What is the relationship between the two altcoins and stablecoins in the cryptocurrency market? There are two definitions of the altcoin: one is cryptocurrency without Bitcoin, and the other is cryptocurrencies without Bitcoin or Ethereum. No matter what definition you choose, this term usually refers to all "other" cryptocurrencies in the market. Part of the altcoin is a specific type of cryptocurrency called stablecoin. stablecoin is a cryptocurrency with fixed value. Although it is not so useful for investment, the fixed price of stablecoin makes it useful for cryptocurrency transactions. The following is a detailed introduction to stablecoin and altcoin.

What is an altcoin?

Altcoin refers to any cryptocurrency that is not a Bitcoin (BTC). Some people call altcoins a cryptocurrency that is not a Bitcoin or Ethereum (ETH). Bitcoin is the first cryptocurrency and is still the most important cryptocurrency. The total value of BTC in the encryption market is between 45% and 70%, worth millions of dollars. In addition to its value and use, Bitcoin is also the world's most famous cryptocurrency.

Although Ethereum is not widely used as Bitcoin, it is also a well -known market and occupies a large proportion. Ethereum network is used for many blockchain and encryption transactions, because Ethereum network can be used to create smart contracts and other tokens.

Since Bitcoin is the main component of the encryption field, all other cryptocurrencies are called altcoins. Thousands of altcoins can be traded on various exchanges. It is impossible to know how many altcoins are, because this industry is so decentralized and global, and anyone can create a altcoin. Industry observers have observed the relationship between Bitcoin and Congzhai. If the value of Bitcoin rises sharply, it is usually the altcoin season, and the value of the altcoin will increase.

Bitcoin and altcoins have the same basic characteristics. They are digital currencies, using blockchain -based classification accounts to track transactions in a safe and transparent manner. However, each altcoin has different characteristics, which can make it potential and attractive alternative to Bitcoin. For example, some altcoins use different types of pledge or certification systems; they can claim more anonymous than Bitcoin, or their trading time is faster.

What is stablecoin?

stablecoin is a cryptocurrency, and the value of each currency is fixed on external assets. According to the definition, any stablecoin is also a altcoin. Although most stable currencies are defined by the US dollar or euro, the value of stablecoin can be linked to any assets.

"Fixed" one asset to another means that you always ensure that these two values remain the same. For example, suppose you publish a name xyzcoin stablecoin. You decide to fix 1xyz for $ 1. This means that once you issue your tokens, you will interfere with the market when necessary to ensure that the price of assets is always as close to $ 1 as much as possible. This is the common practice of some countries in the world. Although this is not common, developing countries sometimes fix their currencies into larger currencies to avoid market confusion. Like cryptocurrencies, the state fixed its currency into dollars.

Cryptocurrency projects can ensure stability of its value in multiple ways. The most important step is to ensure the combination of repurchase and inflation production.

How to operate stablecoin?

Because the price of each coin is linked to specific assets, the price of coins is always the same as the market price of the current asset. For example, if a stable coin is linked to the US dollar, the price of each coin will always be as close to $ 1. In order to maintain a stable price, token developers, or in some cases, are government agencies -can be intervened, usually in the form of inflation production and ensuring repurchase.

The above example is an example. Suppose you have issued Xyzcoin and want to ensure that it is maintained at $ 1. First of all, you can guarantee the entire market that you will always repurchase the XYZ tokens at a price of $ 1. This is called "support" of assets. This means that you can convert the exchange rate between the two assets, because the secondary assets do exist in the account of this purpose.

Support the minimum price of assets, because anyone who wants to sell its tokens can be sold to you at a price of $ 1. You can then monitor its Xyzcoin market price. When the price rises to more than $ 1, you can release more tokens to expand supply and reduce prices. However, because you guarantee the minimum price of each coin, there is no risk of inflation to push the price below $ 1.

However, this is not a precise science. Although support assets are the most reliable way to ensure stability, it still requires sufficient cash reserves to achieve a guarantee of $ 1 per coin. Because cryptocurrencies are not regulated to a large extent, many industry analysts believe that leading stablecoin projects is actually much less than they claim. If people try to sell them back and cannot guarantee the purchase price, this may cause the collapse of stable currencies.

Another method is called algorithm stability. In the process, stablecoin will try to adjust its price through pure supply. When the price of coins falls too low, the project will delete the coin from circulation to tighten the supply. When it rises too high, the project will release new coins into circulation. The algorithm is cheaper than support, but it also ensures a certain degree of changes in stablecoin prices and may not be able to keep up with the speed of market pricing.

About "coin tax"

Another method of stabilizing currency developers to maintain a stable token price is to use algorithm systems to guide the expansion and contraction of stablecoin supply. In other words, the algorithm can tell the government and economists when it may be beneficial to injecting funds to the economy or withdrawing funds from the economy.

In some cases, the face value of creating new currencies in a specific country is cheaper than the current currency. When this happens, the government can regard the spread between the printed currency and the current currency face value as the income.

In financial services, the government's revenue obtained by creating new currency is called the coinage tax. The coinage tax strategy uses only supply as a supervision tool. If the price is lower than $ 1, the developer will repurchase the tokens from the market to increase the price, and vice versa. Although this requires less funds than support methods, it is often slower, so the price of stablecoin may not be so stable.

Why is the altcoin important?

Although some markets are calculated according to value, according to definition, the altcoins almost constitute the entire cryptocurrency market. This makes them very important for any investors who are interested in. Especially, the altcoins are valuable for investors who are looking for opportunities, such as:

More affordable investment

As market leaders, Bitcoin and Ethereum are expensive assets. When writing this article, the price of Ethereum (coins related to Ethereum) exceeds $ 4,200, while the price of Bitcoin exceeds $ 62,000. This can prevent many investors who don't want to buy such high -priced assets. On the other hand, altcoins are usually cheap. The prices of other cryptocurrencies can rang from hundreds of dollars in each tokens to one cent. This enables investors to access cryptocurrencies without buying high -cost assets.

Emerging assets

According to the definition, any new cryptocurrency will be fake currency. Investors who want to buy new products or innovative products will need to track fake currencies. This is especially important for investors to seek potential explosive returns. The return of assets in early investment can only come from fake currency. This is the opposite of Bitcoin and Ethereum. Although these assets are highly unstable, they are as mature as any cryptocurrency.

Diversified investment portfolio

Most cryptocurrency investors invest in Bitcoin and Ethereum to a small extent. This is why these two assets lead the cryptocurrency market. The pursuit of this value will also limit your investment portfolio. In order to make your assets diversified, you need to invest in altcoin. However, the usefulness of diversification in cryptocurrencies is limited. Most markets are still developing simultaneously with Bitcoin, which means that even diversified investment portfolios may imitate assets. This does not mean that diversity is useless, but it is worth noting.

Why is stablecoin important?

Stablecoins ... difficult. In fact, they summarize one of the biggest problems in the entire cryptocurrency market.

The idea behind the stablecoin is that they allow you to transfer funds to cryptocurrencies. Although the missionaries in the industry have made a commitment, no cryptocurrencies are as real consumer assets. The price fluctuations are too large, users cannot consume or enterprises cannot accept, and transactions are usually required for a long time according to modern standards. If you want to fulfill your cryptocurrency, this is also a problem. Unless you transfer all your assets to cash at a time, your assets may have completely different value every day.

Therefore, many traders transform their investment into stable currencies and then hold these stable currencies until they want the disposable money (such as the US dollar and the euro) or they want to invest in other cryptocurrency assets. stablecoin will promise to allow the system to operate with a fixed value commitment.

This makes stable currencies an important tool for cryptocurrency investors. However, they are not investment assets because the value of stablecoin is rarely fluctuated. If so, arbitrage opportunities will be generated almost immediately. Let us see an extreme example and see how it works. Suppose you have the following content xyzcoin transaction value:

1xyz coin :: $ 1.

1xyz coin :: 0.5 bitcoin

1 Bitcoin :: $ 57.022 (accurate when writing this article)

This means that you can spend $ 1 to buy an XYZ coin, and vice versa. You can buy half of Bitcoin with a Xyccoin, and one bitcoin can buy two Xyccoin.

In this case, you can buy XYZ coins with $ 1. Then, you can replace the coin with 0.5 Bitcoin. Finally, you will trade your 0.5 bitcoin for $ 28511. This will effectively make each person's XYZ token worth $ 28511. Because this is impossible (the price of the XYZ tokens against the US dollar is fixed), on the contrary, the price of the XYZ token is about $ 1 Bitcoin until the market is transferred. This process is called arbitrage. Although it rarely occurs such extreme situations, even very small price fluctuations are usually quickly eliminated by a large number of traders.

Although it is very important for any types of frequent cryptocurrencies, many stable currencies have proven to be unreliable. As cryptocurrencies are not regulated to a large extent, the stabilization of currency companies has been reviewed by more and more. Market observers have accused them of unnecessary financial assets to ensure the value of currency commitment, but decline in the situation where no one pays too much attention to their account purposes.

This may be catastrophic for investors who regularly enter and exit funds for stablecoin. Like the real currency, cryptocurrencies that do not support their prices will definitely depreciate. This is a serious potential problem, which is used to make the system work normally.

Stablecoins and altcoins

Although all stablecoins are altcoins, not all altcoins are stable coins. Let's take a look at some of the similarities and differences between the two.

Similarities

stablecoin and fake currencies are cryptocurrencies using blockchain records and tracking transactions. They can be traded on the exchange and stored in different types of hot storage or cold storage encryption wallets.

difference

The main difference between stablecoin and altcoin is that stabilization coins always maintain the same value, and the value of altcoins may soar or decrease.

stablecoin provides stable investment and always maintain the same value. On the other hand, altcoin provides different types of functions, making it an attractive alternative to Bitcoin.

Similarities

Both are cryptocurrencies

Based on the blockchain

Digital currency

Can be traded on the cryptocurrency exchange

Store in different types of encryption wallets

difference

The value of stablecoin usually remains unchanged

The value of a altcoin can increase or decrease

Examples of Congzhai and Stable Coins

Here are examples of altcoins and stable coins that individuals can buy.

Altcoin:

There are thousands of altcoins on the market; some popular altcoins are: Cardano (ADA), Dogecoin (Doge), Litecoin (LTC), Monero (XMR), and Solana (Sol).

Some types of altcoins include mining -based altcoins, securities coins, practical coins and stable coins.

• Mining -based altcoins: Users can earn altcoin through computer -based processes. Bitcoin also uses a mining system to cast new coins and keep network operation. The altcoin based on mining is Ethereum and Litecoin.

• Securities tokens: These altcoins are similar to buying company shares. They are issued by the enterprise and published to the buyer through the first token issuance (ICO). Buyers with securities tokens can get dividends or partial ownership of the issuing company. Examples of securities tokens include Siafunds, BlockChaincapital and ScienceBlockchain.

• Practical tokens: These tokens serve the use cases of specific ecosystems, such as video games or e -commerce stores. They enable the owner to take some actions in the network, such as buying digital products in the video game world. This tokens are specially used for ecosystems and can be traded in a broader crypto market; but it is only really useful in the ecosystem. Examples of some practical tokens are basically concerned to tokens and currencies.

Stablecoin:

Some popular stablecoins are: BinanceUSD (BUSD), DAI (DAI), Digixgold (DGX), PAXOSSTANDARD (PAX) and Trueusd (TUSD).

Potential advantages and disadvantages of altcoins

Congzhai coins may be a good way to get rid of Bitcoin's diversity, and their functions are very attractive to investors. It is impossible to know which altcoin will eventually survive and use it on a large scale, so there are some risks in the altcoin, but there are several altcoins widely used.

Potential advantages of altcoin

growing space

Stay away from the diversity of Bitcoin

Can provide unique features

Can have a lower cost

Fast trading speed

Provide more anonymity

Low energy utilization rate

The potential disadvantages of the altcoin

It may be unstable

Restricted use

Can't guarantee that they will survive

It is difficult to compete with Bitcoin for market share

Low liquidity

The second choice of many investors

Potential advantages and disadvantages of stablecoin

Stable currencies make cryptocurrencies on exchanges. Traders do not directly purchase bit currencies (or other cryptocurrencies) with legal currencies, but often convert legal currencies into stable currencies -and then exchange another cryptocurrencies with stable currencies. During market fluctuations, some investors may choose to deposit funds into stable currencies. However, stablecoin does not provide the same potential price increase as fake currencies.

Potential advantages of stablecoin

Fast processing time

lower costs

transparency

Borderless transaction

Programming changes are easy

Store more secure assets in the turbulent market

Many people get security support for external assets

Convenient trading on the exchange

Potential shortcomings of stablecoin

Need a third party

Need external audit

Investment return is low

Lock the value of external assets

The above content is the introduction of altcoins and stable coins, and what kind of relationships and differences. Stable coins are altcoins, but not all altcoins are stable coins. Altcoin is a way to get a new opportunity for the cryptocurrency market. This is because the return on altcoin investment is sometimes very large, but the risk of the altcoin of altcoin is relatively large. Therefore, investment needs to be cautious.