What are Altcoin and what are their benefits and disadvantages? Why should investors care about Altcoin? What risks can occur when investing in Altcoin?
Discover more about this topic and learn more details in the article below from AZcoin.
Altcoin is an abbreviation for the term “alternative coin”, referring to all types of cryptocurrencies other than Bitcoin.
Altcoin can vary in technology, purpose, features and how they work, and many of them were developed to address Bitcoin limitations or to offer more unique features.
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Below is the classification of altcoins according to 5 main types:
👉 Platform coin: These are cryptocurrencies developed on blockchain platforms to support the building and deployment of dApps and smart contracts. Platform coins typically offer high flexibility and are widely used within the blockchain development community. Examples include ETH, ADA and SOL.
👉 Stablecoin: These are digital currencies designed to maintain price stability by pegging their value to a stable asset such as the US dollar, gold or other stable assets. Stablecoins help mitigate price volatility in the cryptocurrency market. Examples include USDT, USDC and Dai DAI.
👉 Meme coin: These are digital currencies created or developed based on popular memes or viral internet images. Meme coins often lack a formal use case and are typically used for entertainment purposes or as trading instruments. Examples include DOGE and SHIB.
👉 Utility Token: These tokens are issued for use within specific systems, such as accessing services or products, often within dApps. Utility tokens play a crucial role in incentivizing users to utilize blockchain platforms and services. Examples include BNB and UNI.
👉 Governance Token: These tokens are used to participate in the governance and decision-making processes of decentralized systems or communities. Governance tokens enable owners to participate in strategic decisions and regulatory changes within the system in a democratic manner. Examples include COMP and MKR.