Cryptocurrency Scalping

As of this writing, there are nearly 1600 cryptocurrencies in the market, according to CoinMarketCap. With that in mind, how do you choose the right altcoin to invest in?

Some digital wallets enable their users to store multiple digital currencies, which they can convert into Bitcoin and sell for fiat currency. However, there are different interpretations out there for the term ‘altcoin.’

This can be misleading because it simply implies an alternative coin, which can be a substitute for Bitcoin. This is not true, as the main goal of Bitcoin was to provide an exchange of value. Many altcoins, on the other hand, operate on a different protocol and serve different purposes. Many of them are not purely cryptocurrencies, but mere representations of technology, service, or simply a platform for applications.

Types of Altcoins

When it comes to choosing an altcoin for crypto investment, you should know the various samples that exist in the market. The altcoin spectrum is mixed, as follows:

  • Jokecoins—these cryptocurrencies have no unique benefits and sometimes no practical use. They include Pepe Cash, Piety, Dogecoin, and TrumpCoin among others.
  • Parodies—these coins include PonziCoin and Useless Ethereum.

On the scale between the useful and satirical coins, altcoins find themselves in between. While they might not be outright scams or jokes, many of them don’t offer anything practical or new. Most are simply duplicates of other digital cryptocurrencies with minor alterations.

Identifying the Right Altcoin

If you would like to explore beyond the pioneer Bitcoin and expand your crypto portfolio, there are numerous options to explore. All the same, it’s advisable to pick an altcoin with a principle that you believe in, instead of just choosing a coin bandwagon or just choosing a coin because other people are buying it. Here are the inspirations behind the most popular altcoins:

Ethereum

 

Ethereum

Ethereum

Many crypto enthusiasts regard Ethereum as the pioneer altcoin. However, it’s not purely a digital currency. Ethereum is a blockchain-based platform for building decentralized applications by utilizing a digital currency known as Ether. Therefore, even though Ether is listed and traded on various exchanges as Bitcoin, its protocol states that it’s not a currency or a digital asset.

Computers around the world run the decentralized Ethereum network. The developers and users of the network pay for computing resources and services using the Ether coin. The Ethereum network and Ether coin have established a strong use case and stable popularity. This makes Ether the number one choice of altcoin to buy when users branch out from Bitcoin.

Ripple

Ripple is another decentralized platform that utilizes the XRP cryptocurrency. Interestingly, Ripple is even older than Bitcoin and it receives much support from established financial companies. For those looking for a cryptocurrency with a potential for extensive adoption, then XRP is the ideal option.

All the same, learning how the Ripple network operates can take time, which is why users should consider Ripple as a payment infrastructure and not a currency. XRP is the accepted medium for paying transaction fees to the network.

Litecoin

litecoin

Litecoin is one altcoin, which is nearly similar to Bitcoin, except that it’s meant to be faster. However, in the tech world, the first mover in a new space is not usually the winner. A subsequent mover built on the initial technology and public interest could sometimes be the ultimate winner.

For those who are doubtful about Bitcoin’s origins, it is reassuring that the cryptocurrency traces its roots to Litecoin founder Charlie Lee. Together with Ether, Litecoin is one of the best alternatives to get started with altcoins without purchasing a newer cryptocurrency.

Cardano

cardano

Cardano is the product of scientific research, developed by a worldwide team of researchers and engineers. Cardano utilizes the ADA coin, but it focuses on smart contracts, decentralized applications, and other blockchain-based projects. The team behind Cardano aims at developing more robust blockchain features, backed by scientific philosophy.

Different from other altcoins, many influential organizations support Cardano. Besides, it works directly with regulatory bodies and has a clear roadmap for the future.

Cardano is “a marathon project involving feedback from hundreds of the brightest minds inside and outside of the cryptocurrency industry. It involves tireless iteration, the active use of peer review and shameless theft of great ideas when uncovered,” reads its website in part.

NEO

NEO is a unique altcoin—serving as both cryptocurrency and a blockchain platform. It enables developers to write utilize the trendiest programming languages to write smart contracts. This makes the NEO network more versatile and accessible. In the footsteps of Cardano and Ethereum, NEO focuses on the platform.

“NEO is the use of blockchain technology and digital identity to digitize assets, the use of smart contracts for digital assets to be self-managed, to achieve “smart economy” with a distributed network… NEO will be committed to the development of its ecosystem, providing mature development tools, improving development of documents, organizing education and training activities, and providing financial support,” explains its whitepaper in part.

Steem

Steem is a blockchain-based platform for Smart Media Tokens (SMTs). The platform enables content producers to earn money out of their work without advertising. Users can earn the tokens (SMTs) any time someone likes their work or approves of it. Contrary to adverts-funded platforms, the Steem platform incentivizes users to produce high-quality content and to engage with the community. The goal of the platform, however, is to improve the internet, as detailed in their whitepaper.

“Steem aims to support social media and online communities by returning much of its value to the people who provide valuable contributions by rewarding them with cryptocurrency, and through this process create a currency that is able to reach a broad market, including people who have yet to participate in any cryptocurrency economy.”

Dogecoin

dogecoin cryptocurrency

This altcoin is the initial joke coin, which has acquired adequate popularity to trade on various exchanges. It embraces the Shiba Inu (an ancient dog breed) lucky charm, which is the main feature that distinguishes it from Bitcoin. The coin is popularly used to send donations to producers of pleasant content.

Overall, each altcoin has a mission, which varies from one platform to another. If you’re looking forward to venturing beyond Bitcoin, choose an altcoin that rhymes with beliefs.

The possibility of a price drop

Altcoin cycles often degenerate to price dips. One day can be bullish, the next bearish. This usually happens when the value of bitcoin reduces. However, amid all the challenges, the market capitalization of altcoins continues to increase.

Several factors can turn the altcoin market from buying to selling. Here are five factors that may cause the prices of altcoin assets to drop:

When traders return to Bitcoin: when an altcoin reaches its peak in relation to Bitcoin prices, most traders usually take profits and return to Bitcoin. This happens because most traders believe that BTC is the best store of value and the most stable coin.

Bot trading: altcoin recovery in the market has been robust. However, when traders decide to take profits without waiting for too long, they put the market in a selling mode and altcoin prices are likely to plummet.

Lack of trust in altcoin projects: Even the hottest coin in the market has critics who are busy pocking holes on its reputation and strength. They blame the technology, or the absence of a product. When that happens, the altcoins might not rally for long, causing price drops.

Discovering greener pastures: traders are likely to move from assets that have already peaked to one that is still in a sleeping mode. Somehow, such assets may outperform the ones that have already peaked. This migration eventually affects the price of altcoins in the market.

Various trader communities: the conversation around a coin affects differently the trading communities. The U.S. or Asian investors have their own preferences when it comes to digital assets. When one altcoin market drops in price, other markets may suffer as well.

Closing Remarks

In the crypto market, prices are likely to rise and drop. Since the beginning of second quarter 2018, most coins are on an upward move. A major price increase is expected in May and June if the market behavior recorded last year is anything to go by. All the same, what remains unknown are the exact speed and possible bust. It is always advisable to do due diligence and research before taking the plunge.

Which is your preferred altcoin and why? Join the conversation over at Telegram (https://t.me/coinstaker)

Author info

Tony is a writer for the crypto space. He presents cryptocurrency and blockchain topics to the public in a way that he only can. While carefully researched, this article should not be taken as an express investment guide. Do your own research and consult a financial advisor before you invest in cryptocurrency.

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