Alt Coins! Read All About It!

By | January 7, 2018
ICO Puzzle
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What are Altcoins?

New to cryptocurrency?

‘Altcoins’ refers to ‘Alternative Coins’, which is to say, alternatives to the mainstream coins that could probably currently be summed up as Bitcoin, Litecoin, Ether and Dash. Those are the four big ones that most cryptocurrency investors aim to grab and hold if they are looking for the long-term profits. Ripple is also making waves…

But others will have different opinions. Some people may choose to invest in coins that are more speculative but may have great long-term benefits. It’s a matter of knowing your appetite for risk.

The Code Etc.

Altcoins are usually built on the Ethereum backbone so they can be mined like Ether, and they use similar code. The code for an Altcoin is called a Smart Contract. Altcoins are usually ERC20 compliant, so that they can be swapped directly for Ether, which also means that you can usually invest in an ICO using Ether. When you do this you are buying the new Altcoin during the Initial Coin Investment stage rather than buying coins that are already on the market, and you can usually get them cheaper than the proposed market-release price for the coins.

Typically, although it can vary a lot, for every Ether you contribute during the ICO stage, you’ll get around 10,000 of their tokens/coins. Clearly, you first have to hold some Ether to be able to do this.

On the ICO Website, once registered, you will be given a contribution address and tag. It’s important to user the tag so that the ICO group know who is investing.

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Multiple opportunities.

Although there are now over 1000 Crypto-coins, you might want to have a look at the selection of coins/tokens in this image (which I cropped and simplified from Wikipedia). No point in me doing work that has already been done.

If you buy Altcoins during their ICO (Initial Coin Offering), there is often very fast profit to be made. But as always, you could completely lose your investment. So think hard before deciding what to do!

Whatever the case, don’t put all your eggs in none basket. That one basket may fall and break. Or in this case, fail!

Here is an explainer video for HODLcoins. Bear in mind that HODLcoins were released about 18 months ago and have basically flat-lined, going nowhere in value, at least, not yet. Incidentally a fairly recent confusion has arisen. Bitcoin enthusiasts have started using HODL as an acronym for Hold On for Dear Life! You should understand that they are referring to Bitcoin, not HODLcoin!

Understand the enthusiasm of the narrators of the video, and you can see they had very high expectations that have failed to materialise. But they obviously didn’t know when making the video that their expectations would fail to materialise.

If you watched that video, it should help you to realise that how much the team involved in the ICO believed in their coin, so you should never get caught up in the enthusiasm.

It is only the business case that matters, along with a responsible team capable of bringing influence to persuade exchanges to list their tokens, and also capable of generating enough publicity to make the token popular. It is good to have somebody well known on the team, because popularity along with a good ‘use case’ for the coin, is what will make low value tokens rise in price, generating you a profit.

What are the chances of an ICO Making Money?

Most ICO initial values go up fairly quickly, but then there is a quick sell-off, bringing them back down, sometimes to baseline.

Is it worth the effort? If this is your first venture into alternative coins, then it will be a possibly very profitable learning experience, and everything we learn, we can put to use later. Sometimes you have to lose a bit to learn a lesson. It’s worth dipping in a toe before plunging into the choppy ICO waters.

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Research, and more Research.

Before in vesting in an ICO, you should read their ‘White Paper’. A new token can take off big-time only when the organising team have a  good working plan and a practical use for their coins.

There is a lot more to ICOs than I can go into in this article, but not a lot more that you need to know to be able to go off and do research on upcoming ICOs, and make your own decisions, along with taking whatever advice you need, to invest or not to invest, and if you do invest are you doing it to make a quick buck and sell the tokens off shortly after getting them, or to hold on and hope that they go up in value. Some do. Some don’t. Personally, I always hold.

Good research in advance of purchasing is often capable of sorting out the winners from the losers. But it takes luck too. Some of the best Altcoins were started by college dropouts working from their basement. Others with huge clout and a highly respectable team behind them become absolute failures. Failures for the investors, that is, because the Team Reward from the money raised by the ICO can be huge.

For successful ICOs, the rewards can also be huge for investors.

The Odds…

Seven out of ten ICOs will develop coins that will still be around in five years, or three out of ten, depending on what you read and who you believe. Remember that in ICOs he or she who hesitates loses out. You don’t get a long time to do your research from first announcement of a new ICO, until it is launched. Learn to research fast. That’s not difficult with search engines.

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Disclaimer: As always, please do not take anything I write as financial advice. It is just my opinion. Also, don’t invest what you can’t afford to lose. Because if you invest what you can’t afford to lose, and it all crashes down at your feet, you’ll have to start again at your beginnings (and never breathe a word about your loss).

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