Any market with a monopoly dominating it is never a healthy one. More competition and diversity are pro-consumer, and the more options are present, the better the outcome for the people involved.
Altcoins offer precisely that, challenging the prime status of Bitcoin and Ethereum in the cryptocurrency market and giving you the power of choice. Altcoins try to stand out with the vision of their creators behind them, the number of practical applications, and the benefits associated.
Safe transactions and speed
Cryptocurrencies with high transaction speed have value, meaning you can easily exchange them for another crypto, money, goods or services. Altcoins are accepted for all of the above, and you can cross-reference this crypto variant to see various altcoins’ practical usage.
More options are always a good characteristic in the crypto market because when an altcoin has use, it gets recognised by more providers. The more providers recognise them, their value goes up, and users flock towards the altcoin.
Greater stability
Volatile changes to the value of central cryptocurrencies did occur in the past, with plenty of Bitcoin market crashes. But stablecoins, a subvariant of altcoins, aim to reduce such oscillations. The value of a stablecoin is tied to a physical good, fiat currency or precious metal.
USD coin, Tether (USDT) and MakerDAO’s DAI are good examples of stablecoins which maintain their value in a narrow bracket. Value oscillations are inevitable in any trading, but as the name implies, stablecoins exist and aim to reduce this to a minimum. When investors have stability, they can easily and readily access the decentralized finance (DeFi) market and continue trading.
Decentralization
The beauty of different altcoins is that they specialize in various fields. Having a right to vote or a degree of control over a cryptocurrency project makes altcoins like MakerDAO (MKR), Decentraland (MANA), Uniswap (UNI) and Decred (DCR) more exciting for potential investors and users. In their way, altcoins offer everyone a chance to participate in the project process, depending on the type chosen.
For a community to have governance over the said project, each user must have a degree of voting power. That amount is directly related to the number of said governance tokens in their possession. Even so, users with less voting power can band together and still make their votes count.
A wider market
When the value of Bitcoin or Ethereum goes down, it reflects on the number of new users and early adopters. Fewer users wish to invest when the market is volatile and in a downward trajectory, making the importance of altcoins more impactful. Altcoins offer more options for those willing to enter the crypto market, as their value can be tied to various applications or commodities (as discussed).
Because they have higher survivability, and are not tied to the major players, altcoin users are safer from sudden market changes. Even when said changes occur, flocking to allocations for a safer investment is always a good option. Diversifying your crypto portfolio with altcoins means users can mitigate the dangers while enjoying the various benefits and applications of altcoins.
Innovative application
Altcoins can be tied or made for a specific niche, satisfying a market segment which the big players have ignored. Because of their mentioned qualities, altcoins can even exist as play-to-earn (P2E) tokens, which are rising in use in developing countries like the Philippines. The value of any altcoin isn’t tied to any currency.
This ability means an altcoin can avoid inflation. Users in developing countries who wish to enter the crypto market are, therefore, not limited by the purchasing power of their currency but by the altcoin’s nature. The biggest P2E token is Axie Infinity’s governance token (AXS), which has a total market capitalization of $2,182,274,030. While the altcoin is still young (AXS started in 2020), its projections are promising.
Detailed investigation
Altcoins are less known than Bitcoin or Ethereum, which are recognisable and widely known. Whichever altcoin you decide to invest in requires delightful research and understanding. Altcoins can have narrow or specific uses, so it’s paramount to understand the intent behind the altcoin. By researching the nature behind the altcoin, you can use it to its full extent. Of course, this requires time, patience and sometimes even money.
Altcoins always have a smaller community, where a sudden departure of a key player can cause a herd effect and for the rest to follow. Many altcoins, like PayCoin (XPY), FTX Token (FTT), and SpaceCoin (Space BTC), serve as a reminder of what can happen.
Because some altcoins are not widely known, outside their niche communities, they are not recognised by institutions as valid forms of payment. If the intended use of altcoin is narrow, its liquidity gets limited. New altcoins face identity problems while trying to establish themselves in the crypto market. The names of Bitcoin and Ethereum have instantaneous recognisability and credibility, which new altcoins may struggle to get or need time to accumulate.
Disclaimer: The views and opinions expressed in this article are those of the authors and do not reflect those of Geek Vibes Nation. This article is for educational purposes only.
Caroline is doing her graduation in IT from the University of South California but keens to work as a freelance blogger. She loves to write on the latest information about IoT, technology, and business. She has innovative ideas and shares her experience with her readers.
