When it comes to cryptocurrency, it appears as though there is just one type: Bitcoin. Today, we explore altcoins – the ‘other’ cryptocurrency.
Over the last 3 years, cryptocurrency has skyrocketed in popularity. Of course, bitcoin remains the most popular.
However, as the notion of digital currency continues to permeate the public mind, several smaller cryptos are gaining significant traction as well.
Hence, it can be challenging to determine which cryptocurrencies to invest in, or even whether you should. There are thousands of various varieties of coins available on the market at the moment.
While this is not a definitive list of the finest cryptocurrencies to invest in 2021, it is a collection of some of the most fascinating altcoins. You should conduct independent research.
An investment’s value might decrease as well as increase. Cryptocurrencies are frequently volatile. Furthermore, never invest more than you can afford to lose.
If you looking for some information to help your research? Let’s take a look at some of the altcoins you can HODL before they increase in value.
What are Altcoins?
Altcoins are digital currencies that do not use Bitcoin as their base currency (BTCUSD). They have some similarities to Bitcoin, but they’re also distinctive. Many altcoins, such as some major ones, use a different consensus technique for generating blocks and validating purchases and sales. In other words, they are different from Bitcoin because they offer new or enhanced features like smart contracts or low price fluctuation.
Altcoins became well-known in 2017 as tens of thousands of new Bitcoin competitors appeared on the market. There aren’t any Bitcoin alternatives in today’s top 100 “altcoins,” they’re all completely separate items.
To think of all other cryptocurrencies as competitors is an outmoded view of what blockchain can do beyond digital payments. Ethereum and Solana, two cutting-edge blockchains, are changing and decentralizing a wide range of financial goods, making them top altcoins to HODL in the year 2021.
After a surge in the use of decentralized finance (DeFi), the finest cryptocurrencies now belong to blockchain initiatives and firms that use smart contracts. More than just a speculative investment, DeFi tokens generate real money and have a lot of use in the DeFi industry.
What are the Types of Altcoins?
Altcoins come in a wide variety of flavors and classifications based on their functions and consensus procedures. Here’s a quick rundown of some of the most significant:
Some altcoins may belong to more than one category.
Mining-based altcoins, as the name implies, are created through the process of mining. Blocks are created by solving challenging problems in most mining-based altcoins. This process is known as Proof-of-Work (PoW). Litecoin (LTCUSD), Monero (XMRUSD), and Zcash are mining-based alternative cryptocurrencies (ZECUSD).
Early in 2020, the majority of the most popular altcoins were mining-based. Pre-mined coins are altcoins that rely on mining.
These coins aren’t generated by an algorithm; instead, they’re awarded to users before being posted on cryptocurrency exchanges like Bittrex. XRP from Ripple is an example of a pre-mined cryptocurrency (XRPUSD).
Since its inception, cryptocurrency trading and usage have been fraught with risk. By linking its value to a basket of goods such as fiat currencies, precious metals, or other cryptocurrencies, stablecoins strive to lessen overall volatility. The basket’s purpose is to provide a safety net for bitcoin holders in the event of a failure or issue. Stablecoins’ price fluctuations are limited to a specified range.
Diem, sponsored by social networking giant Facebook, Inc. (FB), is the most well-known example of a stablecoin. It’s backed by one US dollar. 2 USDC and MakerDAO are two further instances of stablecoins. Stablecoin settlement capacity will be expanded in the second half of 2021, according to Visa Inc. (V), the world’s largest payment processing company, which announced the move in March 2021.
Security tokens are similar to securities traded in stock markets except they have a digital provenance. These tokens resemble traditional stocks and often promise equity, in the form of ownership, or a dividend payout to holders. The prospect of price appreciation for such tokens is a major draw for investors to put money into them. Security tokens are generally offered to investors through initial coin offerings (ICOs).
As their name suggests, meme coins are inspired by a joke or a silly take on other well-known cryptocurrencies. They typically gain popularity in a short period of time, often hyped online by prominent crypto influencers and retail investors attempting to exploit short-term gains.
For example, Tesla, Inc. (TSLA) CEO and cryptocurrency enthusiast Elon Musk regularly posts cryptic tweets about leading meme coins Dogecoin (DOGEUSD) and Shiba Inu that often substantially move their prices.
In October 2021, Shiba surged 91% in a 24-hour period after Musk tweeted a picture of his pet Floki, the Shiba Inu puppy, on a Tesla Many refer to the sharp runup in these particular altcoins during April and May 2021 as “meme coin season,” with hundreds of these cryptocurrencies posting enormous percentage gains on pure speculation.
Tokens used to deliver services within a network are known as utility tokens. These cards can be used for a variety of things such as making service purchases, paying network fees, or redeeming rewards.
Utility tokens, in contrast to security tokens, do not distribute dividends or give up ownership interests. A good example of a utility token is Filecoin, which can be used to pay for network storage.
What are the Most Important Altcoin Terms and Definitions?
When it comes to blockchain technology, the simplest definition is that it’s a decentralized database that can’t be hacked.
Buyers and sellers trade Bitcoins and altcoins on a coin exchange.
Dapp is an acronym for decentralized application, and it refers to blockchain-based applications.
When information is encrypted, it can only be decrypted using a unique private key code that only the owner has access to.
A new blockchain currency’s ICO (Initial Coin Offering) offers a chance to buy digital currencies for the first time. This is the cryptocurrency industry’s version of an IPO: an initial coin offering (ICO) (IPO). An ICO is a mechanism for a firm to generate money to establish a new coin, app, or service.
A blockchain miner is a machine that verifies transactions.
Public Key can be used to send and receive money between a wallet and the public.
A wallet’s private key serves as the key to unlocking it.
Satoshi Token is the one hundred millionth part of a single Bitcoin.
One of the most common types of digital wallets is the Wallet. For instance, check out Jaxx and Exodus.
Are Altcoins Good Investments?
Altcoins are still in their infancy on the market. This is a bad matchup. In the last decade, the number of cryptocurrencies listed on cryptocurrency exchanges has exploded, attracting swarms of retail investors who are speculating wildly on their price swings in an attempt to make quick money.
These investors, however, lack the resources to contribute significantly to market liquidity. Altcoin valuations are prone to quicksilver fluctuation due to small markets and a lack of regulation.
Consider Ethereum’s ether, which on January 12th, 2018, hit a record high of $1,299.95. Ether’s price fell to $89.52 by the end of the year after falling to $597.36 in less than a month’s time.
However, two years later, the altcoin had reached record highs of over $4,000 per coin. Traders who use timed trades have the potential to make a lot of money.
However, there is a snag. As of now, the cryptocurrency market is still in its infancy. The lack of established investing criteria or metrics for evaluating cryptocurrencies despite various attempts has been discouraging investors for years.
The majority of the altcoin market is based on speculative activity. There are numerous examples of cryptocurrency projects that have failed to acquire traction or have simply vanished with the money they raised from investors.
Consequently, the cryptocurrency market is for investors who are willing to take on the enormous risk of operating in an unregulated and developing market that is prone to volatility.. Stress brought on by large price swings should not be a problem for them. This type of investor may find significant success in the cryptocurrency markets because of the high potential profits.
Top Altcoins to HODL in 2021
#1 Ethereum (ETH)
Ethereum, the second-largest cryptocurrency after Bitcoin, is the next generation of blockchain technology. In terms of the best cryptocurrencies to buy, Ethereum is a strong candidate.
It differs from other currencies in that it is built to support the creation of decentralized applications.
A range of ground-breaking innovations have been spurred by ETH, the first blockchain platform to enable smart contracts.
It’s also going to be one of the greatest altcoins because PayPal will support it, along with Bitcoin, Litecoin, and Bitcoin Cash, among other cryptocurrencies.
Analysts will examine the best altcoins to determine if they can beat their prior highs if ‘altseason’ happens in 2021 and 2022. It’s possible that it won’t return to its pre-May 2021 levels just soon, but anything is possible.
Eth will likely continue to shine and break the market for some time to come.
#2 Uniswap (UNI)
For the purpose of swapping Ethereum tokens through liquidity pools, Uniswap has been developed as an Ethereum-based DApp. Uniswap offers two main services: supplying liquidity and utilizing it.
By using its smart contract liquidity pools, Uniswap gives customers the option to immediately exchange Ethereum-based coins for other cryptocurrencies. Other users provide the liquidity for these liquidity pools, earning the exchange fees in the process.
#3 Stellar Lumens (XLM)
To unite the world’s diverse banking institutions, Stellar has created a decentralized platform that makes use of disparate payment mechanisms (ACH, SEPA, SPEI, etc). As a result of Stellar’s decentralized ledger and on/off ramps for each payment mechanism, it unites various disparate systems.
Ripple, Stellar’s main competitor, is under investigation by the Securities and Exchange Commission. This is a golden opportunity for Stellar to establish itself as the world’s leading payment network.
User transactions must be fee-paying and meet margin requirements in Lumens, the Stellar Network’s token, in order to prevent spam (XLM).
#4 Aave (AAVE)
Decentralized lending offers better security and anonymity than centralized lending, while also charging higher interest rates. As one of the most popular lending protocols of today, Aave requires borrowers to provide collateral equal to or more than the amount of the loan. The smart contract replaces the requirement for a trusted middleman by securely holding collateral in escrow during the loan’s term.
In the event of a default by the borrower, the smart contract pays the lender immediately.
There is no need to know your customer (KYC) for Aave’s 10 percent annual percentage yield (APY) on some stablecoin loans. This is unheard of in traditional finance.
#5 Solana (SOL)
Solana is a smart contract blockchain with an active DeFi ecosystem and over $10 billion locked-in protocols. Many see Solana and other smart contract blockchains as “Ethereum-killers”. Others see the demand for blockchain products growing to the point where many of the largest smart contract blockchains can be simultaneously fully utilized.
Regardless of which outcome happens, there’s likely to be a significant amount of innovation happening on the Solana blockchain thanks to its deep-pocketed VC-backing. Solana has been embraced by Sam Bankman Fried and the FTX team, who certainly have the funds to ensure the success of the blockchain.
While many financial applications require the security of a heavily decentralized blockchain like Ethereum, blockchain gaming and other applications make more sense on a high-throughput, low-fee chain such as Solana. Solana’s native token is SOL, which is required to interact with the blockchain.
This would allow transaction throughput to scale proportionally with network bandwidth satisfying all properties of a blockchain: scalability, security, and decentralization. Additionally, the system can support a maximum throughput of 710,000 TPS on a gigabit network and a staggering 28.4 million TPS on a 40 gigabit one.
#6 Dogecoin (DOGE)
Dogecoin, which began as a meme cryptocurrency, has come a long way since its inception. The year 2021 will go down in history as a watershed year for cryptocurrency. It’s one of the hottest cryptocurrencies to invest in now before it skyrockets in value.
A big thanks to Doge for providing a major boost to all the cryptocurrencies who were seeking to establish themselves in the market Elon Musk, the Tesla and SpaceX chief executive, has made a major push for Dogecoin, which has since emerged as a leader in a new race of digital assets.
By the middle of April, Doge’s price had risen to $0.74, surpassing both Ford Motor Company and Twitter in market capitalization.
#7 Shiba Inu (SHIB)
Shiba Inu, a dog-themed cryptocurrency dubbed the “Dogecoin killer,” has impressed and piqued the interest of investors. Shiba Inu, which went live in August of 2020, has been the most-talked-about digital asset in the market.
This is one of the top long-term token investments thanks to the massive growth of 21,000% in just one week. As the SHIB community expands, a thriving crypto-related ecosystem is emerging around the coin.
A new decentralized exchange (DEX) platform was just established, allowing its users to supply liquidity while earning staking incentives.
One of the world’s oldest blockchain projects, Ripple’s XRP Ripple, was released in 2021. It differs from other coins in that it aims to make international payments simpler.
According to Coinpedia, its value increased from $0.2 to $0.5 in February, allowing it to reach a high of $1 in April. After the last surge, the coin reached early highs of $1.9, but the market slump reduced the coin’s price to $1.06.
Using distributed storage technology and the Tron blockchain, the Tron platform aspires to create a free, global digital content entertainment system that makes it simple to share digital content.
#8 CHAINLINK (LINK)
LINK is a great coin to invest in this year since it continues to excite both individual investors and larger institutions. While keeping the security and reliability guarantees inherent in blockchain technology, Chainlink increases the smart contract’s capabilities by allowing access to real-world data and off-chain processing.
#9 INTERNET computer
An improvement on traditional blockchain technology is the Internet Computer. ICP does not use Proof of Work or Proof of Stake like other cryptocurrencies like Ethereum do. Instead, it makes use of queries and calls to get the information it needs.
This new technology promises to combine the internet’s high data processing speed with the blockchain’s security and trustlessness. The DFINITY foundation, which employs hundreds of talented individuals, created the Internet Computer.
What is the Future of Altcoins?
Discussions about the future for altcoins and, indeed, cryptocurrencies have a precedent in the circumstances that led to the issue of a federally issued dollar in the 19th century. Back then, there were various forms and types of local currencies circulating in the United States. Each had unique characteristics and was backed by a different instrument. For example, gold certificates were backed by deposits of gold at the Treasury. U.S. notes used to finance the civil war were backed by the government.
Local banks were also issuing their own currency, in some cases backed by fictitious reserves. That multiplicity of currencies and financial instruments parallels the current situation in altcoin markets. There are thousands of altcoins available in the markets today, each one claiming to serve a different purpose and market.
The current state of affairs in the altcoin markets is unlikely to consolidate into a single cryptocurrency. But it is also likely that a majority of the more than 1,800 altcoins listed in crypto markets will not survive. The altcoin market will coalesce around a bunch of altcoins—those with strong utility and use cases—which will dominate the markets.
The maturation of cryptocurrency markets will likely bring more sophistication and capital into the industry, paving the way for regulation and less volatility.
In the same way that purchasing Apple stock is a simple way to introduce yourself to the stock market, purchasing bitcoin can be your introduction to the crypto business. However, there is a great deal more going on beneath the surface of things. Many altcoins could make a big comeback this year.
The adoption of altcoins and tokens will rise in tandem with the value of their underlying currencies and tokens as people gain a better understanding of their real-world applications.
So, it’s your decision to make a selection from these top altcoins to HODL in 2021.
What are the best 7 altcoins to HODL?
The best altcoins to HODL are ETH, LINK, UNI, BNB, XLM, AAVE and SOL.
What is Shitcoin?
Shitcoin is a derogatory term that is commonly used to describe cryptocurrencies that serve no discernible purpose.
Are Altcoins Good Investments?
Altcoins have many of the same investment risks associated with Bitcoin. In addition, many of the small altcoins are illiquid. But well-established altcoins, such as ether and XRP, are competitors to Bitcoin.
What Is the Best Altcoin to Invest In?
Based on market capitalization, Ethereum is the biggest and most well-established altcoin.