Cryptocurrency has a significant impact on financial markets and technology. According to experts, digital assets can reform traditional systems and influence the global economy. Usually, Bitcoin is at the forefront due to the surge in the number of investors. However, Altcoins have been seen outperforming Bitcoin.
The recent surge in Altcoin investors has led to upward trends. Still, many do not know the difference between Bitcoin and Altcoin. You’ll find key facts about altcoins explained in detail on Bitemycoin. In this article, we will explain the distinction between Bitcoin and Altcoin, their advantages and disadvantages, and what to consider before investing.
Table of Contents
What is Bitcoin?
Bitcoin is the first decentralized cryptocurrency (virtual currency). It is said to be a new form of money that eliminates the need for third-party involvement. A group of developers named Satoshi Nakamoto created this cryptocurrency in 2008. It has laid the foundation of crypto trading and the development of other cryptocurrencies. The first Bitcoin was mined on January 3, 2009.
Bitcoin is mined through blockchain technology, where all transactions are recorded in an immutable ledger. SHA-256 hashing algorithms are used to encrypt the data on this technology.
What is Altcoin?
Cryptocurrencies other than Bitcoin are Altcoins. However, some people consider Altcoins to be cryptocurrencies apart from Bitcoin and Ethereum. Altcoins are different in their purposes and visions. An existing blockchain technology or an improved form has been used for transactions. A few Altcoins use staking, consuming less energy than mining. Sidechain technology is also used to improve scalability and interoperability.
Different Types of Altcoins
Let’s look at the different types of Altcoins available.
- Payment Tokens: Altcoins like Litecoin, Dash, and Bitcoin Cash are used as digital currencies. Litecoin is popular for its faster transactions and lower costs. Bitcoin Cash has a higher capacity.
- Utility Tokens: Altcoins are used as tokens to access blockchain networks or services. Ethereum is used as a payment for services on networks.
- Stablecoins: As the name suggests, Stablecoins are used to maintain price stability by determining their value relative to fiat currencies and commodities. For example, Tether (USDT) is connected to the US dollar.
- Governance Tokens: Governance tokens allow traders to participate in decision-making processes. The cryptocurrency holders have the right to propose and cast a vote.
Benefits and Drawbacks of Bitcoins
Bitcoin has been dominating the market for almost two decades. Here, we will look at the advantages and disadvantages of investing in Bitcoin.
Benefits of Bitcoin
- Bitcoin is a secure and reliable cryptocurrency
- Withstood many attacks in the past
- All transactions are secured through blockchain
- Paired with different markets
- Accepted as a means of payment
- Often categorized as digital gold due to its increasing value
Drawbacks of Bitcoin
- Unpredictable price fluctuations
- Limited number of transactions per second
- Higher fees during network congestion
- Prone to market manipulation and unequal distribution of assets
Advantages and Disadvantages of Altcoins
Altcoins have become popular among many investors over the years. Before we get into other aspects, let’s examine its advantages and disadvantages.
Advantages
- Improvements over Bitcoin
- Created more decentralized assets like Ripple (XRP)
- Rapid growth has been reported
- Offers higher rewards
- Many Altcoins are available
Disadvantages
- Altcoins are not as popular as Bitcoin
- Some of them are scams or do not survive market competition
- Acquiring some Altcoins can be difficult
Bitcoin: Current News
Bitcoin is currently at $118,941 (BTC/USD) and has a cap of $2,360 billion as per CoinMarketCap. Its value has increased by +1.88% over the last few hours and has a supply of 19.89M. The Bitcoin rally has surpassed the total value of silver and companies like Amazon. Experts predict that the prices will continue to rise till December and are expected to experience a bullish trend.
Performance of Altcoins
As of now, Altcoins like XRP continue to be one of the top performers. It has earned the confidence of investors, as prices went up 464% within a year, outperforming Bitcoin.
Pepe ($PEPE) has made it to the top three trending meme coins. Its market value exceeds $4.6 billion. Moreover, Cardano (ADA) has also outperformed Bitcoin, and more bullish events are predicted.
Growth Potential of Altcoins and Bitcoin
The growth of Altcoins and Bitcoin depends on prospects such as technological advancements, government-related regulations, and market trends, including milestones like Ethereum’s all-time high. With Bitcoin as digital gold, experts predict that it will continue to dominate the market space. The US government has been developing new frameworks to adopt cryptocurrencies that improve investor confidence.
On the other hand, Altcoins will be used in fields such as DeFi, NFTs, and smart contracts. However, since the government is planning to classify them as securities, it could impact their availability and pricing.
So, before considering trading Altcoin or Bitcoin, one should take measures to manage risks and consider diversification. The market movements should be continuously monitored, and traders should adjust their strategies accordingly. They should also be prepared to face potential fluctuations and take quick action to limit losses.
