What Are Altcoins?

An “Altcoin” is simply a cryptocurrency that isn’t Bitcoin. All altcoins share common characteristics, and operate in broadly the same way as Bitcoin, but under the hood, they may use a different mechanism to conduct transactions.

Some altcoins are used purely for mining, whereas others are intended to be used as security or utility tokens. Ethereum and Binance Coin are probably the best know Bitcoin alternatives, but as of 2021, there are over 9,000 different cryptocurrencies in existence, and that number will undoubtedly rise in the future.

Should You Invest In Altcoins?

Some altcoins are more stable and mature than others, Ethereum being a prime example. With that being said, you only have to take a look at a recent Bitcoin price chart to see that even the most mature of cryptocurrencies can still be very volatile in nature.

Investing in altcoins then, is something of a gamble. Many of the Bitcoin alternatives are attractive to investors because they’re currently extremely cheap, and have the potential for huge growth. That means it’s relatively easy to build a broad portfolio of coins for relatively little outlay. It’s also perfectly possible to make a very good return if you choose wisely.

Here are some of our top altcoin picks for 2021:

Disclaimer: Any recommendations we give in this article are purely based on our own opinions. We’re certainly not giving you financial advice. Always do your own independent research before investing in cryptocurrency of any kind.

Our 1st Pick: Cardano (ADA)

Out of our “top 3 altcoins”, Cardano is perhaps the most interesting. So-called “meme coins” like Doge are getting a lot of celebrity hype right now, which means that genuinely innovative altcoins like Cardano aren’t always given the attention they deserve. That’s a shame, because Cardano is based around a genuinely useful (and ethical) set of features that could eventually see it becoming a very wise choice for patient investors.

What Is Cardano?

Cardano’s CEO, and former Ethereum founder Charles Hoskinson, describes the altcoin as:

“A collection of protocols and technology that allows you to transform, store, and manage value, identity, and governance.”

Hoskinson has focused his efforts on creating a technology that can help people in the Third World to create verifiable records and better access to bank accounts and loans, as well as a means of storing academic credentials that are recognized worldwide.

In addition to it’s ethical underpinnings, Cardano uses the “Proof of Stake” model to mine new blocks and verify transactions. This means that only a fraction of Cardano holders can mine on the network, which greatly reduces the overall carbon footprint of the blockchain, as it puts restrictions on the number of computers that can mine new coins.

Bitcoin on the other hand, uses a “Proof of Work” model. This puts zero restrictions on mining, meaning that wealthy companies not only have an unfair advantage in the amount of processing power they can bring to mining operations, but there is no ceiling on the amount of energy that can be thrown at mining.

Should You Invest In Cardano?

Obviously all altcoins are volatile in nature, so we can’t be certain that you’ll hit the big time by investing in Cardano. With that being said, the team behind this cryptocurrency has some great experience and credentials, and they’ve already proven the technology as viable. Cardano is also set to launch smart contracts within the next couple of months which experts in the field claim will skyrocket the price.

Think of this one as a slow burner, and not your typical “meme coin”, and you could see healthy returns in the longer term.

2nd Pick: Polkadot (DOT)

Founded by Gavin Wood (another Ethereum co-founder) back in 2016, Polkadot launched in 2020. To date, the cryptocurrency has raised over $200 million from investors and although its growth has been volatile, it’s seen some promising gains in 2021.

What Is Polkadot?

Polkadot is essentially a software that allows users to launch and operate their own blockchains. It features a main network (the so-called Relay Chain) for permanent transactions, as well as user created networks, known as Parachains, that can be customized for any number of uses.

The purpose of Polkadot’s design is to create an ecosystem that allows users to conduct more secure transactions with greater privacy, using blockchains that don’t disclose user data onto the public network itself.

So This Is Basically Like Ethereum?

Since the major Ethereum update known as Ethereum 2.0, it does share many similarities with Polkadot in operation and developers can even use Polkadot’s developer framework to simulate the Ethereum blockchain for use in custom blockchain designs.

Should You Invest In Polkadot?

Polkadot’s value grew rapidly in February 2021, with a huge price hike of 350% from the start of the year. Like many altcoins, there’s been a degree of volatility in Polkadot’s market price, but many experts are bullish about the future value of this coin, with some forecasters suggesting it could break the $100 mark by the end of 2021.

3rd Pick: Shiba Inu (SHIB)

Shiba Inu Coin is a cryptocurrency featuring the same dog mascot made famous by Elon Musk’s favorite altcoin, Dogecoin.

Dogecoin was conceived as a Bitcoin parody way back in 2013, and Shiba Inu Coin takes the absurdity to the next level, using the breed name of the Japanese dog mascot of Dogecoin to create a “a meta parody”.

Although clearly created as something of a joke, Ryoshi, the founder of Shiba Inu, envisaged the coin as a fun experiment to build a token using a 100% decentralized community, and despite clearly being a meme-coin, it does show promise for future investors:

Shiba Inu – Made For Investors

Shiba Inu was created in such a way as to provide its investors with greater investment potential from its inception. The Shiba Inu team created an ERC-20 token that was priced low enough that anyone could own millions of tokens whilst they were still relatively undervalued.

Another decision made by the Shiba Inu team was to hand over half of the pool of coins available at launch to Vitalik Buterin, a co-founder of Ethereum. The team hoped that “burning” a large amount of the currency would prevent the coins being bought up by a few big investors, which could have impacted its future use as genuinely useful coin.

As it turns out, Vitalik Buterin has now given away 10% of his entire portfolio of Shiba Inu to a COVID-19 relief fund in India, and burned the remaining 90% sending prices tumbling after their huge initial surge in early May 2021.

Should You Invest In Shiba Inu Coin?

The market for novelty “meme coins” is huge at the moment. Investors are constantly looking for the next big thing, and Shiba Inu still has decent growth potential, despite the loses suffered b Buterin’s huge coin dump. For that reason, and because it’s so closely tied to the fortunes of Dogecoin, we’d say that Shiba Inu still has a lot of potential left for the rest of 2021.

Summing Up

There are hundreds of promising altcoins making strong gains in 2021, and these are simply the top 3 altcoins we believe will see significant price rises towards the end of the year. It’s important that you go into the world of altcoins with your eyes open, and don’t make any rash investing decisions that you’ll later regret. However, for those of you that keep a level head and invest wisely, you could see some amazing returns from your portfolio!

The post The Top 3 Altcoins To Keep An Eye On In 2021 appeared first on Tech Magazine.