As the global economy continues to limp, you may be among the investors wondering if the best investments are in currencies that are not tied to any economic authority but are easily accessible to anyone with a digital wallet. If cryptocurrencies are an acceptable and responsible addition to your investment portfolio, how can you make sense of all the options and increase your chances of trading your crypto for a profit? Beginning with an explanation of the nature of cryptocurrencies and the most popular altcoin options to Australian investors, this guide will offer insights you need to feel confident diversifying your portfolio to include cryptocurrencies beyond Bitcoin that can add to your wealth.
What Are Cryptocurrencies?
As a quick recap, cryptocurrencies refer to any monies stored in a digital wallet and not verified or maintained by a centralised authority. Using coding and blockchain technologies, these digital assets can be used to complete transactions through payment systems that accept them. Cryptocurrencies are not required to have any physical assets backing them or establishing their value, so their worth in Australian dollars can fluctuate.Bitcoin Dominates the Market
Bitcoin was the first cryptocurrency to become a household name across the globe. Because it was innovative and captured people's imagination, it quickly became a buzzy conversation piece since its introduction in 2008. Its rise in popularity may have been tied to recessions across the Western world that left many people disillusioned with money backed by central authorities. Between the timing of its establishment, its relatively uninhibited growth cycle, and the lack of popular competitors, Bitcoin became the most popular cryptocurrency. However, being first and most popular does not inherently result in a superior product, so many Australians have kept their options open for other opportunities to invest in crypto.The Rise of Altcoins
Although Bitcoin paved the way for cryptocurrencies to one day become mainstream monies, the future of crypto will be enhanced by the innovation and designs accompanying a competitive market. Specific altcoins, or alternative digital assets besides Bitcoin, effectively tackle challenges in the crypto market and provide security and variety to potential investors. Some altcoins see their value diminish quickly, but others have maintained their purchasing power to become popular digital asset options. As more and more altcoin technologies become available, the organisations that create them push each other to reach new heights in security and value.Why Consider Investing in Altcoins?
Some altcoins have established a base that provides relative security, making them an ideal addition to a well-rounded investment portfolio, and other altcoins take advantage of their volatility to offer investors a chance to buy and sell their currency with major gains in view. Although cryptocurrencies are notoriously risky, you can build your confidence in your ability to evaluate the value of an altcoin and potentially see its value and volatility work for you.Understanding Altcoins: Evaluating Value for Investment
How well an altcoin performs for investment can be unpredictable, but some features indicate that an altcoin investment is a good idea. When creating your cryptocurrency portfolio, consider balancing these three key attributes:Popularity
When it comes to altcoins, popularity matters because the value of a cryptocurrency is established mainly by how many users are actively trading and advertising a particular coin. A more popular choice will inherently be less likely to deliver a high-loss investment. Popularity also determines how many people will be interested in buying and selling the coin, resulting in a more competitive market, which may influence whether a short-term gain is feasible or if your investment is better suited to a longer-term waiting game. Crypto prices can be affected by popularity and advertisements, making this one of the most essential features to consider when buying into an altcoin market.Security
Particularly when buying and selling altcoins, you want to protect your wealth. While you cannot completely control the market value, your due diligence before adding an altcoin to your portfolio can protect you from losing money to an altcoin scam or a less effective blockchain technology that invites theft. While the cryptocurrency market offers some security guarantees you are working with, ultimately, the value of your investments can be directly influenced by the altcoin provider's security. Therefore, this feature should be carefully weighed when deciding which coins deserve attention.Diversity
A good cryptocurrency investment portfolio will be defined by diversity. Don't limit yourself to currently popular cryptocurrencies, and don't discount the long-term benefits of working with established altcoin providers. Do let the goal of a diverse portfolio guide your decisions when investing in any crypto organisation, particularly altcoins.Overview of Popular Altcoins
With a view of letting popularity, security, and diversity direct your investment strategy in altcoins, let's examine some of the other crypto options that attract investors such as:- Ethereum
- Cardano
- Dogecoin