Cryptocurrencies have always remained a central point of discussion for many reasons. Undoubtedly it provides a safe platform for transactions and also promises good returns. Despite the odds that Cryptocurrency blockchain systems had faced initially, investment in it has risen. The scenario was not the same with bitcoin. Despite the initial apprehension regarding its sustainability in the longer run, bitcoin managed to reach a mark of dollar 65,000 and continues to stably soar at dollar 20,000 in 2022. However, when it comes to making an investment, most investors believe in the diversification of portfolios.
What is portfolio diversification?
One of the key things to note about crypto transactions or trading in the stock market is portfolio diversification. It is always advised that one must lot not limit their investment decision to just one or two Cryptocurrencies. Rather start exploring the market and which are the best options. Adding more Cryptocurrencies to the portfolio assures you of good returns and lesser loss. However, they certainly don’t signify that one must use any Cryptocurrency that one come across. What are the major drawbacks that investors have nowadays that they are driven by the news and social media hype? Adding Cryptocurrencies and making an investment decision based on the hype created in social media can give negative results. Hence, research is a must before you step into the pool. Altcoins are great opportunity options for investors.
Earlier, people had limited options for investment, but today there are more than 10,000 Cryptocurrencies in the market. In addition to Bitcoin, these Cryptocurrencies are grouped under the umbrella term “altcoins.” For instance, Ethereum has gained recognition due to its dual function as both a cryptocurrency and a platform for developing decentralized applications. Additionally, Litecoin has become popular for its faster transaction time and lower fees compared to Bitcoin. Therefore, incorporating these altcoins into your investment portfolio can bring diversity and balance.
In summary, altcoins have become popular because they offer unique features and characteristics, they provide an opportunity for investors to diversify their portfolios, and they are being used as building blocks for decentralized finance platforms, which are gaining traction in the market.
Altcoins, or alternative cryptocurrencies, can have a wide range of features and characteristics, but some of them come with distinctively unique features which might blow your mind in the first place. Thus, the best thing which you can do is to look for all the positives and the negative loop holes in the distinctive crypto coins and then finally come up to a conclusion on which crypto coin you should invest in.
Key features that differentiate them from Bitcoin include:
Faster transaction times: the growing reason for the popularity of old coins is the transaction time. In a normal scenario, for a bitcoin transaction to be executed, it takes 10 minutes. This time is much less in the case of bitcoin and Ethereum, and hence it becomes one of the significant features of alternate Cryptocurrencies.
Lower transaction fees: Coming to the transaction fees, although crypto transactions cost lesser there is a fee associated with them. Hence, you must enquire about the same. As compared to bitcoin, alternate Cryptocurrencies have lesser transaction fees.
Different consensus mechanisms: Cryptocurrencies operate on different consensus mechanisms like proof of stake, which is energy efficient and scalable as well.
Smart contract functionality: a few of the topnotch crypto coins, which also fall under the category of Altcoins like Ethereum works on the principles of smart contracts.
Privacy features: Some altcoins, like Monero and Zcash, offer built-in privacy features, such as stealth addresses and ring signatures that can provide greater anonymity for users.
Special features: Some altcoins have specific features that are not available on Bitcoin, such as the ability to create tokens or to be used as a store of value.
Wrapping it up!!!
It’s important to note that not all altcoins have these features, and not all of them offer the same level of security, scalability or decentralization. Therefore, it’s crucial to conduct thorough research before investing in any altcoin. Once you are confident about your investment decision, your next step is to register yourself on a trading platform. Regarding the diversification of aspect, then you can explore investment in oil bonds.
