What Is An Altcoin?
What are altcoins? If you’re familiar with our podcast and have read “What is Bitcoin” then click here to skip the information you know.
For the rest of you, hi! We are The Coin Boys, your average everyday crypto bros. We do a podcast that describes everything we are about to talk about, but in a more entertaining way… we hope. Feel free to listen!
Also, if you have no clue what Bitcoin is, you are going to need to know that first. It is the king of all Crypto (Short for Cryptocurrency), and is the basis for most Altcoins (which is also referred to as Crypto).
The simple answer to this question: an Altcoin is literally an alternative coin to use instead of Bitcoin. Bitcoin is wonderful, but really limited to what it can do and how fast it can be done. It can mostly be used as just currency, there is an exception to this but you’d need to be a coder to understand how to even do it. If you are a coder, then this may be a bit too simple for you.
A lot of Altcoins are known as “Forks” from Bitcoin. The main thing you need to know for this purpose is that it has the same code that makes Bitcoin as it’s base, but there are some changes that were made.
These changes vary from being able to hold a “Smart Contract”, the maximum amount made for distribution, how it’s distributed, if it’s mined or not, centralized, etc… There are MANY possible changes that can be made but the idea behind most are pretty close to one another.
There are advantages and disadvantages to each one, which is why this is the Wild West of money right now. So you are going to have to do your research on each one that you are considering. It is also not easy to do that, but very necessary if you are looking to give money for any of these coins. The Coin Boys Podcast goes into a different Altcoin on each episode and is a good resource to start with on that particular Crypto.
Here are a few things that are important to keep in mind when thinking about investing in Altcoins!
ScamsMany of these are exactly that, a scam. There are over 1500 cryptos as of right now that are available for you to get. A lot of these are intended to take your money and RUN. Look at Bitcoiin (notice the two I’s), and Bitconnect. They are great examples of how people lost a lot going in and trusting random people. If you truly feel you can trust it, and are willing to completely lose all your money on it, then that is your choice. This also includes Bitcoin, this can all go away in a few seconds. Be sure you are not spending any money that you can’t afford to lose.
Coin VS Token
Many of these so called Altcoins are actually Tokens. So it is important for you to know the difference.
“Coins” are anything that is considered a currency, or a way to exchange value for goods and services. Some Coins can do more than just that, but at the very least that is what it needs to do.
“Tokens” can be any of the following things. A currency, a contract, a way of identifying yourself, a club membership, a stock, plus many other things. We are only scratching the surface of Cryptocurrency so new possibilities will be added all the time. The thing to know is WHY you are investing in the Token to begin with. Some people expect a return on the Token, thinking it is a currency for everyone to use, and come to find out it will either remain the same value, or become worthless.
How do you know if something is a Token or a Coin? The fastest way is to go to CoinMarketcap.com and look through the list. Find the one you are interested in and click on it. Under the name of the Altcoin on the left hand side, but above the chart info you will see an informational list. One of the last items on the list is if it’s a Coin or a Token.
A few good quick rules of thumb are, it is a Token if it can only be used for a specific site. Think old school Disney Dollars (if you have ever been to Disneyland), gift cards, or Chuck E. Cheese arcade Tokens. They are only able to be used in the store or site it was designed for. Steem is a great example of this.
You buy Steem to use on their social media site steemit.com, so instead of likes you can literally give money for others shared content.
Next up: does it need another platform or Coin in order to run? If yes, then it is a Token.
Many people can easily create there own Tokens using existing coin. Ethereum’s ERC20s and Nem’s Mosaics are two very good examples of how to easily do this. Which makes things harder when you are trying to separate the reliable tokens from the scams. It also makes it easier for a business to raise funds, or interact with their clients!
Not Every Altcoin is Legal
Note the country you are from because investing in certain Cryptos can be illegal. An example of this would be if you live in the United States and want to invest in the Petro just released by the Venezualan government, you need to think again. The US and Venezuela are not friends so investing in their money is a no go. This is a rare thing, but enough of a penalty not to ignore.
Don’t be a Fangirl/boy
This is a big world, and every Coin/Token has it’s purpose. There will not be only one, there will be many. Think of it like voting with your money. The ones you support may thrive, and the ones you don’t may fail, or vice versa. The public will decide, and right now it is in it’s infancy. Keep your eyes on how the market is moving and adjust accordingly.
If you are not a pro at trading…. DON’T DO IT!
This is important. A lot of people think this is a way to get rich quick, and I made you read all that so you would at least know there is work to do with this. Unless you have been reading charts and know what you’re doing don’t attempt to trade this for profit. You will go broke.
If you are having trouble right now trying to pay for your everyday things and struggling day to day, week to week, month to month…. DON’T INVEST.
This can and will drop in price on you so fast it’ll give you a huge scare. If you do choose to buy it, think of it as a donation or gamble towards something you want to support and you hope will be adopted.
If after all this you still are intrigued then you owe it to yourself to learn more about it. Take a listen to our podcast (Soundcloud, iTunes) and please leave us a review for us. Good or bad we always want to improve. Follow us on Twitter and Instagram, Email us, or even give us a call! We would love to hear from you!