With Bitcoin becoming more mainstream, its value has soared. But what about all the other cryptocurrencies out there? We’ll discuss what it takes for a cryptocurrency to be valuable and how you can tell if an altcoin is worth your time.
Most altcoins, or alternative cryptocurrency coins, are forks of Bitcoin. An altcoin is extremely unlikely to surpass Bitcoin in market capitalization. In addition to being the first digital currency to gain popularity, Bitcoin has also maintained its dominance due to several key characteristics. These include:
Bitcoin and other altcoins are digital currencies that are not backed by any central authority. Most of the time, “altcoin” refers to cryptocurrencies after Bitcoin. While there aren’t any hard-and-fast rules for what makes a cryptocurrency valuable, there are several important factors:
Before investing in an altcoin, you should consider the following:
One of the most critical factors in an altcoin’s value is how much Bitcoin it can be exchanged for. Most altcoins are not as valuable as Bitcoin, and less valuable means less demand for them.
As we’ve seen, if you have less demand for something, it has a lower price. So the more supply of an altcoin there is—the more people who own or sell it—the lower its price will be.
Altcoins are generally less secure than Bitcoin because they don’t have a fixed supply like BTC. Nor do they have nearly as much market adoption or recognition worldwide.
Altcoins can be valuable, but they have a different value than Bitcoin. The market capitalization of an altcoin is mostly derived from speculation.
If you want to invest in altcoins, some important things need to be considered before making any decisions.
The post What makes an altcoin valuable? appeared first on CryptoMode.
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