Warrior Trading Blog

Altcoin Definition: Daytrading Terminology

Altcoin

Altcoin is a colloquial term used in finance to describe any of Bitcoin’s successor and competitor cryptocurrencies.

While there is no hard rule for what defines an altcoin, they generally have the same features as Bitcoin (peer-to-peer exchange, mining, etc), while also purporting to improve on one or more of Bitcoin’s suggested shortcomings.

Some examples of the most popular altcoins are Ethereum, Litecoin and Ripple.

Improving On Bitcoin

For many years Bitcoin was the only cryptocurrency, and it was a largely obscure form of exchange limited to a small number of users.

Following Bitcoin’s growing popular awareness and acceptance, a number of successor cryptocurrencies emerged that promised to improve on Bitcoin’s original formulation.

One of the main criticisms of Bitcoin is its slow and irregular transaction clearing. Most cryptocurrency alternatives have based their formulations on providing faster and more reliable transaction clearing, which would make cryptocurrency usage far more widespread and common.

Other altcoin formulations have altered the mining process, the number of coins that can be mined or the form of governance.

Trading Altcoins

Day trading in altcoins can be very profitable. Not only do most altcoins share Bitcoin’s generally high volatility , but they have the potential for significant sudden increases in price when they enter popular awareness through favorable reviews or information releases.

Altcoin prices also tend to shadow the major changes in the price of Bitcoin and vary between exchanges, which offers many opportunities for arbitrage.

Final Thoughts

While Bitcoin is a revolutionary form of exchange and value storage, it has many features that are seen as less than ideal.

In the end it may not be Bitcoin that becomes the most popular digital currency, but rather one of its successors and competitors that has improved on the original formulation.

This potential for incredible value growth makes many altcoins an excellent source of potential day trading profits.