3 Cryptocurrencies to Buy instead of Bitcoin — Crypto 101

BTC too expensive for you? Here are 3 altcoins that you can consider.

So you want to start investing in cryptocurrency but you’re not sure which coin to look at first.

When I asked around for tips, Bitcoin was always the first answer. Only because it has the largest market capitalisation for decentralised finance, due to being the first and oldest cryptocurrency existing.

But BTC, which is currently trading at more than US$22,000 at the time of writing, is pricey for newbies looking at FinTech and DeFi. Even if you have spare cash laying around, you‘ wi’ll need to shell out at least US$2,200 for 0.1 BTC.

So if that amount of investment is not kind on your financial flow, consider altcoins aka cryptocurrency other than BTC.

There are numerous altcoins available and it can be overwhelming when you do your research on the ones you’d like to invest in.

But research you must! To kickstart this, here are three cryptocurrencies that I think new crypto investors can considering looking at.

** Disclaimer: The opinions expressed here are meant for your research. Always Do Your Own Research into the investment options presented to you, before you make your investment decision. **

Ether

When you speak to anyone active in the DeFi crypto community, ETH would be the first altcoin that comes to mind.

Introduced in 2015, ETH is the second-largest cryptocurrency by market capitalisation in the decentalised market space as of September 2019.

It is often confused with Ethereum, the network on which it is transacted on. Etheruem is an open-source, blockchain-based decentralised platform that is used for running decentralised applications. ETH is the transactional token that facilitates operations executed on Ethereum-powered smart contracts and applications.

Therefore, ETH can be acquired and traded on the Ethereum network, as you would with other altcoins.

What makes ETH attractive to traders is the speed at which you can acquire the token: a mere 15-seconds approximately, in comparison to BTC’s acquisition time of 10-minutes. And we all know the saying, time is money!

Keep in mind that transaction fees on the Ethereum network can only be paid in ETH, which goes to users who mine ETH.

Miners add blocks to the Ethereum blockchain, which helps to grow the chain. Payment in ETH incentivises miners to keep mining blocks on the Ethereum network.

So if you’re risk averse, you can also consider becoming a miner on the Ethereum network to earn ETH in this way.

Another reason for keeping your eye on ETH is the planned upgrade of the Ethereum network. Investors believe that Ethereum 2.0 will mean faster and more secure transactions on the network, which could lead to further adoption and price increase of ETH.

One thing to note is that there’s no cap to the amount of ETH. As of 22 Dec, 2020, there is 113.94 million ETH. This has raised concerns among the community about inflation ala fiat currencies due to demand and supply.

AAVE

Another altcoin to look at is AAVE. It is the token of Aave, an open-source, decentralised and non-custodial liquidity protocol that runs on the Ethereum platform.

Acquiring AAVE is as easy as depositing funds on the platform — the value of the tokens you receive is pegged 1:1 to the amount you’ve deposited, and the tokens start accruing interest immediately.

Then, the interest is distributed directly back to your wallet, which increases your wallet balance. And the whole cycle repeats.

So what are you being rewarded for?

You’re essentially being rewarded for providing liquidity to lending pools on the Aave network. As a liquidity provider, you can also choose the type of interest rates you extend to lenders, either a variable rate or a stable one.

Therefore, you can see how your funds are being used as liquidity for borrowers as the Aave network is decentralised and non-custodial.

This is in contrast to depositing funds in a bank or traditional financial institution, where you’ve no idea how your funds are being used and where they flow. On Aave, you have full transparency and control over your funds.

So if you’re looking to earn passive income yet know how your funds are being used, consider depositing funds into Aave to earn AAVE.

AAVE are minted when funds are deposited on the network, and burned upon withdrawal of funds. Thus the risk of inflation or huge price fluctuations are low.

The risks of the platform are a bug within the protocol code, and an error during the process of liquidating collateral.

DOT

DOT is the governance token of the Polkadot network. It’s also used for staking on the network and for creating parachains by the action of bonding DOT. DOT is native to the Polkadot network, which means it doesn’t run on Ethereum.

Polkadot distinguishes itself from other platforms by giving DOT token holders he same privileges that its miners have. So you don’t have to be a DOT miner to be rewarded with DOT for actions such as managing protocol upgrades.

So as a DOT holder, when you stake your tokens to validate operations on the network, you’ll be rewarded with more DOT when the activity is completed.

Token holders are also incentivised when they behave honestly on the Polkadot network. Thus any positive activity that improves the platform’s security and functionality more DOT.

Remember: DYOR

These three altcoins mentioned here are provided merely as a suggestion. Take your time to research, research, and research some more before taking the plunge.

I cannot repeat this enough: Do Your Own Research before you sink your cash into any cryptocurrency.

Why?

Because when pulling together this article, I spoke with a few of my crypto savvy investor friends and each one gave me different responses.

One said that “risk averse” and “cryptocurrency” don’t appear in the same sentence. Another said to just stick with BTC and ETH. Yet another checks the charts every minute, while someone else says he just leaves it after he’s made his purchase.

As you can tell, investing means different things to different people. It all depends on the value of investment that each person is making, and and their personal comfort level in regards to risk or volatility.

Take the time to understand your own levels for risk and volatility, especially how you’d feel if your investments were to decrease in value by 50% overnight.

So which altcoin would I sink my money into?

Personally, it would be ETH. But don’t let my personal choice influence your decision.

DYOR!

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