If you are just interested in getting started with trading altcoins I recommend you check our list of recommended altcoin exchanges.
What is an Altcoin and why do they exist?
Since the birth of Bitcoin and blockchain technology 9 years ago, the amount of altcoins on the market has increased exponentially.
Bitcoin does not support every single use case for blockchain technology and that is why there are now far more than 1000 different altcoins you could choose to invest in.
The boom of altcoins has created opportunities for both investors and scammers to make easy money.
Here at Coinworld we help people separate the gems from the crap and provide you with information that will increase your chances of making successful trades.
Why this sudden hype and interest in altcoins & ICO’s?
Bitcoin does not support every single use case of blockchain technology (yet). This leaves room for other currencies and tokens to provide value by utilizing their own blockchains.
Examples of some of the most popular use cases altcoins solve are:
Truly anonymous transactions (Monero, ZCash, Zcoin & more).
Lower fees and faster transaction time (Litecoin, Ripple, Bcash & more).
Smart-contracts (Ethereum, NEO, Stratis & more).
Data-storage (Filecoin, Storj, Siacoin & more).
Easy money for developers is another reason for the recent altcoin boom.
Previously, in order to monetize on a new software, the developing team or company had to either sell a finished product and generate revenue, or receive funding from venture capitalists.
With ICO’s the development teams do not need any of those things.
Projects with not even one line of code have managed to raise hundreds of millions of dollars from private investors buying pieces of the promised product through Initial Coin Offerings.
There is no denying the fact that many of the new ICOs are inspired by the easy money, and where there is easy money, there are scammers.
Unfortunately the rise of cryptocurrencies has provided a hotbed for scammers.
Almost anyone can launch an ICO and have a professional white paper written for a few hundred dollars.
Freelancing services such as Fiverr are full of people selling services writing white papers.
In an industry that is very young, even knowledgeable investors fall victim from scams.
We will help you identify and spot the tells of a scam to minimize your risk of falling for one in our next article.
How and where to buy Altcoins
Most altcoins are traded through either Bitcoin (BTC) or Ethereum (ETH) on exchanges. A select few have USD trading pairs but generally you are better off buying them with BTC or ETH.
There are a bunch of different exchanges out there, but in our opinion there is really only two altcoin exchanges you need.
Binance.com – Binance offers most of the well-known altcoins and provides an amazing platform for trading.
Cryptopia.co.nz – Cryptopia does not have the same amazing platform that Binance does but they have by far the widest array of altcoins to choose from.
If you can’t find it on Cryptopia, you are unlikely to find it anywhere else.
Deposits are made only through cryptocurrencies.
If you do not have any ETH or BTC to begin trading with, we suggest you check out our list of reviewed exchanges where you can buy BTC or ETH with a credit card, bank wire or PayPal.
Why investors & traders buy Altcoins
Depending on your investment strategy, there are multiple different reasons as to why you might want to pick a certain coin.
From an investor standpoint the coins use case might not always be the most important however. Many investors do not care about what they are investing in, as long as it yields returns.
Many altcoins utilize a proof-of-stake technology.
If you hold enough coins, you can stake your coins to receive dividends of the network.
Staking your coins is more commonly known as running a node on the network.
A node typically verifies blocks and is used to vote on consensus rules and receives rewards for doing so. As an investor, running a node is similar to receiving dividends from stocks.
Another reason why investing in altcoins may be very profitable is because generally anyone is allowed to do so.
Normally early investing opportunities are given to a handful of people who make enormous returns.
In cryptocurrency the standard practice is that anyone can invest and it gives anyone the opportunity to become an early investor which tends to be a lot more risky but yield higher returns.
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