The past 12 years have been a roller coaster for the crypto market after Bitcoin was launched by a mysterious individual identified as Satoshi Nakamoto. Earlier, trading and investing were a huge deal for the commoners. As years passed, the financial markets were inundated with thousands of cryptocurrencies. Suddenly, the restraints dissolved, and the physical existence of money faded for the layman.
Bitcoin is the father of all cryptocurrencies providing the baseline for the growth of other umbrella currencies, known as “Altcoins.” To gain an in-depth knowledge of the same, you can click here.
According to reports, in 2021, Bitcoins and Ether account for 60% of the crypto market, followed by Altcoins, which make up for the rest of the 40%. Delving deep, Bitcoin and Altcoin have significant differences. If you are a beginner in trading and investing, it is essential to have thorough knowledge about them.
This article will help you know about the basics of these mediums of exchange and decide which one to opt for while investing.
Bitcoin was the first decentralized currency, free of intervention from establishments like banks or any other third-party authority.
Some features of Bitcoin are listed below-
- It has a high return rate and allows investors and traders to stay anonymous for security purposes.
- It is accessible to the most ordinary man, and no prerequisite conditions are required to conduct transactions through it.
- Despite the anonymity, all necessary information about the executed transactions is stored in public ‘Blockchain Ledgers’ to maintain a certain degree of transparency and safety.
- It is highly divisible, allowing investors to buy even a millionth fraction of a single Bitcoin.
- Restraints imposed by banks and authorities are absent.
- Peer-to-peer transactions facilitate hassle-free financial interactions within a virtual environment.
- People from any remote corner of the world can get access to the transaction process.
These basic but lucrative features have made this cryptocurrency sell like hotcakes. In 2021,El Salvador became the first country to recognize Bitcoin as a currency. The treasury of the USA has allowed its citizens to use bitcoins as a medium of exchange in place of physical money. Not only this, but the European Union has also recognized cryptocurrencies as legal and tradable assets. Canada interprets the usage of Bitcoins to be equivalent to other business taxes. Likewise, 103 countries are on the way to developing rules and conditions to legalize the same.
As already stated, Altcoins stand for Alternative coins (cryptocurrency coins other than Bitcoin). And almost half of the crypto market is occupied by them.
Features of Altcoins-
- Altcoins work on the same principles as Bitcoin. For example, they also offer peer-to-peer transactions and the utilization of blockchain technologies to create a legit digital environment for carrying out monetary transactions.
- Altcoins have a diverse range of classes that act upon the shortcomings of Bitcoins. The high order of entropy within the financial markets often destabilizes Bitcoin. It is very beneficial when price volatility is high. However, stable Altcoins such as USDT provide a digital reserve basket that links Bitcoin’s value to other goods like costly metals.
- Investing in Altcoins is safer than Bitcoin as they ensure valuation payment in the form of dividends or proprietorship.
There are other forms of Altcoins, namely, Utility tokens (acting within the ramifications of the network), meme coins (whose price fluctuates in response to the funny public hype surrounding them), and coins based on mining or creating roadblocks.
Hence, it is clear that Altcoins have diverse categories to research and choose accordingly. They use a range of mechanisms to reduce the intricacies and complications of handling cryptocurrencies while processing a higher number of transactions per second. The presence of diverse options provides a user with the flexibility to choose a cryptocurrency according to the fundamental properties of a specific Altcoin.
Bitcoin Vs. Altcoin: The Optimist’s View
The eternal question remains: which one is better than the other, Bitcoin or Altcoins. Depending on the needs of the trader and the longevity of various cryptocurrencies in the market, one may superficially overtake the other.
Altcoins are a lucrative and investor-friendly choice because they can be scaled efficiently. They follow a high degree of functionality. On the other hand, the high return, high divisibility, and shorter and secure anonymous transactions make Bitcoin a remunerative choice as well.
Fluctuations are a constant in financial markets. Just like any other investment, cryptocurrency also comes with various risks, so having ample knowledge about the market serves as an advantage to face fewer losses. As a first-time crypto trader, make sure you use a trustworthy exchange that offers various security features to prevent your assets from getting hacked or lost on the web.