An altcoin trader refers to a cryptocurrency trader who actively invests in altcoins, meaning cryptocurrencies other than Bitcoin.
Bitcoin is one of many early attempts to create a decentralized digital currency and the only one to have succeeded. Satoshi Nakamoto – the pseudonym for Bitcoin’s creator(s) – focused on developing a digital currency efficient enough to challenge existing financial markets and systems.
However, there were several notable shortcomings with Bitcoin. Many developers began creating other blockchain-based digital assets to address these issues and present them as an “alternative” to Bitcoins.
Although this quest has been largely unsuccessful as Bitcoin is still the largest digital asset by market capitalization in the cryptocurrency market, thousands of altcoins exist today that are considered excellent improvements to the Bitcoin blockchain and its native cryptocurrency – Bitcoin.
Are Altcoins Good Investments?
Many altcoins have proven to be fantastic crypto investments over the years. Many active investors prefer to buy cheap coins with the prospects of raking in massive gains from price movements. Rather than investing in a higher-priced coin like Bitcoin, an altcoin crypto trader prefers the expected returns on investment associated with altcoins. For instance, it is relatively easier for a $1 crypto asset to experience a 100% rise to $2 compared to a priced asset moving from $40,000 to $80,000).
There are quite a number of investment risks associated with altcoin trading. Altcoins are generally considered high-risk investments as they can easily be manipulated by market whales. Also, many altcoins have low liquidity; hence, getting in and out of investment positions can be a hassle due to low trading volume. It is best to have a proper risk management strategy and informed investment advice when considering trading altcoins.
Ethereum (ETH) has so far been the most successful altcoin created, all thanks to its smart contracts functionality and its support for the creation of decentralized applications.