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What are altcoins

What are altcoins

The first cryptocurrency was bitcoin. All virtual coins issued later are called altcoins. These cryptocurrencies implement some of the solutions that the “pioneer” did not have.

In fact, altcoins act as an alternative to bitcoins. And this number continues to grow every day. Altcoins account for 99.999% of all digital coins. The most serious competitor to bitcoin is believed to be etherium.

A huge number of new cryptocurrencies are emerging due to decentralization and blockchain technology. The developers of these coins are trying to solve the problems inherent in bitcoin. Due to this there is an attempt to create new successful coins. Although the first cryptocurrency receives major upgrades, it has the following disadvantages:

  • transaction duration;
  • lack of anonymity;
  • high cost of mining;
  • weakness of functionality.

To speed up the transaction time, it is necessary to improve the algorithms, which is happening in the development of altcoins. Special encryption methods are used to improve the anonymity factor. This makes it more difficult to track the sender and recipient of coins.

Alternative protocols are used in altcoins to reduce the cost of mining, eliminating the need for sophisticated equipment. Even for subsequent coins, improved functionality is created. For example, the ability to conclude smart contracts appears.

In general, the creators of altcoins attempt to successfully play on the disadvantages of the first cryptocurrency. Compensation of these disadvantages leads to the implementation of other cryptoprojects.

If we talk about the disadvantages of such coins, here stand out the following:

  • rate jumps;
  • dependence on bitcoin;
  • the influence of the political component and other information background;
  • the potential loss of confidence in the project;
  • the danger of the ban on mining and operations with cryptocurrencies.

All coins, including bitcoin, are subject to rate hikes. The dependence of altcoins on the first cryptocurrency, political decisions and statements of famous people is also obvious. For example, Ilon Musk’s words about Dogecoin led to a sharp drop of this coin.

It is also impossible to deny that new coins are usually perceived with distrust. And in general, the danger of losing confidence in any project is high. There are many cryptocurrencies created in the world, which is not always perceived positively.

A ban on mining and operations with digital coins can be introduced in any country. In particular, this topic began to be actively discussed in Russia. As a result, it was decided to regulate this area, not to ban it.

Varieties of cryptocurrencies.

Among the alternative cryptocurrencies stand out:

  • Unique altcoins.
  • Stablecoins.
  • Anonymous altcoins.

Unique altcoins use exclusive solutions. For example, for etherium there is a system of work with smart contracts, in Dash there is a possibility to transfer funds via SMS. Such coins try to come out on top due to their unique technologies.

Stablecoins are created to minimize financial risks. The rate of such coins is tied to specific currencies. A striking example here is Tether – a cryptocurrency corresponding to the U.S. dollar in the ratio of 1:1. Such coins become a kind of digital safe havens, protecting assets from large price fluctuations.

Anonymous altcoins are used by people who want to hide their digital assets and personal data from outsiders. Users encrypt such assets and transactions themselves. This type of altcoin has been the subject of the most criticism from the governments and regulators of many countries.

There are different opinions about the prospects of specific altcoins. For example, well-known trader Justin Bennett recommends paying attention to the following coins:

  • Polygon;
  • Polkadot;
  • VeChain.
  • Dogecoin (DOGE).

Polygon could grow to $4.5 this year. The analyst tested this asset and then was convinced of its prospects. Bennett is confident that the coin will overcome resistance and begin to grow. However, such a prospect is not so obvious.

Polkadot is now characterized by a downtrend. The rate has fallen to $17, but there should be a reversal, providing further growth. The coin can overcome a mark in 38$ and higher. For this purpose it is necessary to pass successfully the expected resistance at the level of $31-32.

Another promising asset could be the VeChain token. A breakthrough is expected here in the coming months due to the accumulation of volumes. For success in 2022 this unit needs to overcome the level of $0.15. Then the currency will continue to grow.

Cardano. The coin seeks to make up for the shortcomings inherent in the etherium. Cardano uses the Proof of Stake system. Less electricity is consumed here. The underestimation of this cryptocurrency is due to the lack of smart contracts and tokens. But these problems need to be solved. Cardano is also associated with Ilon Musk, which suggests its great prospects. The coin will seriously compete with the etherium.

Enjin. This project allows the introduction of NFT tokens in the popular game Minecraft. Since it is in great demand among gamers, it will inevitably affect the cryptocurrency. So the Enjin project is assured of success. At least, the probability of such development is extremely high.

Uniswap. Uniswap token will prove to be a promising asset after Ethereum 2.0 launches. The requirements for mining Ethereum should change, which will favorably affect the UNI token. This unit will prove popular again.

Litecoin. Many traders perceive Litecoin to be the best alternative to bitcoin. Although the coin has some drawbacks, it attracts attention due to two important advantages:

  • ease of transfer;
  • the development of privacy.

Litecoin has low commissions, due to which this coin, which is based on Proof of Work algorithm, is often used for transfers and exchanges. In addition, the PayPal system is supported here. Lightcoin is characterized by stability, which allows you to look positively on this asset. The project also allows for public and private transactions. This is the only leading cryptocurrency that has a built-in feature for private transfers.

Binance. The cryptocurrency of the exchange of the same name deserves special attention. The capitalization of this coin ranks third at the moment. Investing in this asset can bring you a good profit. But you should not buy Binance yet. It is better to wait until the value of the coin decreases. Then it makes sense to invest in such an asset.

Filecoin. This is a unique project that makes it possible to store files via blockchain. This technology can be implemented in different ways. Filecoin also stands out for its stability, which differs from many cryptocurrencies. This coin can be a good source of profit.

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