How to invest in "altcoins"?

In the previous article, I shared with you what types of altcoins I think there are. Then everyone will naturally ask whether "altcoins" are valuable? Should we invest in "altcoins"?

In my article, I advocated that ordinary investors should allocate their main funds in mainstream currencies, but I never said that investors should not pay attention to altcoins other than mainstream currencies.

In fact, we believe that ordinary investors should not only pay attention to "altcoins", but also spend a little more time understanding "altcoins".

On the one hand, it is necessary to allocate the main funds in "mainstream currencies", but on the other hand, it takes more time to understand "non-mainstream currencies"? How should this seemingly contradictory formulation be understood?

1. How "altcoins" become "mainstream coins"

As mentioned in the previous article, only BTC was considered "mainstream" in the early years, while other currencies including Ethereum were considered "cottages". But when Ethereum let the public see the power of smart contracts because of its ICO, a brand new application scenario was opened up by Ethereum. Since then, Ethereum has become a "mainstream" from a "cottage".

In fact, not only Ethereum, but also some other currencies that later entered the mainstream, such as exchange platform coins and privacy coins, have gone through this journey of turning over salty fish.

From being unknown in the early days, they later developed features and advantages that other digital currencies did not have in a certain field, and became the overlord in that field, established an irreplaceable position, and became the "mainstream."

2. Look at "altcoins" and "mainstream coins" from the perspective of investment income and risk

From the perspective of investment income:

1) In the process of these "altcoins" becoming "mainstream currencies", the income they create is actually far greater than the income of BTC in the same period. Therefore, for investors who want to earn high returns, if they completely ignore these former "altcoins", they will lose a lot of investment opportunities.

2) As the market value of mainstream currencies increases and more and more investors enter, their future price fluctuations will definitely become smaller and smaller, and the returns to investors will also become smaller and smaller. Therefore, if we only focus on the current mainstream currency, our investment income will become smaller and smaller.

From the perspective of investment risk:

"Mainstream coins" are recognized by the market and have a high degree of consensus, so the risk of clearing is relatively small; while "alt coins" are still in the process of growth, and many of them are explorations and experiments in new fields in the industry, so they fail The possibility is extremely high.

3. Why should we put the main funds in "mainstream coins" and focus on "altcoins"

For ordinary investors, we must put risk control first, so we must allocate at least half of our funds in mainstream currencies led by BTC, Ethereum, etc. This is to ensure our long-term struggle in this investment market and the basis for survival.

In the current market, there are only a handful of mainstream currencies recognized by the public, so investors do not need to spend too much time thinking and analyzing their risks and prospects when investing in mainstream currencies (such as BTC and Ethereum, they are zero The risk is quite small), especially in the current non-bull market, the mainstream currency is hovering at a low level, we only need to make a fixed investment according to our ability, so it is not difficult to invest in the mainstream currency in terms of investment behavior.

But if we want to obtain extra income much higher than mainstream coins, we must find possible future stars among the existing altcoins. In the currency circle, we call it looking for "hundred times coins".

Whether it is looking for "hundred times currency" or "ten times currency", investors need to spend a lot of time and energy on observation, tracking and research.

In this search process, we have to take the time to understand the latest industry news, the latest technological progress and the latest application scenarios.

This is the homework we must do to ensure we keep up with the development of the industry. Once there are signs of an outbreak in a new field, we can quickly cut in.

Among the many altcoins, there must be a minority that can finally enter the mainstream, but it is this minority that represents the hope of the future and breeds the next subversive scene, and most of them will become the martyrs and victims of this revolution.

Therefore, the future of "cottage coins" is uncertain, and the risk is far greater than that of "mainstream coins". Therefore, from the perspective of asset allocation, even if we are optimistic about their future, we can only allocate a small amount of funds.

This is why we say that the main funds should be allocated to "mainstream coins" and the main energy should be placed on "alt coins".