Take a look at the state of the crypto industry and one
thing quickly stands out; Bitcoin reigns supreme. In terms of market cap, value
per token, and sheer popularity, it is clearly leading the pack. In fact, it
was declared the best-performing asset of the 2010s, even beating out gold.
With all of these benefits, one might wonder if there is any point in investing
in altcoins.
Altcoins, for the uninitiated, refers to any crypto token
that is not Bitcoin. In this article, we’ll break down why altcoins are a
worthy investment.
The Benefits of Altcoin Investment
Even though Bitcoin reigns supreme, altcoins are not exactly
lagging behind. When it comes to crypto to buy
today, many investors are looking at up-and-coming altcoins as opposed to
more established coins like Bitcoin and Ethereum. As Michael Graw writes,
altcoins like Stacks (STX) and Sui (SUI) are picking up momentum. By investing
in these lesser-known cryptos, you gain several benefits, such as:
Diversification
One of the golden rules of investment is to not put all of
your eggs in one basket. As much as Bitcoin is the most valuable crypto, it has
seen periods of market decline. If you only invest in it, you could go months
or even years without significant profit. But if you invest in a variety of
altcoins, at least one should perform well at any given time. Diversification
is especially important because of how volatile the crypto sector is known to
be.
So, as a rule, make sure your funds are split across several
cryptos with high growth potential. If one encounters a market slump, you can
focus on the others. And if one or more of your tokens completely tanks, you
haven’t lost all of your money. In the best-case scenario, you will have
multiple streams of income from the various altcoins you’ve invested
in.
Market Performance
Looking at the crypto sector, it is easy to think that
Bitcoin is the only token
that performs well. And while it is the biggest token by market cap, there
are assets reporting growth rates that blow it out of the water. Looking at the
altcoin space, especially newly launched tokens, you’ll see crypto that has
100x growth upon launch.
If you put $1,000 in Bitcoin and $1,000 of a new token that
ends up being a runaway success, the latter might actually net you bigger
profits. The reason for this is that Bitcoin is so big that the level of
relative growth it can see is limited. A new altcoin might see its price grow
by 100% in a few weeks but Bitcoin is less likely to. So, investing in altcoins
comes with the added benefit of granting access to impressive market
performance.
Access to Unique Projects
Altcoins are also impressive because many are attached to
interesting blockchain projects. In the last few years, we’ve seen blockchain
projects of every niche emerge to great success. We’ve seen the rise of gaming,
including play-to-earn projects with native tokens. We’ve seen NFT projects,
environmental enterprises, and many more. If you were to invest only in
Bitcoin, the only projects you would be able to directly access would be the
Bitcoin network.
With altcoins, you have access to a whole world of projects,
along with the communities and features they come with. This is especially
important if you are interested in blockchain and crypto beyond just making
money.
Additional Benefits
Cryptos are very dynamic, meaning the features one has might
be absent in another. One reason you should be investing in altcoins is to have
access to unique features. For example, Bitcoin is based on a proof-of-work
consensus, meaning it cannot be staked and uses a lot of energy. By using an
altcoin based
on a proof-of-stake consensus, you can earn interest on your funds and do
better for the environment.
Certain altcoins are known to have faster speeds and more
security than Bitcoin, as well as other features. While Bitcoin has its
benefits, you rob yourself of a world of unique crypto features if you exclude
altcoins from your investment portfolio. One thing to do would be to research
the possible features that crypto might have that you’d want access to and then
seek out altcoins that come with these.
This article was written by FL Contributors at www.forexlive.com.
Leave a comment