If you’re into the crypto space by any means, you surely have heard of bitcoin, and you’re probably aware that it is the most popular cryptocurrency. There is a really big player in the market that started accepting crypto payments for their products. But if you are a little more keen, then you must have also heard people using terms like “altcoins” and “stablecoins” also.
If the last two terms sound a little confusing, then we are here to help you. Today, through this article, we’ll learn exactly what it means to be when people use terms like “altcoins” and “stablecoins” in comparison to Bitcoin.
What is an alt coin?
Altcoins is short for “alternative cryptocurrencies,” and as the name suggests, it means any coin other than Bitcoin or Ethereum. Currently, we have more than 10,000 crypto-currencies, and naming each of those coins individually can be tedious, hence the convention. Moreover, the state of Bitcoin largely decides the state of the entire crypto market.
You must have come across various posts on the internet that tells you about the state of the entire crypto market, saying something along the lines of, “Bitcoin increases by 1%, altcoins also see a rise”. Usually, all altcoins follow blindly the bitcoin dominance. Here, instead of naming each of the coins individually, we refer to them as “altcoins” as they generally follow similar market behavior.
For these very reasons, we call any currency that’s not bitcoin as an altcoin. Ethereum, however, stands in a grey area, where in some places it is mentioned along with Bitcoin and in others as an altcoin.
Importance of Alt Coins
Because bitcoin and ethereum are already in high demand, that’s why they have already become really expensive assets.
Altcoins, on the other hand, tend to be inexpensive. Other cryptocurrencies can sell for hundreds of dollars per token or a fraction of a cent. This allows investors to access cryptocurrency without having to buy high-priced assets. It’s not only the investors or traders who are joining hands with altcoins; there are many companies like Tesla, AMC, travel, and so on where you can easily pay with crypto.
Altcoins have a lot of importance. They introduce competition to the market, which drives the entire crypto-tech industry forward, but that’s not even their main importance.
Affordability – Altcoins offer a cheap alternative to bitcoin and other major cryptocurrencies. They are especially easy for newcomers as they have a low entry price barrier. They have better chances of learning from the market due to less volatility.
Technology – Other than the investment aspect, altcoins are an advancement over Bitcoin. Some of the coins offer very low transaction times and much better security enhancements than Bitcoin. There are many cryptocurrencies that are delivered more efficiently than bitcoin.
Diversity – As a trader, altcoins are a great option for trading. There are several thousand altcoins, each with great potential. Giving your portfolio diversification is always a good choice. Trading in altcoins can definitely diversify your portfolio.
What is a Stable Coin?
Stablecoins are a type of cryptocurrency where each coin’s value is fixed to an external asset. As its name states, a stablecoin is any coin whose value remains fixed or sees very little price movement, which means volatility is low. By definition, any stablecoin is also an altcoin. The external asset of choice is usually a strong, stable currency. US Dollar is the most common asset the coins are bound to. USDT(US Dollar Tether) and BUSD (Binance US Dollar) are two of the most popular stablecoins. Many crypto payment gateways use stable coins for their system to make things more stable for them.
“Fixing” one asset to another means that you always ensure the two values keep the same relationship. For example, say that you release a stablecoin called ABC Coin. You decide to fix (or “peg”) the price of 1 ABC coin at $1. This means that once you release your coin, you intervene in the market as necessary to ensure that the price of the asset is always as close as possible to $1. This is a practice shared by some national economies around the world. The way stable coins keep their values stable is quite interesting.
Importance of Stable Coins
Stablecoins are essential because they make the crypto technology stable and more feasible for everyday use.
Stable Source of Value – Perhaps the most important part about stablecoins is the stability itself. If you are a trader, cashing out from exchange to fiat currency can be difficult at times. Stablecoins provide an easy way to capture your profits and store them in a stable reserve.
Great For Payment-Volatility is what makes Crypto a great asset for trading. However, this makes it really difficult to use cryptocurrency as an everyday currency. Stablecoins solve this issue by introducing stability to the technology.
The crypto market is volatile, but that doesn’t mean it’s bad. Volatile assets can go up just as fast as they go down. Instead of diving directly into the market, all we have to take care of is that before you dive into this marketplace. You should start doing your own research. There are plenty of ways where you can make a profit on cryptocurrency. Some of them are yield farming, staking, mining, leverage trading, etc. It’s not all about investing or making money in crypto, as crypto is booming each day and there are lots of websites where you can buy products using crypto.
So it’s essential to know which type of coin serves which function so that you can align your needs with those of a particular coin. Once you’re aware of which coins serve which purpose, you’ll be able to decide which specific currency is right for you. Don’t worry; you have plenty to choose from!
What we think is that in the future, developing nations will fix their national currency to a larger currency in order to avoid market disruptions. As with cryptocurrency, it is most common for nations to fix their currency to the U.S. dollar.