It is almost common knowledge in the crypto space that Bitcoin (BTC) is the largest and very first cryptocurrency. It is very easy to see, then, why ‘Bitcoin’ and ‘cryptocurrency’ have become synonymous with each other.
However, both do not mean the same thing. Bitcoin is a form of cryptocurrency; specifically, it is the largest and most well-known cryptocurrency, but it’s NOT the only one in the market.
Altcoins, short for alternative coins, are the other hundreds of thousands of cryptocurrencies OTHER THAN BTC.
For example, Litecoin (LTC) is the very first altcoin and was a fork or ‘version’ of BTC. It endeavored to make a faster version of Bitcoin with lower transaction fees. With this, developers and creators realized the potential of blockchain technology for purposes other than payments, and thus created coins with varying uses and characteristics.
Now, there are thousands of these alternatives in the crypto market, each with its respective distinctions.
These are just some of the most popular altcoins today:
Bitcoin holds several ‘advantages’ over its alternatives, brought about by its status of being the primary cryptocurrency.
For one, BTC is much less volatile than altcoins. It is considered one of the most stable investments in the crypto space. It is the most purchased, held, and traded coin on the market, making it a highly liquid asset. The coin dominates the total market capitalization of cryptocurrencies, with BTC’s market cap accounting for about 30% of it. To add, as nations worldwide begin to adopt cryptocurrencies, the demand for Bitcoin as the chosen cryptocurrency for transactions will continue to rise.
Each altcoin is designed to have varying characteristics and uses. Holding various altcoins gives you a bunch of utility that you can use in the ever-growing web3 space. With this, more and more innovations are being integrated into every new coin introduced in the market, each serving to improve upon older coins. For example, the aforementioned Cardano’s Proof of Stake consensus mechanism is one such innovation on Proof of Work.
Remember, altcoins were created for purposes different to that of BTC, which means that we cannot definitively say which one is better than the other. For investors or businesses buying or investing in Bitcoin is generally more preferred due to its reputation and stability. Altcoins, although riskier and more volatile, are respectively attractive for their innovations and ‘high reward potential’.
So, what’s the pick? Should you stick to ol’ reliable Bitcoin? Or, should you buy altcoins that could yield more profits in a shorter amount of time? The answer is: it’s up to you. Every person works with their own set of rules and goals when it comes to investing. Whether it be risk-reward ratios, asset fundamentals, or profit targets, every investor’s goals and risk appetite should dictate their choices. Invest carefully guys!
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