Altcoins have become the most interesting market for cryptotraders over the last few years. This sky-high-risk market is commonly compared to penny stock, a traditional market for worthless stocks.
However, while the latter proves profitable in months’ or even years’ time, in the world of altcoins, one may skim the cream off a deal or go back to square one in just one day.
Of course, all altcoins combined couldn’t reach bitcoin’s market cap, however, being a traded asset in the hands of a seasoned trader, they may spot any asset at a traditional exchange.
ForkLog talked with Svetlana Geller, executive director of Livecoin.net exchange to find out more about specific features of altcoin markets. The number of such exchanges is only growing these days to meet the increasing demand from the traders. The experts believe the competition will only increase.
“Certainly, we feel the competition incresaing, but the number of new projects/coins is also growing, and so is the number of people willing to invest their assets in those projects. There are many of them, because making a fortune out of bitcoin investments takes enormous sums of investment as it doesn’t skyrocket in a day. It, however, is the other way round with altcoins. They may become ten times as expensive in a few months, so it might be enough to invest a thousand dollars to earn very serious money, which is what many our customers do,” Svetlana Geller says.
The growth of altcoin exchanges also owes to the need of investment diversification. This practice is quite common for cryptotraders after notorious hacks of MtGox, Bitstamp, Bitfinex and other well-known platforms. Closure of Cryptsy made traders to choose platforms even more cautiously and carefully. Over two years of its operation, the exchange experienced numerous technical failures, and practiced questionable policies. In early 2016, the exchange filed for bankruptcy in the wake of a hack that had deprived the company of $7,500,000.
The subsequent litigation proved that the exchange’s owner, as it might seem, was taking bitcoins to his personal account as well. Notably, one of suspects was the developer of Lucky7Coin, which was among the numerous altcoins traded at the exchange. These days, nobody can find the altcoin in any charts, which is quite common for coins entering unscrupulous markets for a short time.
Some altcoin exchanges don’t mind working with downright swindling coins, so heeding the list of traded coins is important while choosing an exchange. The risks inherent in the technology’s vulnerabilities can’t be eliminated, yet they can be mitigated. Aside from other precautions, Livecoin experts recommend that users withdraw their assets to offline wallets to ensure maximum safety.
“Cold storage, in our opinion, is the only method to ensure real safety of customer assets. Therefore, one should know whether the exchange uses them prior to working with it. Ninety-nine per cent of customer safety relies on the customers themselves. As hacks take place on the customer’s side, one should assume measures on their side regardless of which exchange you actually use,” Svetlana Geller says.
Last year, many new cryptocurrencies have emerged. Not every one of them was viable, however, as long as they bring serious income to the traders, new coins will keep on emerging. There have been instances when trending exchanges run pre-sales of a new coin at their platform thus offering users to participate in some sort of an ICO.
Coins accumulate at such platforms for indefinite time, and eventually become deadcoins, forsaken coins left for dead. Thanks to absence of any regulations, such exchanges may feature communities of traders who openly agree on pumping some coins. Certainly, such platforms are very risky for any trader not being a member of such an inside group.
However, even at trustworthy exchanges, navigating the ever-accelerating torrent of altcoins is no easy thing. Some altcoins have earned certain trust in the cryptocommunity, and therefore may be considered less risky.
“Some expect the years-long project of MaidSafeCoin developers to go into the production. If they succeed, it will be very interesting. Possibly, LISK will be able to compete with ETH in the future if it finds serious investors. Emercoin remains a technologically interesting project. Speaking of minor coins, Adzcoin may have some success if they implement what they’re doing. There’s no need to mention Ethereum, I believe. They’ve managed to become the second cryptocurrency in the world, and I believe they’re able to approach the first place, if not outstrip it,” Svetlana Geller comments.
Experts recommend the rookie traders to heed reputation and status of the project behind the coin in question, and not to rely on short-term movements on the market. Safety of the trading process is also important. Right choice of an exchange is an important first step to the breathtaking and dangerous world of altcoins.
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