7 Altcoins To Diversify Your Portfolio

Altcoins are often considered an integral part of Crypto portfolio diversification. By investing in promising Altcoins, you can reduce the overall risk of your portfolio. Investing in different classes of Altcoin is a responsible investment strategy. These classes include platform tokens, DeFi tokens, static coins, and even meme coins.

Introduction

Although Bitcoins usually dominate the Cryptocurrency news, Altcoins now have a fair share of headlines. It’s good to know more about what’s on offer during Cryptocurrency trading, whether it’s an increase in the price of Dogecoin or an update to Ethereum; there’s a vast amount of Altcoins available, so let’s take a look at some of the top projects in the various Cryptocurrency classes.

What Is An Altcoin?

An Altcoin is not a Bitcoin but it is a type of Cryptocurrency. As Bitcoin started the Cryptocurrency industry, as we know, other coins and tokens have become alternatives. A wide variety of Altcoins is available, from large-cap coins such as BNB and Ether to tokens for newly launched projects. Altcoins have traditionally been associated with ERC-20 tokens on Ethereum and local tokens from other major Blockchains.

Why Should I Invest In Altcoins?

Bitcoin (BTC) is the most popular and largest market cap coin cryptocurrency. As a responsible investor, you should diversify your investment portfolio. To do this in the Crypto world, you will need to buy Altcoins.

By exposing your Cryptocurrency portfolio to various Cryptocurrency coins and sectors, such as Decentralized Finance (DeFi), you can reduce your overall risk. That way, if the Bitcoin falls in value, your other Crypto investments may balance some losses.

If you don’t know about DeFi, we already elaborate it in detail, must read ( What Is Defi And Why Do We Need It).

Platform Tokens

Some Blockchains allow users to create their tokens, projects, and even interactive Blockchains. Ethereum is the most popular platform, but others have followed its lead and provided the infrastructure for new innovative projects.

Ether (ETH)

Ether is a local symbol of the Ethereum platform, created in 2015. Ethereum was a significant technological advancement in the Cryptocurrency ecosystem and is known as the original Blockchain of the second generation.

It took the principles of decentralization of Bitcoin and enhanced its usefulness with program-capable code. These scripts, called smart contracts, are self-executing and run according to the developer’s rules.

They are also unchangeable, which means that developers cannot change them once deployed in the Blockchain.

Ether is used as a Blockchain utility token. All interactions and transactions with intelligent contracts require the user to pay for Ether. Each type of activity requires a certain amount of gas, which is computational power.

Using a complex smart contract will require more gas than sending a simple ERC-20 token from one wallet to another. The fee you pay for gas is determined based on the block you add to it and is known as the base fee.

You can also stake Ether for interest as part of a planned upgrade to Ethereum 2.0. However, once you stack, your Ether will remain locked until the release of Ethereum 2.0 in about two years. Ether also does not have a supply cap, but transaction fees are burned as a deflationary mechanism.

Ethereum is also Cryptocurrency. It is very beneficial Virtualcurrency in Crypto trade. You can buy and sell Ethereum without any hassle. Here is a complete guide about Ethereum (What Is Ethereum). If you want to buy Ethereum, read this ( How to Buy Ethereum). And if you want to sell Ethereum then also read ( How to Sell Ethereum (ETH).

Solana (SOL)

SOL is the local symbol of the Solana Blockchain, which launched in March 2020. History proof replaces block time stamps and uses hashing function to measure time. This method significantly increases the speed of the network. Solana also has intelligent contracting capabilities.

SOL acts as a utility token for customers to pay transaction fees or gas when negotiating intelligent contracts. The network burns all percent of each transaction fee as a deflationary measure.

Blockchain will generate a total of 489 million SOL tokens. You can also become a network verifier if you have SOL and participate in proving its stakeholder consensus mechanism. Stickers and Verifiers are awarded SOL tokens for adding new transactions to the block.

Polkadot (DOT)

The DOT was first elected in 2017 as a local Polkadot sign. DOT focuses on creating an interoperable Blockchain, and there are three main areas of use: stacking, governance, and bonding.

DOT’s governance model allows users to make decisions about parachains, upgrades, and network fees. Each parachain is a custom Blockchain for a project connected to a central Blockchain called a relay chain.

The DOT slot is also used in Auctions. Consumers put DOT behind plans that want to win a parachain slot. If the project is successful, the DOT is bound until the parachain lease expires, and in return, the stickers receive tokens from the project.

BNB

BNB Binance is the local symbol of Smart Chain and Binance Chain. The coin was launched at the ICO on the Ethereum Blockchain in 2017 to raise funds to develop Binance’s exchange services.

To convert BNB tokens from ERC-20 tokens to BEP-2 tokens Binance moved to Chain in 2019,.

Binance DEX (decentralized exchange) uses BNB as a utility token for low fees. Consumers will also have to pay BNB to transfer the balance to Chain in their gas-based transaction system.

Other uses of BNB include participating in the BNB Stacking Authority Consensus Procedure and paying a small fee on the BNB Exchange. Binance also burns the number of tokens each quarter as a deflationary mechanism.

Separately, we elaborated about Binance, for more understanding must read this ( Binance Exchange Review) guide.

Meme coins

Although meme coins have not traditionally offered much value to investors, they are increasingly making more profits. If you add one to your portfolio, be aware that they are a particularly high-risk investment.

Dogecoin (DOGE)

Dogecoin was created in December 2013 as a parody of Cryptocurrencies such as Bitcoin. Primarily Its Blockchain is based on Litecoin work. But the consensus method is not compatible with SHA-256 mining rigs.

Although Dogecoin is a satire of the speculative nature of Crypto, it has become an investment opportunity with significant benefits over the years. It has no use other than making payments more manageable.

Online communities on Reddit and other platforms have used Dogecoin as a way to make suggestions. Its popularity and online community have grown exponentially as its value.

Dogecoin originally had a limit of 100 billion coins. It turns the coin into inflation as miners mine five billion new Dogecoins each year.

Stablecoins

Adding a Stablecoin to your portfolio has benefits in the stability and liquidity of your portfolio. They are low risk and can be used in products to generate continuous passive income. For example, Binance Earn offers many ways to gamble your Stablecoins and get yields in return. You can take advantage of the features of fiat currencies or other fixed assets on the Blockchain. Stablecoins are also helpful for investors to avoid price fluctuations, which we will discuss later.

If you are a newbie and did not know much about Stablecoins, Here is a complete guide about ( What Is a Stablecoin).

Conclusion

Investing in Altcoins can be a great option if you want to diversify your Crypto portfolio. If you are new to Cryptocurrencies, it is a good starting point to look at some big projects. Prominent market cap Cryptocurrencies will generally be less risky than small. Overall, the best advice we can offer is always to research whatever token or coin you use.

Originally published at https://decentralbuzz.com on September 14, 2021.

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DecentralBuzz is a latest blockchain and cryptocurrency news blog. We cover Bitcoin, Altcoins, ICO’s, Crypto updates and much more.

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Decentral Buzz

Decentral Buzz

DecentralBuzz is a latest blockchain and cryptocurrency news blog. We cover Bitcoin, Altcoins, ICO’s, Crypto updates and much more.

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