Bitcoin peaked in 2017 at a price per coin just shy of $20,000 and has failed to reach this level ever since. However, digital currencies are not dead, nor are they a fad that will go away. While Bitcoin will continue to be a major currency in 2020, some investors are looking for other crypto investment opportunities, the so-called altcoins.
What Is an altcoin?
An alternative coin, or altcoin for short, simply refers to any digital cryptocurrency that is not Bitcoin. Some altcoins act in a similar fashion to Bitcoin, while others have different underlying monetary policy rules. In fact, some altcoins exist purely as a joke, like Dogecoin, which is based on a popular internet meme.
When evaluating one of the many altcoins in existence for a potential investment, there are typically two factors to consider. These are no different than any other investment tool, such as stocks or commodities.
First is demand. An investor will decide to invest in oil if they believe the world will experience a supply shortage while demand stays consistent or even rises. Similarly, digital currency investors should only be interested in altcoins that look set to grow significantly, and that have the potential to add some form of benefit or utility to people’s lives.
The second factor to consider is the price. Stock investors will look at Apple’s $300-plus per share price tag along with a valuation north of $1 trillion and deem it overly expensive. The same holds true in the crypto market prediction as investors prefer undervalued and “hidden-gem” opportunities instead of bloated and overvalued assets.
A good altcoin needs to satisfy both conditions at the same time. A concept that is beneficial to lots of people but also expensive is of no use to most people. A cheap but useless altcoin that offers zero benefits to users will quickly fade into irrelevance. Investors are wise to seek out altcoins that check off both criteria.
More than 2,000 cryptocurrencies are traded in some form on a digital currency exchange, the trading of these assets is no different from commodities or stocks. A cryptocurrency exchange brings together buyers and sellers to facilitate transactions between those who want to buy a coin and those who want to sell their coin.
The total altcoin market cap stands at around $66 billion (as of January 13, 2020) while the most profitable altcoin of 2019 for some lucky investors was Luna Coin. On August 19, 2019 Luna Coin soared nearly 50,000 per cent but ended the year with a 25,000 per cent return once 2019 came to an end.
Here are some of the top altcoins to invest in.
Enjin Coin (ENJ) is an Ethereum-based platform that caters towards gamers who want to have true ownership of in-game items, such as custom game currencies, generic loot, or collectible cards. Game developers can “mint” a digital asset and then each minted digital asset has a real-life value through Enjin.
Perhaps most notable, Enjin and Microsoft developed a partnership in late 2019 to create a blockchain-based recognition program that should gain momentum in 2020. The partnership is called Azure Heroes and is a “new and fun way to earn digital collectibles for meaningful impact in the technical community.”
Basic Attention Token
Digital advertising dominates our internet experience and there is no way to avoid it – until now. Basic Attention Token (BAT) is a token for a decentralised ad exchange, which both compensates the viewer of an ad while protecting their privacy.
According to MarketingDive’s estimate, worldwide digital advertising will grow by 6 per cent year-over-year in 2020 to $656 billion.
As noted in the BAT 2018 Whitepaper, the altcoin aids in connecting advertisers, publishers, and users while eliminating fraud, privacy violations, and malicious advertising. The coin serves as a payment system on the Brave Browser, which rewards users and offers better conversion to advertisers and higher yield to publishers.
The Brave browser counted nearly three million daily active users as of mid-October, 2019. Monthly active users topped the eight million mark at the same time. The crypto market outlook for the browser could see continued traction in 2020 as more users are likely to become fed up with social media platforms and other internet companies tracking their every movement.
OmiseGo (OMG) attempts to solve one of the biggest issues preventing economic expansion in some of the poorest areas of the world. Many people in the third world and developing countries have access to smartphones and the internet, but not a bank account. Currently, there are more than one billion adults across the world without a bank account but two-thirds of those own a mobile phone.
OmiseGo is a decentralised and currency agnostic payment platform that runs on the Ethereum network. Users can conduct financial transactions with each other in both cryptocurrencies and traditional fiat currencies.
The network’s native token is called OMG and can also provide interoperability among multiple blockchains and payment networks.
The peer-to-peer financial lending sector remains hot and Aave (LEND) is well-positioned to take advantage of borrowers shunning away from traditional banks and their inflated interest rates. Aave is a decentralized and non-custodial money market protocol where users can act as a borrower or lender.
Depositors offer liquidity to the Aave market and are able to collect passive income. On the other side of the transaction, a user is able to borrow in an overcollateralised or undercollateralised fashion.
The protocol is backed by a set of smart contracts on the Ethereum blockchain, which not only makes a transaction secure but completely avoids a middleman.
The Kleros platform (PNK) offers a unique decentralised arbitrational tribunal intended to solve disputes among two parties. Kleros is able to step in and offer a transparent arbitration process composed of anonymous users who collaborate to form a consensus.
Kleros is well-positioned to take advantage of the growth of the “gig economy” where freelance workers are more likely to be paid through a digital currency.
According to Kleros, bitcoin founder Satoshi Nakamoto believed that anonymous people can be trusted to reach the right decision but only when there is an incentive to do so. As part of Kleros’ platform, arbitration fees are sent to each juror for their work.
While Bitcoin may well be king, it is entirely possible that a new altcoin will emerge in 2020 and challenge the current crop. As the fate of so many altcoins are affected by market sentiment, stay tuned to the latest crypto market news with Capital.com. On our innovative platform you can track the live performance of the top-20 cryptocurrencies and trade crypto CFDs.
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