As the crypto industry continues to grow in popularity, adoption and technological opportunities – the amount of new cryptocurrencies and projects continues to expand as well. With over 1,000 cryptocurrencies OTHER then Bitcoin, there have emerged different classifications to define them.
Altcoins is the most broad definition of cryptos. It simply stands for ‘alternative coins’ and it refers to all coins that are not the most popular one – Bitcoin. This includes everything from #2, Ethereum, all the way to the least popular cryptocurrency.
What are Blue Chip Altcoins
You have probably heard the term “blue-chip” before, as it is used both in the stock market as well as in gambling. It’s origin is from casino’s, where the highest value chips are blue. It was adopted long-ago by stock market investors to refer to the most valuable and stable companies.
Examples of ‘bluechip stocks’ include; Apple, Microsoft, Amazon, Facebook. These companies are seen as more stable, and lower risk long-term investments then non bluechip stocks.
Blue chip cryptos are similar in nature to the above definitions, except they apply to altcoins. The ‘bluechip altcoins’ are the cryptocurrencies the highest market capitalizations, which results in them being the most liquid. This means you can easily buy and sell these coins. Just like bluechip stocks, these are seen as the best long-term investments in the industry, with the most underlying value and useful technology driving their adoption.
Examples of bluechip cryptos include: Solana, Avalanche, Fantom, Chainlink and more. As a general rule of thumb, anything in the top 15-20 coins by market capitalization are considered bluechips. You can see a real time list of almost every coin at CoinMarketCap which will have every bluechip listed.
Before we get to different ways investors trade bluechips, it’s important to understand the other types of altcoins.
Major Altcoin Classifications
Stablecoins
Stablecoins are referred to as stable because their value is pegged to an external asset, such as the dollar, euro, precious metals or even a carton of milk. This offers investors a way of holding cryptocurrency, without the large volatility the industry has become known for. When you buy 1 USDC, for example, it will always be equal to $1 USD.
The most popular stablecoins are USDC, USDT, MakerDAO and DAI.
Mined Coins
Mining refers to the mathematical process of validating transactions on a blockchain, where miners do the validation and are rewarded in a cryptocurrency. Bitcoin, Litecoin and Monero are well known examples of mined coins. Known as “Proof-of-Work” coins, the ‘work’ is mining. These calculations are done in a brute force manner, with the first to validate the transaction being rewarded.
The proof-of-work structure has fallen out of favor recently for the newer proof-of-stake consensus.
Proof-Of-Stake
Proof-of-Stake cryptos can be staked. This means you deposit a certain amount of crypto onto a validator node. This node runs a software program that validates transactions. This process is much more eco-friendly (much lower energy usage), results in faster transactions and lower costs. The more you stake, the more rewards you’ll earn. The reason staking is required is to reward those people who have a financial incentive and buy-in to the crypto.
Security Tokens
Security tokens are liquid contracts that allow fractional ownership of off-chain assets. This means that you can prove ownership, via the blockchain, of assets the security token is tied to – which could be anything from real estate, automobile or even corporate stocks.
This allows investors of any size to own portions of assets they were unable to get access to before. To purchase these you need to find a security exchange, such as tZero, INX, Uniswap, IXSwap, or TrillionDigital.
Service tokens
These tokens are used to pay for services, cover network fees, or for remuneration purposes. They do not imply dividends or capital distribution. You should only get them when you know what exactly you need them for. However, this is not an option for long-term investments. why is not good for long term investments? provide examples of service tokens
Meme coins
Meme tokens usually become popular very quickly and deliver huge profits based on pure speculation. They are promoted online by powerful cryptocurrencies and investors trying to capitalize on short-term gains. This option is not suitable for saving money. You may as well win big once and then lose everything. I certainly won’t recommend indulging in meme coins too much.
DeFi Cryptos
The craze for decentralized finance is gradually outrunning the cryptocurrency industry. Decentralized alternatives offer financial solutions through smart contracts by executing agreements between two or more parties without an intermediary.
It gives more than a simple exchange of values. DeFi cryptos have significant financial value, they can be used for lending, lottery, and the purchase of crypto coins with a value based on a fiat currency or commodity. No intermediaries and wide availability with quick settlements are the main advantages here. These are Chainlink (LINK), Wrapped Bitcoin (WBTC), and DAI with fairly high returns.
What does the availability of alternatives give?
Each altcoin has its own supply. They may differ in market size, payment speed, transaction efficiency, and other aspects that make them unique in their own way. In other words, they can be more tailored to your needs than the popular bitcoin can.
Usually, fluctuations in the value of altcoins follow its movements in the market. However, sometimes, even very often, due to capital inflows, the price of an altcoin can fall despite the rise in the value of bitcoin. You can play the market (like poker) for a substantial income.
What Are The Best Bluechip Cryptos
Choosing the best bluechip’s one has to consider the ‘Ethereum killers’. These are the 5 cryptos most often said to provide real competition to Ethereum as the #2 crypto by market cap. They are all seen as better alternatives, and possible replacements, to Ethereum. They all run their own blockchain, allow smart contracts and DEFI DaaP development, and each one has faster transaction times and lower costs.
Where and how to buy cryptos?
First, you need to choose an exchange and register an account. The most famous are Binance, Bittrex, Kraken, Coinbase, Huobi Global. You need to fund your account by making a deposit. Keep in mind that while some crypto exchanges accept fiat deposits via wire transfer or credit card, many only accept deposits in crypto. You may need a digital wallet if the exchange does not offer storage or if you want to store your crypto assets.
Before investing
When deciding to invest in blue-chip cryptocurrencies, do your research by paying attention to the following aspects.
Market volatility
It can be quite extreme. Do you remember last year’s fluctuations in bitcoin (with a drop of up to 30%)? You must understand that even blue-chip cryptocurrencies cannot be absolutely stable in a market that is inherently volatile.
Diversify your wallet
Don’t invest in a single asset. Instead, spread the risks evenly by buying two or three different blue chips. Like many investors, I prefer to follow a 6:3:1 strategy (60% bitcoin, 30% ether, and 10% other altcoins). You can choose an 80/20 ratio, where 80% of the investment is for the currency with the highest return.
Market influence
When buying even blue chips, investments should be based on research, not FOMO. If the latter prevails, you may lose your money. Also, don’t blindly follow other people’s advice. You must evaluate the merits of the investment project yourself. For this it is necessary:
- Making sure you are aware of the inevitable risks and understand their implications well.
- Choose a strategy and make a reasonable decision on the direction and amount of investment, depending on the demand in the market, taking into account your capabilities. Choose cryptocurrencies that are volatile and tend to bring consistent profits. And invest only what you have and what you are willing to lose.
- Make sure you use risk mitigation measures. For example, a stop loss tool to prevent extra losses.
Keep in mind that you are not the only one trying to make a profit. That’s why you should try to avoid the influence of non-specialists. Analyze and make a move only when you are sure that the price will change.
What crypto to get this year?
Surely, the situation in this market is changing quickly, but today it is worth considering Litecoin, Tronix, Ripple XRP, Tezos, Bitcoin Cash, as well as traditional currencies ─ our well-known leaders:
- Bitcoin ─ has a large market capitalization, but has a fixed supply of only 21 million BTC. Scarcity and popularity make it an attractive investment.
- Ethereum. As the second largest cryptocurrency by market capitalization, ETH has the most number of use cases. The platform supports 70% of the altcoins on the market, the most decentralized applications (dApps) run on it.
The Ethereum network uses smart contracts for participants to secure agreements with each other. The Ethereum Virtual Machine (EVM) is used to monitor smart contracts by removing untrusted code. Ethereum’s extensive use cases and cutting-edge technology make it a cryptocurrency worth investing in.
Bottom Line
Cryptocurrencies open up huge opportunities for investors. It’s just worth taking into account all of the above, as well as:
- You must have a good understanding of what asset class you are dealing with and how it differs from others.
- You must make sure that you do not endanger the well-being of your family.
- Investments should be made to the extent that your risk appetite allows.
Trading often promises a crazy income, and altcoins are just an inexpensive way to expand the horizons of an investor. But it is important to consider the risks associated with the lack of regulation. The gradual maturation of this area is likely to bring more order and capital to the sector, but for now, we will have to rely on our own peril and risk. Good luck to all!