Smart Satoshis: What is an Altcoin?
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Smart Satoshis: What is an Altcoin?

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Smart Satoshis: What is an Altcoin?

Altcoins, short for ‘alternate coins’ (and also referred to simply as ‘alts’), are essentially any token not named Bitcoin (although as the second-largest cryptocurrency, Ethereum may soon have a case for shedding the altcoin label). Altcoins provide a huge amount of versatility for investors looking to diversify their portfolios with projects from high-performing crypto sectors such as NFT (non-fungible tokens), metaverse, and DeFi (decentralized finance).

Crypto traders can turn to altcoins for portfolio diversification as a risk management strategy by pouring capital across the many emerging, and promising growth opportunities that these alternative opportunities present.

As the “alt” tag suggests, alternate coins can simply be thought of as alternate investments outside of Bitcoin, a trend that caught fire during a 2017 phenomenon led by the explosion of ICO projects. This gave rise to the first instance of what is now simply referred to as an “alt season.” During this time, alts massively outperformed Bitcoin–as evidenced by Ripple finishing out 2017 as the top gainer with a huge 36,000% gain, while Bitcoin closed out the year with a “mere” 1,000%.

During this time, Ripple in particular shot to prominence, backed by major financial institutions as it continued to accelerate its adoption alongside a healthy amount of FOMO. This also marked a shift in investing from riskier ICO to viable blockchain ventures, with Ripple skyrocketing to the top thanks to a strong product offering built around digital remittances.

As the overall crypto market continually undergoes stages, or market cycles, ‘alt season’ is a particular cycle, or seasonal trend, where Bitcoin starts to wane in dominance, leading to several opportunities highlighted by increasing numbers of traders flocking to the alt scene, particularly large cap tokens.