance Coin (BNB)
Usage:
- Discounted transaction fees on the Binance exchange
- Development of DApps on Binance Smart Chain
- Payments in daily life (some countries/regions)
Features:
- Native token of Binance, the world’s largest crypto asset exchange
- Offers similar features to Ethereum through the Binance Smart Chain
- Features low fees and fast transaction speeds
Cardano (ADA)
Usage:
- Smart contract execution platform
- Development of distributed applications (DApps)
- Use in academic research and education
Features:
- Developed with an academic approach
- Energy efficient with Proof of Stake (PoS)
- Steadily expanding functionality through gradual updates
Ripple (XRP)
Usage:
- Settlement of international remittances
- Interbank fund transfers
- Business-to-business settlements
Features:
- Provides payment solutions for financial institutions
- Characterized by high-speed transaction processing and low cost
- Characterized by a centralized operating structure, which is the subject of some controversy
Each of these altcoins has its own uses and characteristics: Ethereum is used as a development platform for decentralized applications; Binance Coin is used for the Binance exchange and related services; Cardano is developed with an academic approach; Ripple (XRP) provides payment solutions for financial institutions. It is important for investors to choose an altcoin that fits their objectives and values.
Altcoin Investment Basics
Before beginning to invest in altcoins, it is important to understand their advantages and disadvantages, risk management, and how to get started.
Advantages and Disadvantages of Altcoin Investing
Advantages:
- Potential for high price gains
- Diversification of risk by investing in a diversified portfolio
- Investment opportunities in new technologies and innovative projects
Disadvantages:
- High price volatility risk
- Regulatory uncertainty
- Potential for project failure or fraud
Altcoin investment risk management
- Diversify your investment amount
- Diversify investments across multiple altcoins
- Adjust the percentage of altcoins in the total portfolio
- Principle of self-reliance
- Investment decisions are made at your own risk
- Limit your investment to the amount you can afford to lose.
- Keep abreast of market trends and project information
- Understand market trends and make investment decisions at the appropriate time
- Keep abreast of progress and changes in the projects in which we invest
How to start investing in altcoins
- Choosing a Crypto Asset Exchange
- Choose an exchange with adequate security measures
- Check the types of altcoins offered
- Open an account and verify your identity
- Open an account at an exchange
- Submit identification documents and activate your account
- Deposit funds
- Deposit legal tender or other crypto assets to the exchange
- Purchase altcoins with deposited funds
- Purchase altcoins
- Select the altcoins you wish to purchase
- Execute your purchase at the appropriate price and timing
- Storing your altcoins
- Store in an exchange wallet or in a wallet that you control
- Take adequate security measures (2-step verification, strong passwords, etc.)
While altcoin investment has the potential for high returns, it also carries significant risks. Investors are expected to make investment decisions at their own risk, while acquiring sufficient knowledge and properly managing risk.
Altcoin Gambling Basics
Online gambling with altcoins is gaining popularity. This section describes the types of altcoin gambling, their advantages and disadvantages, and risk management.
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Types of Altcoin Gambling
- Altcoin Casino
- Slots, roulette, blackjack and other casino games
- Place bets using altcoins
- Altcoin sports betting
- Predict the outcome of a sports match and place a wager
- Pay wagers and receive dividends using altcoins
- Altcoin Poker
- Online poker played with altcoins
- Tournament and individual competition formats are available.
- Altcoin Lotteries
- Buy lottery tickets with altcoins
- Winners receive high value altcoins
Advantages and Disadvantages of Altcoin Gambling
Advantages:
- High anonymity
- Use of altcoins minimizes exposure of personal information
- Fast transactions
- Altcoin transfers are quick, allowing you to start gambling immediately
- Low commissions
- Altcoin transfer fees are lower than traditional money transfer methods
Disadvantages:
- High price volatility risk
- High price volatility of altcoins may cause the value of your wager to fluctuate
- Regulatory uncertainty
- Regulations for altcoin gambling vary from country to country and are uncertain
- Potential for fraud
- Malicious gambling sites may exist and caution should be exercised
Risk Management for Altcoin Gambling
- Choosing a Trusted Gambling Site
- Choose a site with a reliable license and adequate security measures
- Control your wager
- Keep your wagers within a tolerable range of losses.
- Do not increase your stakes too much, even if you continue to win
- Principle of self-responsibility
- Gambling is done at your own risk
- Do not gamble until you are in debt
The recommended altcoins for online gambling are those with high trading volume and relatively stable price volatility. Examples include Ethereum (ETH), Litecoin (LTC), and Bitcoin Cash (BCH).
These altcoins are used by many gambling sites to facilitate deposits and withdrawals.However, it is important to remember that altcoin gambling comes with significant risks. It is important not to get too carried away with gambling, and to exercise strict self-discipline.
Cautions for Altcoin Investing and Gambling
There are several important precautions to take when investing in altcoins and gambling. This section will discuss the following: beware of fraudulent projects, be aware of regulatory trends, and the principle of self-responsibility.
Beware of Fraudulent Projects
When investing in altcoins, one should be wary of fraudulent projects. Special attention should be paid to projects with the following characteristics
- Unrealistic promises of profit
- Be wary of projects that guarantee high profits in a short period of time
- Calmly determine if it is a realistic profit projection
- Unclear business plans
- Avoid projects with unclear business plans and no specifics
- Carefully check white papers and information on official websites
- Teams with a high degree of anonymity
- Be wary of projects that do not disclose information about team members
- Avoid projects that do not disclose photos, biographies, or other information
Investing in a fraudulent project puts you at high risk of losing your money. It is important to thoroughly research and determine if the project you are investing in is trustworthy.
Be aware of regulatory trends.
Altcoin investment and gambling also requires attention to regulatory trends. Regulators in various countries are increasingly tightening regulations on crypto assets.
- Regulation of exchanges
- Regulations on crypto asset exchanges may be tightened.
- Check regulatory compliance status when selecting an exchange
- Tax Changes
- Taxation of crypto assets may change
- Consider the impact of tax changes on investment and gambling
- Possible bans
- Some countries may ban trading or gambling on crypto assets
- Always check regulatory developments in your country
Regulatory changes can have a significant impact on altcoin investment and gambling. Investors should always keep an eye on regulatory developments and respond appropriately.
Principle of self-responsibility
The principle of self-responsibility is very important in altcoin investment and gambling. Investors should keep the following points in mind
- Investment decisions are made at one’s own risk
- Do not rely on the opinions of others, but gather information and make decisions on your own.
- Understand the risk of loss
- There is always a risk of loss when investing or gambling in altcoins.
- Invest and gamble within your tolerance for loss.
- Do not get too carried away with your investment/gambling.
- Getting too absorbed in investing/gambling will cloud your judgment.
- Try to make calm decisions and avoid being carried away by emotions.
Altcoin investment and gambling are done at one’s own risk. Investors must act with their own judgment and responsibility and take responsibility for the results.It is important to approach altcoin investment and gambling with caution and calmness in light of the above precautions.
