As some of you may have figured out — there are other cryptocurrencies out there besides Bitcoin (BTC).
In fact, there are thousands of different cryptocurrencies out there.
Generated, in part, by the transformational narrative of BTC, many have tried to replicate the success of Bitcoin in terms of percentage gain of the underlying asset.
These other peer-to-peer digital currencies have emerged over the last couple of years and are all chasing BTC.
First, let me get it out of the way by saying that BTC has extraordinarily benefited from its first-mover advantage and the subsequent snowballing network effect.
Altcoins, not even one, have experienced these super boosters.
These digital currencies, better known as altcoins (alternative coins), are mainly designed to overcome the structural and technical limitations of BTC while supporting a diverse set of real-world use cases.
Why should investors keep tabs on altcoins?
Per the date of this writing, BTC has a market cap of around a trillion dollars, and altcoins also represent another trillion.
Commanding half of the market cap in cryptocurrencies is enough to warrant attention.
Since altcoins are such a big part of the market, every crypto investor should understand how they work.
In fact, the way you might profit off of crypto is not in BTC itself, but the diverse set of other assets in the space.
It’s true many missed the BTC boat — make sure you don’t miss the next boat.
Owing to the growth of the decentralized finance (DeFi) ecosystem, the increased use of smart contracts, and the introduction of environmentally-friendly consensus mechanisms, altcoins have expanded their market capitalization manifold, especially between 2020 and 2021.
Altcoin’s popularity signals the growing breadth of high quality crypto assets invading the industry.
Many blockchain companies and projects issue their own cryptocurrency tokens, making them the primary utility token for users to interact with their network.
Since there are hundreds of projects and DeFi opportunities available, such as staking and yield farming, together with an open market to choose from, it can be a bit challenging to determine the most promising projects.
One major variable that must be baked into the pie is that altcoins tend to offer a higher risk and higher reward as a cryptocurrency investment.
Although Bitcoin is volatile, it's the market leader and has already gained substantial value and name recognition — so investors looking for extra juice will gravitate to lower-priced, nascent coins with more upside.
Altcoins have more room to grow, but they also represent higher systemic risk therefore I can’t advise readers to pour their entire net worth into altcoins just yet.
A wonky altcoin could literally go poof in one second and there’s no way to get your fiat back with it.
Readers looking for altcoin success should only allocate a small portion of their portfolio into this space, and I would recommend a trusted broker like Robinhood or Coinbase as reputable crypto brokerages.
Altcoins are more advanced. Since they came out after Bitcoin, they've improved on its technology. In terms of transaction speeds and costs, many altcoins are far superior technically to Bitcoin.
Should you consider investing in altcoins?
The proverbial low-hanging fruit has been harvested in BTC.
Another serious challenge of altcoins is how to pick the right one in a crowded setup which is where we come in.
We will be navigating through altcoins and giving readers the best chance to succeed.
Like real estate, many of these altcoins are getting priced to the relative price proposition it holds when compared to a $50,000 BTC, which is essentially seen as the best house in the best neighborhood thus priced the highest.
The altcoin that will perform best in the short run will be the worst house in the best neighborhood and the most potential for returns will come from the best house in a rapidly gentrifying neighborhood.
Altcoins and their underlying prices are behaving in a similar fashion to real estate prices, which is why Ethereum and some others are looking super cheap and primed to gain on BTC.
In short, the “rising tide lifting all boats” truly applies to the digital gold as well, and I am supremely confident that BTC will hold this $40,000 support level through the end of 2021 giving the existence of crypto a massive victory to us crypto junkies.
