8 Pros and Cons You Need to Know!
Following their recent skyrocketing prices, traders, investors, miners, and shareholders have begun to capitalize on altcoins in order to make the most of them.
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Altcoins include all digital currencies apart from Bitcoins. Usually, altcoins are better alternatives to Bitcoins when it comes to exchanging. Currently, Bitcoin is ruling the decentralized market; however, other altcoins are also rising at the same rate.
You may have heard about Ethereum (ETH), which is the second most popular decentralized currency after Bitcoin. However, the ‘pros and cons’ regarding whether to invest in Bitcoin are subjective, and different investors may view them differently.
To know how the pros and cons reflect on your situation, first of all, you need to understand what it means to invest in altcoins.
Some Facts About Altcoins Before You Invest:
As mentioned before, altcoins include all digital currencies that accept Bitcoin. There are various digital currencies that have been designed to overcome Bitcoin’s limitations. The main purpose of altcoins is to solve issues regarding decentralization, security, and scalability that Bitcoin struggles to handle.
Today, more than 5,000 other cryptocurrencies are available to invest in aside from Bitcoin, but the market value of altcoins does vary.
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Altcoins come in all shapes and sizes but they do share some similarities. To name some of the strongest Altcoins in 2021: Bitcoin Cash, Ethereum, Ripple, Polkadot, Dogecoin, Tron and more.
The Pros of Investing In Altcoins in 2021
There are two main reasons why you should invest in altcoins:
First of all, you can keep altcoins for a long time period, whilst knowing that their market value will most likely increase significantly. Subsequently, you can maximize their BTC stack by trading altcoins when their value increases. Wondering what a BTC stack is? It is Bitcoin’s Proof of Transfer, an innovative mechanism that rewards STX token holders for participating in the Stacks Blockchains consensus process, called Proof of Transfer (PoX). Each time a new block is mined on the Stacks blockchain, the protocol sends BTC committed by miners to Stackers as a reward for adding value to the network.
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Investing in altcoins also provides several other benefits:
1. Evolutionary Opportunities:
The future of the digital system is unique and therefore offers limitless evolutions.
2. Unique Features:
Unlike bitcoins, altcoins have many unique features such as improved functionality, transactions, and scaling in order to meet the rapidly expanding demand. Therefore, these technologies are more than just a token.
3. Less volatility in price compared to bitcoin:
This is another good reason for making an investment in altcoins; the fluctuations in altcoin prices are usually lower than those of Bitcoin. Because of this feature, your investment will probably not see as many sudden changes in value.
4. Accessible to everyone:
Making transactions with Altcoins is easier than with Bitcoin; most altcoins trade faster and cheaper than Bitcoin, so in terms of transaction ease, altcoins win this one. That being said, buying Bitcoin is not typically part of a person’s scope of return on investment. Therefore, unless you find the act of buying to be its own reward, you will disregard that. Additionally, investing in altcoins is easier in comparison to investing in Bitcoin, which we can attribute to low competition.
The Cons of Investing In Altcoins in 2021
According to experts, the reason behind Bitcoin’s domination of the cryptocurrency market is because this coin is naturally associated with a high return on investment (ROI).
The disadvantages of investing in altcoins include:
Too many altcoins are currently circulating in the cryptocurrency market; this makes it difficult to diversify your digital wallet.
Altcoins tend to be viewed with some hesitancy and curiosity within the general public; young investors are often reluctant to invest in altcoins because the high ROI on bitcoin has already caught their attention.
3. No Protection In The Event Of A Loss:
Altcoins do not provide any protection in the event of uncertain loss; if you have not cashed your profit immediately you could suffer a great loss because the BTC can change in value in the blink of an eye. Obviously, if you are retaining your profits in the form of more altcoins, the loss in value of altcoins will obviously affect your profits. Therefore, security is one of the prime concerns for any cryptocurrency investor.
4. The Market Capitalization Value Is Lower Than Bitcoin:
Before investing in altcoins, be aware that altcoin market capitalization is lower than that of bitcoin; this means that you’ll receive far less profit investing in altcoins than you would if you were to invest in bitcoins.
Tell Us Your Thoughts!
We think that there’s good evidence behind choosing to invest in altcoins this year, and we’ve already seen altcoins like Bitcoin Cash, Ethereum 2.0, Ripple and Litecoin gain popularity. But what do you think? We’re interested to know your opinions on our pros and cons – will you be choosing to invest in altcoins this year? Let us know in the comments below.