Altcoin is all set to rule the crypto world in 2024. If you are a potential investor planning to invest in crypto, you would be eager to know the merits and demerits of altcoin and its scalability in 2024.
This article will aid your decision making when it comes to investing in altcoins.
What Is An Altcoin?
Altcoin simply refers to all the crypto coins other than bitcoin. Some people define altcoins as all coins other than bitcoin and ethereum. Altcoins use alternative consensus protocol for their operations.
The thousands of altcoin now in the market are set to topple the dominance of cryptocurrency majors such as bitcoin and ethereum in future.
So, how are altcoins formed? Altcoins are formed by a process called forking. In forking the original blockchain splits into consequent, competing chains called forks.
Forking occurs when the developers have new ideas that cannot be implemented on the existing chain due to various constraints. Most of the major altcoins are forks of bitcoin or Ethereum.
The different types of altcoins are listed below.
- Meme tokens
- Stablecoins
- Payment tokens
- Governance tokens
- Security tokens
- Utility tokens
The Merits And Demerits Of Using Altcoin
Altcoins have many pros and cons when compared to bitcoin. The merits of altcoin are given below.
- Altcoins are made by building on the weakness of the existing cryptocurrencies. Therefore, they are more customer friendly.
- As they are built by making up for the demerits of existing cryptocurrencies, they have a high chance of survivability.
- There are thousands of altcoins in the market now. So investors have a wide variety of coins to choose from.
However, altcoins also have certain demerits.
- Most altcoins have lower market capitalization due to less popularity and less number of users.
- Due to their lower demand, most altcoin have lesser liquidity when compared to bitcoin.
- Most altcoins have unknown or difficult to identify use cases because they are not widely used and studied about.
Will Altcoins Dominate The Crypto Industry In 2024?
2024 is a happening year in the crypto industry with major trailblazing events like bitcoin halving. Consequently altcoins have also boosted up. The general market trends for altcoin is bullish. That means it is profitable to invest in altcoins after a thorough market analysis.
Since altcoins are relatively new, those platforms are providing various rewards to promote them. Some altcoins can also give you higher returns based on how well they are doing in the market. The altcoin’s success depends on its community, developers and use cases.
If ethereum is considered as an altcoin, it is a strong competition to bitcoin with a current market capitalization of $349,519,026,882. Solana is the next big market player with a market capitalization of $64,890,920,117. The other major players in the crypto industry are Dogecoin, Cosmos, Kaspa and Stellar.
What Are The Factors That Determine The Success Of Altcoins?
There are many factors that determine the success of an altcoin.
- Market Conditions: The demand for a certain altcoin in the market determines its success. Consumer trends, market sentiments and investor confidence shape the demand for an altcoin.
- Regulatory Policies: The regulatory policies of the different national governments govern the success or failure of cryptocurrencies because some governments promote cryptocurrencies whereas others ban its use.
- Technology Used: The technology used in scaling the particular altcoin largely determines its success. The use of technological innovations will benefit any emerging token with their distinct features.
- Competition: The cryptocurrency market is largely competitive. An amount of competition is beneficial as it prompts the developers to innovate altcoins with newer features.
- General Economic Condition: The general economic condition of the world affects the altcoin market too. Altcoins show volatility at times of economic uncertainty or general inflation.
What Is The Future Of Altcoin In 2024?
Altcoins are a good alternative to counter the deficiencies of bitcoin. Even though the emergence of thousands of altcoins are viewed with scepticism, investors can earn high benefits if they invest wisely after a careful study of the market trends.
2024 will be profitable for those altcoins that offer a good deal to the investors with their unique features, different use cases and the strength of the blockchain on which they are built.
