There is no shortage in the world of cryptocurrencies, as new coins are seemingly being created every single day. This massive influx of new cryptocurrencies only floods the ecosystem, though, as the number of currencies having any intrinsic value is fairly limited. It is also much harder to come up with a valuable and creative idea, rather than copying code and hoping to raise a lot of money during an ICO.
#4 Copy And Paste is Easy
Ever since alternative cryptocurrencies became a thing, there has been a growing number of new coins. Unfortunately, very few of these currencies offer something new. In fact, most of them copy existing code from a different currency and change a few of the variables. We even have a tutorial on how to create an altcoin in under an hour. A lot of “developers” create multiple coins along the way, hoping for some people to invest bitcoin into their worthless project. With over 7,000 altcoins in existence today, it is evident the market is oversaturated and running out of ideas.
#3 Alts Are Not “Back”
An often heard sentiment among altcoin “traders” is how there are particular times of the year when alternative cryptocurrencies seem to do well. The phrase “alts are back” is uttered quite often, even though this statement has no meaning whatsoever. While it is true one can make a good profit from a new altcoin once it hits its first exchange, the successes are short-lived every single time.
This is also one of the biggest dangers when investing in altcoins. Every time a new coin hits an exchange, there will be pump-and-dump cycles which will catch newcomer somewhere. Rest assured the vast majority of outcomes offers no value and only serve to make a select group of people richer every time a new coin is listed on an exchange.
#2 ICOs Still have A Bad Reputation
One of the things a lot of people have problems with is just how every new altcoin has to provide some sort of financial benefit to the developers. Either a fixed amount of coins is controlled by the developers, or they organize an ICO to raise money. Satoshi Nakamoto created bitcoin without any financial incentive whatsoever, as running an initial coin offering or creating a pre-mine was never the objective in the first place.
Even though there are projects with a legitimate ICO in the cryptocurrency world, the whole concept of raising money before even showing what the code can do has gotten somewhat of a bad reputation. Investing in an idea is very difficult in the cryptocurrency world, as most of these ideas exist in other currencies already. Moreover, with a growing number of ICOs, there is a bigger chance investors will buy an altcoin that is abandoned by the developer once the money changes hands.
#1 Most Altcoins Are Scams
There is no way to ignore the obvious elephant in the room here. Most altcoins, with the exception of maybe two dozen, are scams. Anyone who invests money into these projects will lose funds over time. One could even argue there is no need for additional cryptocurrencies at this point, as even Bitcoin hasn’t caught mainstream attention quite yet. Developers are more than welcome to submit their idea for features, privacy, and anonymity to existing branches of cryptocurrency development. Not every new idea warrants the creation of yet another altcoin.
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