Bitcoin still dominates the cryptocurrency market more than a decade after its launch. However, other virtual currencies also exist under the collective name of altcoins. Many people consider altcoins to be Bitcoin variants. That’s because developers create them in hopes of improving Bitcoin’s functionality or adding to its features.
Currently, the crypto market has thousands of alternative coins, with Ethereum at the top of the list. Ethereum is second only to Bitcoin in terms of market capitalization. This blog post presents a comparison of Bitcoin to altcoins. Start your trading journey by investing in a reliable trading platform such as quantum ai
What is Bitcoin?
Bitcoin is a virtual currency that Satoshi Nakamoto created and introduced to the world in 2009. It is the original successful digital money that runs on the blockchain. Blockchain technology creates a digital ledger that records all Bitcoin transactions. It establishes a peer-to-peer network with many computers distributed worldwide.
Since the digital ledger is public, any participant can verify Bitcoin transactions on the network. It is also worth noting that the Bitcoin network uses encryption techniques to allow individuals to transact or exchange value anonymously and securely worldwide.
Bitcoin’s decentralization means that no central entity or authority has control over it. It is also a scarce digital asset as the protocol dictates the number of coins that can ever exist on the network. Miners can only generate 21 million BTCs. And this property explains why its value increases over time.
Although Bitcoin is volatile, its price has historically risen to $68,000. The market capitalization has risen to over $400 billion. There are currently more than 19.1 million bitcoins in circulation worldwide.
What are altcoins?
Most people think of altcoins as other cryptocurrencies besides Bitcoin. Developers launched most altcoins after a Bitcoin fork or another blockchain, such as Ethereum. As suggested, developers designed altcoins to address Bitcoin security and transaction speed issues. Others introduced them to improve other features on their blockchains.
Litecoin was the first altcoin. It was a Bitcoin blockchain fork launched in 2011. The term altcoin referred to this new arrival, as Bitcoin had few competitors. In addition to Litecoin and Ethereum, other altcoins were added later. These include Cardano, Solana, Binance coin and XRP.
Other altcoins include the following:
- Utility Tokens: A utility token is a cryptocurrency that people use on a specific blockchain to pay for certain functionalities on the platform.
- Stablecoins: A stablecoin is a cryptocurrency that crypto developers peg to an underlying asset such as the US dollar. USD Coin and Tether are the largest stablecoins.
- Security Tokens: A security token represents a digital contract or physical asset that provides ownership of assets. The underlying asset has a value and can be a house, a car or a stock.
Similarities Between Bitcoin and Altcoins
Bitcoin and altcoins are speculative assets. That means their prices are volatile. Also, Bitcoin and alternative currencies are peer-to-peer systems that people can use to purchase services and goods and as an exchange medium for digital transactions.
To buy Bitcoin or any alternative currency, you need a digital wallet. Platforms allow you to buy and sell altcoins. Once you have purchased an altcoin or Bitcoin, you can store it in a digital wallet. Also, Bitcoin and most altcoins are decentralized, meaning no third parties are involved in their transactions. In addition, no central entity manages cryptocurrency networks.
Differences between Bitcoin and Altcoins
While Bitcoin and altcoins have similarities, they differ in several ways. For example, Bitcoin has been around longer than altcoins. Also, Bitcoin’s price has remained higher than most altcoins. Moreover, people think of Bitcoin as a store of value, while many altcoins have different capabilities or functions.
Whether you invest in Bitcoin or altcoins, always remember that crypto investments come with unique risks. While Bitcoin’s dominance makes it more stable and secure, some altcoins have the potential for significant returns. Nevertheless, take the time to research Bitcoin and altcoins to make an informed investment decision.
Filed Under: Technology News
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