“Why do new Altcoin always come up?” The answer is simple: the first crypto currency created, the Bitcoin, is not perfect.
And that is why many successful Altcoin are created to become improved versions of Bitcoin, focusing on certain features, such as:
- Confirmation speed
- Or even “environmental sustainability”.
For example, Litecoin aims to make Transaction Confirmation much faster than Bitcoin.
Dash and Monero are Altcoins that focus on the anonymity, making it virtually impossible to associate transactions with wallet users.
We can say that all the Altcoins have a peculiarity that they “work better” than Bitcoin.
Another important feature of Altcoin is represented by how new coins are mined.
The bitcoin mining algorithm is called SHA-256, while the Litecoin extraction algorithm is called Scyrpt. Several mining algorithms require specific hardware.
To date, thousands of Altcoins have been introduced, but only a few of them have had a significant follow up as Bitcoin.
One way to understand what Altcoin is gaining in popularity is to keep an eye on the “Market Cup.” This is calculated by taking the number of coins in circulation and multiplying it with the currency exchange rate against the US dollar.
For a long time, the Bitcoin Market Cup accounted for 90% of the total market share. Today, as Altcoins are gaining more attention, Bitcoin’s Market Cup is balanced by other currencies, and the total Crypto Market Cup has managed to surpass $ 100 billion in the year 2017.
How do you decide which coin to invest in?
First of all, you need to know all about the Altcoin chosen for the investment. Understand what makes it unique and understand its potential.
Then: be careful to not invest in a Altcoin just for the clamor around.
Many new currencies employ the so-called “Pump & Dump” schemes.
This means that the creators of this Altoin generate a lot of exchanges to convince people to invest by inflating the price artificially.
Once the value appreciation goal is achieved, they sell all their coins by making an important profit while the price is likely to collapse for the massive sale that is made.
Surely, in any case, the Money Market Cup gives an idea of how the currency is accepted in the investor community.
Participate the Community
A useful hint is to join the community behind the Altcoin.
The most important coins have an official forum, a Facebook group, a Reddit page, and more forums and blogs where you can talk to developers.
A strong community is absolutely an important success indicator
Now that we have talked about the basics to make investments in Altcoin, we will be able to deal with a closely related topic in the next post: