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What are Altcoins?

Learn what altcoins are, and how to buy/swap them in Best Wallet.

Updated over a week ago

Altcoins, short for "alternative coins", are cryptocurrencies that were created after the pioneering success of Bitcoin ($BTC). Technically, all cryptocurrencies apart from Bitcoin are altcoins.

These cryptocurrencies aim to address Bitcoin's limitations or provide new capabilities and utilities, ranging from improved transaction speeds and energy efficiency to enhanced privacy.

The altcoin market is vast and varied, with thousands of alternatives like Ethereum ($ETH), Litecoin ($LTC), and Ripple ($XRP), each designed with specific features and potential use cases.

How altcoins work

Altcoins operate on blockchain technology, similar to Bitcoin. They often employ different consensus mechanisms, such as Proof of Stake (PoS) or Delegated Proof of Stake (DPoS), to validate transactions and secure the network.

These mechanisms are crucial for maintaining the integrity and security of transactions without the need for a central authority. These blockchains often are an improvement on Bitcoin, with increased speed of transactions, cheaper fees, and lower energy output.

Essentially, altcoins improve on Bitcoin's founding principles of decentralisation and peer-to-peer (P2P) transactions.

History of altcoins

The journey of altcoins began with Namecoin ($NMC) in 2011, aiming to decentralise domain name registration. It was the first altcoin to be launched. Since then, the altcoin universe has expanded exponentially.

Significant milestones include the launch of Ethereum in 2015, which introduced smart contracts and decentralised applications (dApps), and the surge of Initial Coin Offerings (ICOs) in 2017.

Between 2020-2021, the decentralised finance (DeFi) and non-fungible tokens (NFTs) drive further added to the growth of the altcoin space.

The different types of altcoins

Altcoins come in various forms, including:

  • Platform Tokens: These are native to a wider platform or ecosystem. For example, Ether ($ETH) is the native token of the Ethereum network, which helps power the creation and support of decentralised applications (dApps) and smart contracts.

  • Privacy Coins: These focus on providing secure and anonymous transactions. For example, Monero ($XMR) and Zcash ($ZEC) offer end-to-end encrypted private transactions.

  • Stablecoins: These are cryptocurrencies pegged (paired on a 1:1 rate) with national fiat currencies. For example, Tether ($USDT) and USD Coin ($USDC) are pegged to USD, meaning their values remain stable.

  • Utility Tokens: These cryptocurrencies provide access to a specific service or platform, like Binance’s $BNB. Holding $BNB whilst using Binance's exchange means users can get favourable exchange rates or reduced trading fees. These are also called exchange-specific tokens. Another example of this is Uniswap's token, $UNI.

Tips for investing in altcoins

  • Do Your Research: Before investing, thoroughly research the altcoin. Understand its purpose, technology, market potential, and risks. Don't invest based on hype or speculation alone. You can read about some of the largest altcoins here.

  • Diversify Your Portfolio: Don't put all your funds into one altcoin. Spread your investments across different assets to mitigate risk. You can buy a number of the biggest altcoins in Best Wallet, including Ethereum ($ETH), Binance Coin ($BNB), Poylgon ($MATIC), and many more.

  • Understand the Risks: Be aware of the volatility and risks associated with altcoin investments. Be prepared for the possibility of losing large chunks of your investment.

  • Safeguard Your Altcoin Purchases: Protect your altcoins by buying and holding them in your Best Wallet. Avoid keeping significant amounts on exchanges for long periods.

  • Stay Informed: Keep up-to-date with the latest crypto news and Best Wallet developments. Market conditions can change rapidly, and staying informed can help you make better investment decisions.

  • Consider Long-Term Potential: Look for altcoins with long-term potential rather than short-term gains. Consider the sustainability and prospects of the project.

Why you should own altcoins

Investing in altcoins can be rewarding for several reasons:

  • Diversification: Holding various altcoins is part of a healthy crypto portfolio. Whilst Bitcoin ($BTC) is coming soon to Best Wallet, owning other major cryptocurrencies like Ethereum ($ETH) and Polygon ($MATIC) are also important and often lucrative.

  • Innovation: Many altcoins bring innovative solutions to the market, which can lead to significant demand and price increases. For example, Chainlink ($LINK) is touted as a cryptocurrency that will bridge blockchain to traditional finance, offering huge adoption.

  • Market Growth: As the crypto market expands, well-positioned altcoins could see substantial value appreciation.

  • Entry Point: Some investors find altcoins attractive due to their lower price point compared to Bitcoin, providing an accessible entry into the cryptocurrency market.

Can I buy altcoins in Best Wallet?

Yes, you can buy altcoins in Best Wallet. Best Wallet supports a wide range of cryptocurrencies, including many popular altcoins like Ethereum ($ETH) and Polygon ($MATIC).

The Best Wallet app has integrated Onramper, so you can directly buy altcoins built on the Ethereum, Polygon, and BNB Smart Chain networks.

Swapping your altcoins on Best Wallet

Best Wallet facilitates not just the buying and holding of altcoins, but also swapping one altcoin for another. This feature is particularly useful for those looking to capitalise on market movements, diversify their portfolios, or simply explore new cryptocurrencies.

Swapping altcoins within Best Wallet is straightforward, ensuring users can easily trade between different cryptocurrencies without needing to transfer their assets outside the wallet.

Wrapping up

Altcoins are an integral part of the evolving cryptocurrency landscape, offering a spectrum of opportunities beyond Bitcoin.

While they come with their own set of risks, understanding their unique properties and market dynamics can help you navigate the altcoin space more effectively.

As always, thorough research and a cautious approach are advisable when exploring the diverse world of alternative cryptocurrencies. You can read about Ethereum, Polygon, and more altcoins here.

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