Many crypto enthusiasts, investors, and hedge funds, will generate huge financial returns by identifying and investing in the worlds top rare altcoins. The term “altcoin” means an alternative coin to bitcoin, the first and most popular cryptocurrency. With more than 1800 cryptocurrencies in the world, the term represents the coins in an easy to understand way. However, the term cryptocurrency is also used frequently to refer to coins built through cryptography. For some, cryptos sound better and is a much shorter word than cryptocurrency.
Compared to many investments, cryptocurrencies offer great convenience for anyone interested to invest. When buying a home, for example, you have to raise a huge sum to purchase the whole house. You don’t know whether the value or the house will go up or down, but you have to purchase the whole house anyway. Banks will loan people money to purchase homes, however these mortgages require extensive paperwork and time to qualify for.
Altcoins share some similarities to stocks and are much more liquid than an asset such as a home. And unlike a home, liquidating stocks and cryptocurrencies is easy. You can also buy more than one share or altcoin from different projects to spread your risks. You can, in fact, buy altcoins in dozens of crypto and altcoin projects and if they are listed on solid exchanges you can typically liquidate them any time you want.
Unlike shares, altcoins are easier to buy and there are almost no restrictions as to who can buy and who cannot. A lot of people have been investing in cryptos because of the same reason: they are easy to invest in and there is a lot of money to be made. The ease of investing in altcoins has also motivated a lot of developers to create their own altcoins and build new companies and the blockchain, altcoin, and cryptocurrency space.
While investing in altcoins is lucrative, it can be compared to the dot-com investment days. Back then, everyone rushed to invest in small Internet companies. It led to the funding of Google and other large companies but the bubble also exploded. The same could happen with altcoins. But until then, we shall continue to help you uncover the best rare altcoin projects to focus your energy on.
Are Altcoins Stocks?
Although they have regularly been compared to stocks, altcoins are not stocks. The companies behind altcoins are actually not real companies. They are decentralized platforms developed by individuals. You can’t buy bitcoin to be your company, for example. Even if you purchase the right to call it yours, the cryptocurrency will be decentralized and you can’t control most of its aspects. Attempting to buy an altcoin company is like saying you can buy the Internet.
So, what do you buy when you purchase an altcoin? The best way to describe an altcoin investment is that you buy confidence in the capability of the coin and the enterprise in general. Strangely enough, there is a name for having confidence in an enterprise: investor confidence.
When we buy a home that we may consider to sell in the future, we have to be confident that its value will grow with time. Parents invest a lot in the kids’ education because they are confident it will increase their market value in the future.
Companies with great investors’ confidence tend to become successful. Simply look at companies like Tesla, Apple, and Amazon. Their stocks are valued so highly that it’s almost unimaginable. Investors behind the companies are super confident about their chances of success in the future.
While stocks are fairly understood by investors, altcoins can be confusing. Investors tend to concentrate on the technical aspects of the altcoin and forget the capabilities of the altcoin itself. Investors’ confidence is the most important component of an altcoin when thinking of investing in them.
How to Identify Rare Altcoins for Investment
We have already made it clear that an altcoin’s value represents the level of confidence investors have over it. But how do you determine the level of confidence to place in a particular coin? Benjamin Graham introduced one of the most popular investment approaches of the 20th century in 1949 through his book, The Intelligent Investor. His approach was to buy small or medium-sized companies with great potential and hold them for the long-term. Warren Buffet is a great fan of Graham’s works but he later introduced his own investment approach more popular in the 21st century. This article here at Bitcoin.com presents some fascinating data related to investing in bitcoin vs. rare altcoins.
In Graham’s book, he provides an analogy that best suits how most people approach altcoins. Graham talks of an investor called “Mister Market” who hypes a company so much that you would sell it at any price he offers. Mister Market will approach you and tell you everything you would want to hear about your company. In the end, you sell it to him. However, Mister Market will come a few days later in a totally different mood. “Your company sucks,” he starts. He will make a rant at how bad the company is and how much he regrets buying it. Mister Market will sob and talk to you until you are convinced to buy the company back even if he makes losses. Mister Market represents the present nature of altcoins. The value of a coin could go up 300% in a matter of weeks, and come crashing down to zero in a few hours. If you want to build wealth by investing in altcoins, the goal is to avoid following the frequent swings.
Top Tips of Building Wealth with Altcoins
Do Your Own Research Just like with stocks, not all altcoins will gain significant value in the course of time. Some coins hold almost the same value they had two or three years since they were launched. Doing research will help you identify coins with the potential to gain market value and those that do not.
As you do research, find a lot of coins that looks capable of gaining value. Pay more attention to how such coins work. Learn more about who developed them and reach out to them if you can. Research about the coin’s popularity and the potential in the niche the altcoin targets. This way it will be easier to identify the clear winners and losers from your research.
Don’t invest if you Can’t define a Coin’s Purpose
When researching about the coins to invest in, the first objective should be to understand what the coin means. If you can’t explain someone what the coin does and they understand, it’s probably not worth investing.
Don’t Trust Reddit Discussions easily
Believe it or not, Reddit can be your enemy when it comes to choosing the right coin to invest in. You can always rely on the forum for funny GIFs, but avoid using people’s advice on the platform as professional financial advice. Avoid trusting information on forums easily unless the information concerns an altcoin that could be a scam. To succeed in investments, you need to be right when everyone else was wrong. If you follow the masses, you will always be wrong when they are wrong.
Take Measures to Mitigate Losses
The first rule of investing in altcoins is that you should never invest more than you would be willing to lose. With altcoins, there is a risk you could lose 100% of your investments. However, you don’t have to sit back and wait to lose all of your investments. To mitigate loses, keep most of your investments to major markets like stocks and bonds, some to large coins like bitcoins and the least portion to emerging coins.
There are numerous times you will find stories of people who invested all their wealth and gained a lot more in altcoins. Ignore such stories. There a lot more stories of people who invested all their possessions in altcoins and lost everything. You will rarely hear their stories because no one wants to talk about their losses.
Success comes in Small Bits
With so many stories about people who became rich overnight spreading everywhere, it’s easy to get lost in the hype of trading and make moves at the wrong times. Don’t try to get rich quickly by investing in hypes coins. You will only be gambling, and it’s clear who wins when people gamble. Spoiler alert, it’s the casinos and the government through taxes. If you want to build wealth steadily in altcoins, avoid regular trading and hold your coins until it’s the right time to sell.
Have Faith in your Abilities and Judgment
If you thoroughly researched the coin and invested in it; be confident in it and be patient to watch its value rise. Without faith in your judgment, you will succumb to the rants of the Mister Markets of the modern world and you will make the wrong investment choices.
Always Pay Attention to The Worlds First 10 Cryptocurrency Projects
It’s extremely difficult to predict the cryptocurrency markets. This is also true for many traditional markets like stocks and real estates. However, it is possible to focus on high quality stable Altcoin projects. This reference data from the worlds #1 cryptocurrency news site CoinmarketCap shows the Worlds First 10 Altcoins. Many of these rare altcoins projects such as Litecoin and Mincoin have serious battle test technologically sophisticated blockchains and software ecosystems which should be focus areas of investment for longer term Altcoin HODLers.