The word ‘Altcoin’ is a merger of two words, namely ‘alt’ and ‘coin’, which refers to ‘alternative’ and ‘cryptocurrency’. It is a category of cryptocurrency, and the coins are exceptions to the digital Bitcoin currency. Post-Bitcoin’s victory, various other peer-to-peer digital currencies have come out in want of that success.
Numerous Altcoins are established on the fundamental structure offered by Bitcoin. Hence, most altcoins are peer-to-peer and require a way of mining through which users tackle cumbersome problems in resolving blocks and provide safe and low-cost methods to put web transactions into effect.
Altcoins are the powerful contenders against the largest cryptocurrency named Bitcoin. Their prices correlate to the performance of Bitcoin as it holds 69% dominance of the market capitalisation. Being the gold standard of the crypto market, Bitcoin is a growing digital asset entirely decentralised.
The momentum of Bitcoin does not always show the dynamics of the entire market. Instead, it mirrors the first-mover benefit to the growing asset in digital form. When it comes to Bitcoin’s Bullish run, altcoins don’t necessarily work in sync and withdraw their strength in such situations.
For instance, in December 2020, when Bitcoin rallied by shattering its record of $20,000, most of the Altcoins didn’t surge except Litecoin, Ethereum and XRP.
At the stage when Bitcoin stabilises, prices of altcoins begin rising. It is because the traders hurry up for BTC and place altcoins for some rapid profits. Example: Tether. They tackle the volatility of cryptocurrency by intaking their value to an underlying index, security or commodity.
Also, the falling of Bitcoin could move altcoins down across the lines due to inadequate liquidity, and selling takes place faster than ever.
Bitcoin’s value primarily relies on its supply and the market’s demand for it. Its value is also supportive of other factors like alternative digital currencies, comprising their supply and price, existence and rewards for mining. One can also project intrinsic value by computing the average marginal cost of production of a bitcoin at a particular point of time as per the block reward, energy efficiency of mining hardware, price of electricity and the mining issue.
Ethereum is the finest and strongest amongst all Altcoins, which compete with Bitcoin. In 2017, many felt that they could reverse their positions, which didn’t happen according to the volatility.
Ethereum, Litecoin, Monero, XRP, NEO are some of the highly impactful altcoins which massively behave as per Bitcoin’s movement, whereas stable altcoins reflect low relation with the top currency.
In the last 24 hours, Bitcoin rose 7.42% (approximately 8%) at $37,147, and some key altcoins also went straight, showcasing an upward trend such as Ethereum, which stood at $2690 with a 15.63 % change. XRP and Dogecoin valued at $1.07 with 17.54 % change and $0.3379 with 13.61 % change, respectively.
Undertaking Altcoins as a payment method, there is a low transaction fee. It also serves the purpose to create space for the competitor. The entire framework of altcoins is separated from utility or security tokens as their direction waves differ from the rest of the altcoins when Bitcoins get priced.
Note: Investing in cryptocurrencies is highly risky, speculative and has volatile results. This article is not a recommendation by the writer to invest in cryptocurrencies.