While Bitcoin (BTC) remains dominant in the cryptocurrency industry, it is far from being the only cryptocurrency. These other digital assets are referred to as alternative coins or altcoins.
Because there are so many options available, investors need to clearly understand how altcoins differ from Bitcoin and what benefits they may add to their investment portfolio. This article covers the differences and similarities between Bitcoin and altcoins.
What Exactly are Altcoins?
Altcoins are usually different from Bitcoin because programmers developed them to enhance or introduce functionalities lacking in Bitcoin.
However, these days, Altcoin is used as an umbrella term for other types of cryptocurrencies apart from Bitcoin. They are developed on different blockchains and can have several use cases, including:
- store of value (stablecoins like USDT);
- voting mechanism (governance tokens like MKR), or
- paying gas fees on a blockchain (utility tokens like ETH)
While some altcoins get their attention and support because of their community support and potential price pump, for example, meme coins like Dogecoin and Shiba Inu.
There are currently over 10,000 altcoins existing with different categories based on their uses, including:
- Utility coins
- Governance token
- Security tokens
Amidst the thousands of altcoins available, here are the biggest ones based on their market capitalization:
- Ripple (XRP)
- Litecoin (LTC)
- Cardano (ADA)
- Solana (SOL)
- Dogecoin (DOGE)
- Shiba Inu Coin
What Exactly is Bitcoin?
Bitcoin was the first cryptocurrency ever created, and it is still the most well-known today. It allows users to exchange value directly in the digital space without a centralized mediator.
Users can also transfer bitcoin tokens as a means of payment for goods and services. This feature makes Bitcoin a form of computerized money that exists independently of any government, state, or financial institution.
Bitcoin has maintained its position as the dominant cryptocurrency on the market because its market capitalizationaccounts for most of the total market capitalization.
The Difference Between Bitcoin and Altcoins
There are many differences between Bitcoin and Altcoins. Here are some key ones to consider:
● Market Value
Bitcoin has a more attractive market value than most cryptocurrencies. Bitcoin is the most bought, owned, and traded cryptocurrency. It makes up more than 60% of cryptocurrency market capitalization, or around $1.2 trillion. The daily trading volume exceeds $30 billion.
Unless a Bitcoin alternative has a compelling use case, there is a good chance that the coins will eventually disappear. Numerous alternative coins (altcoins) are gaining mass popularity, but even those with more solid underpinnings will have trouble overtaking Bitcoin. While everything is going on, Bitcoin’s acceptance and demand are increasing.
● Means of Online Payment
Although there is disagreement about considering Bitcoin as an investment, it is designed primarily for online payments and storing online information.
Some investors prefer Bitcoin due to its growing acceptability as a payment currency and see it as a means of storing money. Furthermore, both individual and institutional investors are showing increasing interest in Bitcoin. Therefore, increased investment interest increases Bitcoin’s legitimacy and adoption over time.
Most people trust Bitcoin above every other cryptocurrency. This trust is mainly due to bitcoin’s popularity and the fact that it has endured multiple market crashes while maintaining its relative value.
Similarities Between Bitcoin and Altcoin
Since both Bitcoin and Altcoins fall under the umbrella of the trendy term “cryptocurrency,” there are some parallels between them. Even though they are not the same, they have some characteristics in common that identify them as a unit. Here are some of the similarities:
● Blockchain Technology
All cryptocurrencies are developed on Blockchain technology. A blockchain is a public distributed ledger that secures information using cryptography.
One of the key similarities between Bitcoin and alternative cryptocurrencies is price volatility. Whether it is Bitcoin or an altcoin, falling prices are pretty standard. The intervals between price variations may vary, but they are always present. However, some altcoins follow Bitcoin’s price trends better than others.
● Digital Wallets
In the same way that we carry cash in our wallets when we go shopping, you must have a digital wallet to purchase and store cryptocurrency whether it is Bitcoin or any other Altcoin. We recommend cold storage as they offer the best security to hold your digital assets.
Another similarity between Bitcoin and Altcoin is that both are decentralized, which means that no outside entity is required to conduct transactions.
While Bitcoin’s decentralized nature is rarely disputed, the degree of decentralization in other altcoins has often been a source of debate. Some altcoins sacrifice some degree of decentralization to offer faster transaction times.
Bitcoin and alternative cryptocurrencies can be used as a form of payment. Some altcoins are even designed to replace bitcoin as the best means for digital payments. Many companies and online shops now accept some form of cryptocurrency as payment.
Investing in Altcoin
While Bitcoin is the biggest cryptocurrency and the first choice for many, some investors still see the upside in alternative cryptocurrencies. They could invest in these altcoins for their use case or financial gain.
Some of the most sensational news in the crypto market has often centered on the meteoric rise and fall of altcoins.
You can choose from thousands of cryptocurrencies. We recommend you play it safe by sticking with established altcoins like Ethereum, Solana, and other promising low-cap crypto gems.
Where to Invest in Bitcoin and Altcoins
Many platforms allow people to buy, store and send cryptocurrencies. Some of the best ones used by people around the world are:
- Binance: Binance is one of the biggest cryptocurrency exchanges in the world. The platform allows you to buy and convert one cryptocurrency to another. It is excellent for beginners and advanced investors.
- Ledger: Ledger is a hardware wallet. A hardware wallet is the most secure storage option for storing Bitcoin and other digital assets. You can also trade cryptocurrencies from the platform.
- Coinmetro: Coinmetro is a good alternative for people who cannot use Binance.
- Morpher: Morpher is a platform that allows you to trade and store crypto assets. It allows you to trade with zero fees.
Bitcoin and altcoins share many similarities as cryptocurrencies. They can be accepted as payment and experience price swings. However, Bitcoin holds the upper ground due to its first-mover advantage. Altcoins are also on the rise, and one of them might soon overtake Bitcoin.