Altcoins, Crypto Starterkit, Cryptocurrencies

What are altcoins?

pile of physical altcoins

Doesn’t matter how long you’ve been in the cryptocurrency space, at some point you will come across altcoins. Because you can make a shitton of money with them, right?

But there is more to it than that and also, how do I make a shitton of money with it? I’ll tell you. But first, the fuck are these things anyway?

One master, thousands of servants

bitcoin master and servants

“Altcoin” is short for “alternative coins” and in short just means any coin that isn’t Bitcoin. Bitcoin was the first ever cryptocurrency, and it didn’t take long until another one came up. And thus it was coined “Altcoin”.

The first Altcoin ever made was “Namecoin” (NMC). It wasn’t much different from the original Bitcoin. It had almost the same supply, same codebase as Bitcoin and pretty much the only difference was that the addresses were more anonymized than with Bitcoin. This was in 2011, about two years after Bitcoin was introduced.

One could get the feeling this coin was only made for the sake of “making another cryptocurrency”. Surprisingly, this coin is still developed to this day. That actually took me by surprise.

Silver to your gold

Shortly after this, we’ve got an actual altcoin. It was called Litecoin (LTC) and for the first time ever, had some actual differences to Bitcoin. If Bitcoin is the digital gold, Litecoin was supposed to be the digital silver. It has a supply of 84 million Litecoins as opposed to the 21 million Bitcoin, so it’s not as scarce.

The Mining-reward is handed out every 2 1/2 minutes instead of every ten minutes. And the proof-of-work is different than Bitcoins.

Litecoin peaked at 360 USD per Litecoin in 2017. It was the first altcoin with noticeable differences to Bitcoin and therefore was quite highly valued. It is still one of the highest ranked coins marketcap-wise. Even though the creator sold all his coins at the peak in 2017.

A little side note here: He said he sold his stack to make it a truly decentralized cryptocurrency. Surely, selling it at the highest price was not involved in his decision. I mean, he could’ve also sold it in smaller steps. Or announce it. But anyway.

Bunch of nerds

nerds with a hat

You’ve learned about two altcoins now. But that’s not even the surface of it. Currently, there are over 2000 cryptocurrencies in existence. All of them altcoins, since there is only one Bitcoin.

A lot of them just tried to be the better Bitcoin. All of them failed. Despite all these contenders, Bitcoin still reigns king at Number 1. After ten years. But don’t think the inventor of Bitcoin just made the sickest cryptocurrency, ever.

It’s down to the fact that this space is still not known by the broad masses. If you ask your aunt or anyone not into tech, IF they know about cryptocurrencies, they only know Bitcoin. The fact that you’re reading this article on my blog suggests you didn’t know about most of them as well, right?

So even if there is a better Bitcoin, nobody knows about it, so nobody is gonna invest. Also, the fact that Bitcoin already reigned for so long makes it the safest bet in crypto. Even if there might be better ones.

I can only see Bitcoin being kicked off number one if we do not pay with Bitcoin in the future.

If Bitcoin becomes a store of value like gold, but the majority of day-to-day trading and exchanging money is done with another cryptocurrency.

Totally possible scenario. But at this stage, Bitcoin will probably be so hatefully expensive, that it still might be number one in market cap.

Vapenation

vape hot girl

Let’s be honest here, I’d argue about 80% of the altcoins today are vaporware. Which means, they only have a great goal and a great website with promises, but nothing really to back that up.

The massive bullrun in 2017 sparked an influx of cryptocurrencies as we’ve never seen before. Everyone and their mother came up with a cryptocurrency. Didn’t matter if the use-case was totally made up out of thin air, people were investing in it.
This was part of the euphoria this market lived through. When everything is “mooning” people ignore sound reasoning and resign to FOMOing. Bad plan, but emotions are hard to come by.

I will talk about ICO’s (which sparked that and are the reason why companies like Facebook banned ads for cryptocurrencies) in another blog post in the future. For now, you can note, that most of them don’t offer any real value. But does it matter?

Scamcoins pump the most

That’s a great saying in the cryptocurrency space because it is very true. Or was. In 2017 premined centralized shitcoins like XRP pumped 36.000% or Bitcoin Trash, for example, went up to 4.000 USD a piece. You will notice that these coins are still number 3 and 4 in the overall market cap (so money invested, simplified). Lots of bagholders.

It is because of emotions from inexperienced investors and people falling for all sorts of bullshit. The greatest example to this day is still BitConnect. It worked like this: You put in your Bitcoin, they use said Bitcoin to trade and make money this way and you get passive income as interest in return. The problem was, they promised guaranteed interest on your investments.

Now, how do you guarantee a return in a market as volatile as crypto? Short answer, you don’t. This was a scam or ponzi-scheme, where old investors are paid with the money from new investors (pension works similar by the way).

A ponzi-scheme will inevitably collapse like a house of cards because new investors won’t come in at some point and thus you won’t be able to pay the old ones. Happened to BitConnect as well as this great chart tells you:

bitconneeeeeeect

And it sparked some great parodies and memes:

Why do I bring this up? Well, be careful with altcoins! I am certain that when we are finally moving upwards again, people will just fall for the same old traps. Especially new investors. So please be careful what you invest in.

I compiled a list of what to look for in a coin when you are “The Investor” sort of type: The Investor Archetype.

Doing it properly

The question now obviously arises: How DO you make a shitton of money with altcoins properly?

Depending on which archetype you are, your investment strategy is different. The basic appeal of altcoins (from a pure money making perspective) is this: they are cheap.

Bitcoin is already in the thousands and while it will still make new all-time highs in the future, your gains are limited because of the high price. Unless you invest hundreds of thousands.

free your mind icon

Simple math:
If you hold 1 Bitcoin, you invested 6.000 USD.
Bitcoin moves up to 20.000 USD, you’ve made a profit of 14.000 USD.

If you hold 6.000 Coins of CoinX (one being worth $1).
The coin moves up to $4 a coin, you’ve made a profit of 18.000 USD.

If you are good at math, you’ve already noticed something. The % increase is almost the same. In this example, Bitcoin moved 233% and the CoinX moved 300%.

BUT, the trick is this: emotions. People are more willing to buy a coin at $4 than at $20.000. Simply, because there is (emotionally) more upside possible. Technically the possible upside is literally the same. But emotions play a big factor in these markets.

The second advantage: You CAN buy way more coins with a smaller investment. If you plan to invest 1.000 USD, you can either buy a sixth of a Bitcoin, or 1000 coins of CoinX.

And usually (not always) it’s more likely to make profits with a lot of coins which do a smaller move than it is with 1 coin that does a big move. 

But wait!

Don’t run away buying all sorts of cheap ass altcoins. There is more to it. Do proper research or check my portfolio updates to see how I do my research or get ideas for coins to buy.

Also, if you want a deep understanding on how to research properly, you will want the course I am currently preparing. The idiot’s guide to becoming rich with cryptocurrencies, which focuses to a great extent on altcoins.

It’s not available yet, but if you don’t want to miss out, get on my e-mail list.

Alex

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