Not all altcoins are shitcoins. But most are. So you need to be careful when you are investing in altcoins.

Bitcoin is the first cryptocurrency that proved that double spending problem can be solved in a distributed network. Bitcoin is the first ever cryptocurrency and it will be the most dominant one for quite sometime I guess.

Most of the alt-coins won't survive more than 4 years. If you are looking from a safety perspective I generally suggest 70 percent in Bitcoin, 20 percent in Ethereum and remaining 10 percent in any altcoins you like.

Altcoins are like lottery. I would rather invest in projects that I feel can change the world so that if I loose the money I will consider it as a donation. If you are looking at insane returns by investing in altcoins, do consider that you might loose the whole of your investments in altcoins. During the bulls runs many altcoins have lost more than 95% of their value.

So if you invested 100 INR, you would be left with only 5 INR

How to identify scams

Altcoins are full of scams. There are some altocins which start with good intentions but then gets hijacked by wrong people. There are altcoins which just cannot survive the bear markets in-spite of getting everything right.

We cannot predict whether an altcoin will make it or not. But we might be able to identify the scams.

1. Any cryptocurrency that claims to replace bitcoin is generally a scam. You can make an exception for the top ten currencies on https://coinmarketcap.com/
2. They are clones of existing projects(bitcoin or others) without adding any additional value
3. There is a referral system and most of the users seem to be promoting only because of the referrals.
4. They have created a coin just to cash in on the cryptocurrency hype and don't have real world use case for using the cryptocurrency.
5. There is a lot of pre-mine. The founders and team have a major share of the circulating supply.
6. They do overmarketing. Try to portray even smaller integration as partnerships with the companies.
7. They use names and photos of the popular crypto figures to promote their own projects.
8. There is no active development on the project

Not scams but other risks

1. Listed only on sketchy exchanges. I would say until you get confidence stick to binance and kucoin exchanges. They have enough altcoins and you can pick from them.
2. Low volumes. The volumes are very low and hence even if the value of your coin increases you many not be able to sell them.
3. The community pool of coins is handled only by a few developers.

Relationship between Bitcoin and altcoins

Bitcoin is the real deal. That is the only currency in my opinion which can be a good store of value and can replace or become a good alternative to FIAT.

Bitcoin is the hardest money and hence it will suck in value from other currencies which are not hard. Considering these things and considering that Bitcoin is the one with the most history, which can become a global reserve in future, the one which is already on the balance sheets of so many companies.

The only few other currencies which I am positive about are ethereum, binance, eos

https://medium.com/hackernoon/bitcoin-dominance-and-the-emergence-of-others-64a7996272ad

How to pick good altcoins

1. Founding team has good tech background. In crypto non tech roles have lesser impact compared to tech.
2. They are thinking long term. Generally developers will have their funds locked for a couple of years.
3. They concentrate more on the project than just listing and marketing.
4. They build better partnerships.
5. They are actually solving a problem which is better solved by crypto or distributed ledgers.

Investing strategy for altcoins

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1. Learn to use stop losses. For example if the coin falls more than 20% sell it and buy back. If you are not able to buy back that is fine. Don't FOMO. You will have many more altcoins you can invest in.
2. If the altcoin appreciates in value, try to offload successively.
   1. Binary approach - For every doubling of value, sell half of your stash.
   2. Moderate - For every 30% hike sell 10% stash.
   3. As a rule of thumb never sell all your altcoin stash. Keep at-least some coins in your wallet.
   4. Move some part of your profits to bitcoin and the remaining profits you invest in other altcoins which you feel will give you better returns.

Referenced in:

• Write-first
• Current-trends-and-todos