Altcoin: Pros and Cons


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Hello friends, welcome back to my blog. I trust you're keeping well. I want to also believe you got value from my last post, yeah! So today we would yet be looking at our previous topic of discussion but then we would be considering the **pros and cons**...of Altcoin.

Of course we all know that almost everything in life comes with it benefits and downsides. This knowledge can always guide us so much so that we can always make informed decision. Let's get into it right away friends.

|**Pros of Altcoin**|
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• **Improvement on Bitcoin shortcomings**: Bitcoin is actually the mother coin which came to solve problems related to payments but then it's structure and makeup seems to be having some shortcomings which has given room to for altcoin to come in.

Altcoin leveraged on these shortcomings which includes volatility and complex consensus mechanism. It's also important to mention that these altcoins have very useful use case/utilities which makes it difficult to be ignored. Hence the demands for these coins.

• **Price Stability**: Altcoin like usdt, usdc and the likes have been able to ensure that the volatility that affect cryptocurrency (Bitcoin) is brought to the minimum as they wouldn't react the way a normal coin would react to Volatility. They are very stable in their value.



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Stable coin maintain their stability by been pegged to the value of commodity that have stable value. Most stable coin are tied to dollar making it a ratio 1:1. Some other stable coin are tied to asset like gold. This is the reason why these types of altcoin cannot be ignored, Bitcoin can not guarantee it investors this singular benefit of stability in price.

• **Alternatives to Bitcoin**: Variety they say is the spice of life, I wonder what the market would look like if it were just Bitcoin. Some would have gotten bored already. But with these alternative coins, investors who do not want to invest in bitcoin would definitely find altcoin useful for their investment plans.

Some others could see it as a means of diversifying their portfolio. They could go for more established coin like Ethereum, the second largest cryptocurrency today.

|**Cons of Altcoin**|
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• **Smaller Market**: Altcoin have smaller market when compared to Bitcoin. Bitcoin obviously have the lion share of the market while other coin tag along. When you mention cryptocurrency to a novice, what comes to his mind is Bitcoin.

That's to tell you how much bitcoin has been etched in the mind of a random person. Many investors love to invest in Bitcoin by default because it seem to have proven to be a good project having gained so much ground in the market over the years.

• **Past Records of failure**: This is one of the bad omen that follows altcoin. This alone stands as one big discouragement for altcoin. Many altcoin had come in the past and have failed, making investors loss their hard earned money invested.

This has discouraged many from looking in the direction of Altcoin they would rather go for Bitcoin that has proven track records of sustainability and longevity.

• **Difficulty in Identifying a good Altcoin.**

Many investors would like to jump on investing in alternative coin but then, it's really difficult identifying the ones that will do well. There are so many altcoin out there, they are in thousands, I mean over 9000 coin and all are parading themselves to be good project, calling for investors.



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It takes someone with the eyes of an eagle to spot the ones that will do well. The difficulty associated with figuring out the ones that will do well has discouraged many investors from growing the altcoin market.

• **Thin Liquidity**: we mentioned earlier that Bitcoin dominates the market and of course is very liquid as there are heavy demand and supply for this coin while on the other hand there are fewer investors in the Altcoin market. This plays a very big role when it comes to liquidity.

There are some altcoin that are illiquid and in the long run they fail because investors are not interested in them. Another reason while some altcoin dies is because their use case is similar to the use case of some more established coin.

It therefore means If the use case of a coin is not distinct enough, differentiating it from that of a more established coin, it could die a natural death. Ethereum survived Bitcoin because of it use case and the introduction of smart contracts which made it distinct. It's a proof that it really have something to offer.

• **Highly Speculative & Volatile**: I feel this write up will be incomplete without this very point. Altcoin are highly speculative and volatile as well, except for the coin that are in the stable coin Categories we discussed earlier and in my last post. But one fascinating fact about this point is that most investors are actually drawn to altcoin because of it highly speculative and volatile nature especially when not regulated.

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|**Conclusion**|
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There you go friends.I would love to wrap it up at this juncture. I want to believe you've gotten so much from this piece. As my usual custom is, I would always encourage that you DYOR to be sure of every financial step you would want to take as I won't be liable for any form of loss encountered by you.

Feel free to share with me your thoughts in the comment section. Thanks for your time once again. Gracias!

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^{**Disclaimer: This post is made as an education and not investment advice. Digital asset prices are subject to change. All forms of crypto investment have a high risk. I am not a financial advisor, before jumping to any conclusions in this matter please do your own research and consult a financial advisor.**}

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Regards
@lhorgic♥️

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