What are altcoins and why should you invest in them?

In Blockchain

Alternative + coin = altcoin.

The term altcoin can be used to refer to any cryptocurrency that isn’t Bitcoin. This is because these other coins were formed as "alternative coins" to Bitcoin.

As coins become more established, they may start to lose their status as an "altcoin". Ethereum is not always referred to as an altcoin because it is a fundamental part of crypto today.

But projects built on Ethereum would certainly be classified as altcoins.

Altcoins are created with different goals. Some are built to tackle issues in the finance industry, others may be tailored to disrupting various sectors or functions, like fashion or supply chain.

Some altcoins are created purely for fun. Garlicoin, for example, was created for no real purpose.

Why would you consider investing in altcoins?

No investment is guaranteed, especially in cryptocurrency. You should ensure you fully understand what gives a cryptocurrency value before you begin thinking about investing in an altcoin.

There are a lot of worthwhile projects you may consider adding to your portfolio. We list more than 100 cryptocurrencies on Liquid.

Some traders choose to invest in altcoins because they believe in the vision of the project or the use case of the coin. Others may look at hype surrounding the project or major upcoming milestones.

The appeal of investing in an altcoin is, generally, the high potential for profit. Altcoins have a considerably lower market cap than Bitcoin and so there can potentially be large gains.

Remember:

With market cap, the price per coin is not the value of the coin. The value is reflected in the market cap itself. Low market cap coins generally have more room for growth than large caps, but they can be more of a risk.

Want to know more about how to get started in cryptocurrency? Read our guide to buying your first Bitcoin

This content is not financial advice and should not form the basis of any financial investment decisions nor be seen as a recommendation to buy or sell any good or product. Trading cryptocurrency is complex and comes with a high risk of losing money, particularly if you trade on leverage. You should carefully consider whether trading cryptocurrencies is right for you and take the time to learn how trading works and decide how much money you are prepared to lose.

WRITTEN BY

Liquid

Providing liquidity for the crypto economy.