Bitcoin is the most popular type of cryptocurrency, which is why people often use both terms interchangeably. It is essential to realize that cryptocurrency has a number of types, one of which is Bitcoin. Ethereum is another type of cryptocurrency and is secondary in popularity only to Bitcoin. To understand whether pr, not Ethereum is an Altcoin, one would have to know the classification of an Altcoin. We shall also be talking more about Ethereum and whether or not it as a cryptocurrency classifies as an Altcoin.
What is an Altcoin?
And Altcoin is short for alternative coins. To understand alternative coins, you will have to know the different types of cryptocurrency currently in the market. In layman’s terms, an Altcoin is any cryptocurrency other than Bitcoin. There are more cryptocurrencies in the market as of now then one can easily remember. A major area of differentiation is on the basis of whether a particular cryptocurrency is bitcoin or not.
Let us list some of the most popular Altcoins for your ease:
- Ethereum
- Tether
- Dogecoin
- Cardano
- Stellar
- Uniswap
- Polkadot
- Chainlink
So, to tackle the important question asked, Ethereum does classify as an Altcoin. It holds a major share in the market after Bitcoin and is a favorite of many investors who want to diversify their investment portfolios.
Altcoin Investment
Investing in cryptocurrency, in general, involves a lot of risk as compared to traditional means of investments. Experts advise proceeding with caution rather than putting all of your savings on the line. While cryptocurrencies offer great returns, they are also prone to high price volatility, which can make you lose money. The primary comparison that can be made for Altcoins is with Bitcoin.
If we compare ethereum or any other Altcoin, it has comparatively higher price volatility as compared to Bitcoin. While the thousands of cryptocurrencies currently in the market are gaining a foothold gradually, they still are meant for short-term investment and profits only. Choosing to invest in Altcoin depends on the risk tolerance of a particular investor and the capital they have at hand.
Why Choose Altcoins?
Altcoins bring forth a lot of promise in the cryptocurrency market that Bitcoin cannot fulfill. Some of the advantages that Altcoins can offer to all investors are as follows:
- As alternative coins become more and more mainstream, they are more likely to make cryptocurrency a real world medium of daily transactions. There has been a high rise in institutional investments in a number of cryptocurrencies. This can very well enable people to make daily payments with Altcoins in the future.
- Altcoins like Ethereum have gained enough popularity to become a mainstream source of investment and have reduced their price volatility as compared to other Altcoins.
- Since there is no shortage of Altcoins in the crypto market, it depends on the investor’s interest in a particular cryptocurrency as each Altcoin performs a certain function in the market.
Some Disadvantages
Even though Altcoins offer a number of advantages that any investor can benefit from, they also have a number of cons that one needs to know beforehand. Some of the drawbacks of investing in Altcoin include:
- There are a lot of cryptocurrencies in the market, but they have a smaller share in the crypto economy as compared to Bitcoin or Ethereum. This seriously limits the investment options of anyone willing to invest in Altcoins.
- There are no strict criteria of investment which means that liquidity is not as strong as found in Bitcoin. The drawback resulting from these factors is the higher price volatility of all the Altcoins. The risk tolerance of all investors will be duly tested if they decide to put their money in any cryptocurrency other than Bitcoin.
- The ability to differentiate Altcoins is muddled due to similar functions. This can make the investors hesitant to invest or make mistakes while investing.
- Prudence is advised while investing in Altcoins because there are already enough examples of dead Altcoins that ended up losing money for all of their investors.
What is Ethereum?
Ethereum is the most popular type of Altcoin, which holds a quarter part of the crypto market. As compared to Bitcoin, it still has a higher price volatility and is better suited for short-term investments as compared to Bitcoin, which is also being considered for retirement plans by some investors. Even though one can try to map out the trends related to ethereum and its growth in the crypto market, a new investor needs to understand that the crypto market is yet to mature. Because of the lack of criteria related to the evaluation of cryptocurrencies, we will have to wait and see if Ethereum will stay on the map or not. This is because many cryptocurrencies exist that failed to garner investor interest.
Why Choose Ethereum?
Even though Altcoins generally have certain drawbacks, ethereum has managed to overcome most of them. It is because of Ethereum’s good performance in the market that people have started to prefer investing in Altcoins. Here are some reasons why Ethereum is an Altcoin worth investing in:
- The transaction confirmation time of ethereum is just 10 seconds which is even lesser than the ten minutes of Bitcoin.
- Ethereum is comparable to bitcoin when it comes to getting long-term returns. While price volatility is a defining factor of cryptocurrency, ether is likely to hold its ground in the long run, even if it sees dramatic fluctuations in the short term period.
If you want to know more about crypto investment and details of Altcoins, you can visit this site.
The Takeaway
Ethereum is an Altcoin meant to provide stability to the fluctuating market for cryptocurrency. With more and more investors – both individuals and institutions – investing in cryptocurrencies like ethereum, one can expect that Altcoin will take off and maybe even be used in daily transactions. While there are certain drawbacks to investing in Altcoins in general, they can be avoided if one is vigilant about their financial decisions and risk-taking.
