In the early days of the internet, known as Web1, users could only read the information presented on websites. This changed with Web2, where users could create content, but it was stored on platforms owned by major companies. Now, with the rise of Web3, users can both read and write content that they truly own, gaining control over their digital assets.
As the Web3 ecosystem expands, everyone — users, creators, builders, and investors — stands to gain. This sense of ownership encourages more people to engage with and invest in alternative cryptocurrencies or altcoins, which are becoming crucial to this new digital landscape.
Why is there confusion in the world of altcoin?
However, the world of altcoin might leave investors confused. Altcoins are largely unregulated and poorly understood. At the same time, they might be scared due to past incidences in the altcoin scene. For example, the OneCoin altcoin crypto scam between 2014 and 2017 duped investors of over SG$5 million (US$3.66 million).
Alternatively, investors might be worried of its volatility, as the price of Ether, the digital currency of Ethereum (ETF)’s blockchain network, plunged over 50 per cent in 2021 when it had seemed to be doing well.
The confusion on altcoins is apparent with studies such as the S. Rajaratnam School of International Studies’s “Altcoins: Hidden Gems or Outright Scams?” as recent as July 2021. This in turn has led to altcoin market capitalisation (SG$77.5 million) being only
4.31 per cent of BTC’s market capitalisation (SG$1.8 trillion), highlighting the lack of appetite for altcoins in comparison to Bitcoin.
How can we understand the value of altcoins?
Many investors still struggle to see the broader value of cryptocurrencies. While some institutions recognise Bitcoin as a hedge against inflation, many in the general public only view it as a speculative asset driven by memes. Bitcoin is certainly a store of value, but the real potential of cryptocurrencies lies in their ability to support on-chain applications and verify data assets.
Each cryptocurrency has a specific role to play. Bitcoin mainly acts as a store of value, and we’re seeing more countries and companies start to hold it as a reserve asset.
Meanwhile, ETH powers smart contracts, NFTs are transforming the art market, and stablecoins are bridging gaps in traditional finance. Decentralised Autonomous Organisations (DAOs) offer a new way for groups to govern themselves democratically. Yet, many aspects of currency remain untapped, pointing to a bright future for altcoins.
Also Read: Embracing AI and cryptocurrency: Is Hong Kong too ambitious?
Why has there been a change of attitudes towards altcoins in recent times?
Recent trends suggest a shift in perspectives towards altcoins. This may be driven from investors realising the market potential that altcoins have. The potential for growth in the altcoin market stems largely from the fact that many altcoins are still untapped. The growth rate of the altcoins’ mining market is also faster than Bitcoin’s as new projects continue to emerge in the Proof of Work (PoW) space, and with a significant number of unmined altcoins still available, there is considerable room for expansion.
At the same time, we have seen over the last decade that the proportion of Bitcoin’s market cap in the total crypto market has been declining, which indirectly highlights the market potential of altcoins. Indeed, we have seen that in the first half of 2024, the market cap of altcoins increased by 77 per cent.
Key milestones of positive reception of altcoins in recent times
This change of attitudes towards altcoins has led to the US Securities and Exchange Commission (SEC) approving the first ever spot ETF Exchange Trade Funds (ETF) in July 2024. We also saw that ETF providers on the exchange, such as Blackrock, saw net inflows on their ETF of over SG$460 million (US$337 million) in just three days from the ETF ETH approval.
Furthermore, experts feel that the approval of ETH ETFs can lead to a boom in the performance of altcoins. It allows everyday investors to dip their toes into the altcoin market for the first time by legitimising ETF as an investment asset.
It can also drive substantial capital flow and alter the mindset of traditional finance players who are now looking at launching another altcoin ETF, the Solana ETF. Intchains Group Limited (ICG), as a scarce publicly listed company focused on mining chip development can share some tips on how to seize the opportunity.
Researching altcoins
Miners should start by learning about the new narratives and watching the dynamics of KOLs in the cryptocurrency industry. For example, meme coins such as Dogecoin that once saw a huge rise of 30 per cent in October 2024 after being mentioned by Elon Musk on X.
It is also important to keep an eye on emerging technologies such as Zero-Knowledge Proofs (ZKP) and Homomorphic Encryption (HE) in altcoins. ZKP and HE enhance privacy, security, and scalability by enabling confidential transactions. At the same time, they help to strike a balance between confidentiality and verification requirements in digital interactions. Having an understanding of such emerging technologies enables you to identify opportunities and make informed investment decisions.
Legal and tax considerations are equally important. Regulations vary widely by country, with some nations imposing strict bans on cryptocurrencies. For example, Denmark plans to tax unrealised gains on digital assets starting in 2026. Staying updated on legal
frameworks can help miners avoid pitfalls.
Researching on altcoins can sound daunting. Seasoned investors rely on trusted sources such as crypto news sites and follow KOLs on platforms like Telegram and X. As a prominent player in the blockchain scene, ICG also often shares industry insights on its social media channels to help investors remain informed on the latest development trends of altcoins.
Selecting the right mining hardware
Choosing the right mining hardware is critical for success in altcoin mining. Different cryptocurrencies use various algorithms, so it’s vital to select ASIC (ApplicationSpecific Integrated Circuit) hardware that matches the chosen altcoin’s algorithm.
It is perfectly normal to seek expert advice on software and hardware selection. ICG, a designer of altcoins ASICs and a corporate accumulator of ETH, frequently shares insights to help customers align their mining hardware with their altcoin strategies, focusing on aspects like mining power and energy efficiency.
Also Read: The rise of crypto ETFs: A new dimension in investing
Setting up a secure wallet and network
Mining can be done through solo or pool mining. Solo mining has the potential for higher rewards but also carries significant risks. In contrast, pool mining combines computational power, offering more consistent returns. When it comes to securing assets, cold wallets are typically the safest option. Distributing funds across multiple wallets and pools can also enhance overall security.
Maximising mining rig performance
To boost mining efficiency, miners should consider focusing on altcoins that haven’t yet achieved high network hash rates but show promise. Upgrading from GPUs to dedicated ASIC chips, choosing energy-efficient hardware, and operating in areas with favourable electricity costs can all lead to better performance.
Investing in altcoins is like panning for gold; it requires a deep understanding of emerging technologies and crypto applications. With clearer regulations, positive market trends, and a wider range of altcoins, there’s substantial growth potential ahead.
In conclusion, as we step into 2025, the world of altcoins invites those willing to look beyond Bitcoin. By understanding the unique features of altcoins and taking a strategic approach, investors can seize the opportunities that lie ahead in this dynamic crypto landscape.
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