As the number of cryptos almost reaches 5,000 it becomes harder to navigate the market.
Today we’re going to discuss a popular topic in the crypto community:
Bitcoin Vs Altcoins.
So let’s get started!
What is Bitcoin?
Bitcoin (BTC) was founded in 2009 as the first crypto coin by Satoshi Nakamoto. It was created to be a peer-to-peer electronic cash system that eliminated the need for the transaction to go through a financial institution.
Bitcoin transactions are recorded on an ongoing chain and these recordings can’t be altered by anyone in the network.
It was created as a system that addresses the issues of traditional third-party transactions on the Internet.
Advantages
- Adoption
Bitcoin, being the first cryptocurrency ever created, gained mainstream adoption. Of course, initially it faced a lot of backlash with many people, especially those in the financial system, calling it a scam.
However, throughout the years, Bitcoin became an acceptable payment method for many companies.
- Value
The first recorded value of BTC was 0.08 in 2010 and, in seven years, the price almost hit 20,000. As you can see, Bitcoin is a fast growing and very volatile asset.
Right now, Bitcoin has the highest rank, market cap and volume among all crypto coins. The value of Bitcoin is partly based on speculation, partly on the ever growing adoption rate and its use cases as a medium of exchange.
- Influence on Altcoins
If you take a close look at the movements of both Bitcoin and Altcoin price, you won’t fail to notice that there seems to be a correlation.
Indeed, Altcoin prices do largely depend on Bitcoin. This is because when rumor spreads that BTC is going up, the interest in crypto-assets increases overall. Subsequently, the price goes up and vice versa..
Disadvantages
- Better Competition
When Bitcoin was first released there was nothing like it. However, currently there are thousands of crypto coins to choose from.
Many coins that came after Bitcoin introduced numerous innovations such as Smart Contracts with Ether and secure proof-of stake protocol with Cardano.
Bitcoin in terms of its functionality isn’t the best crypto-asset anymore.
- Transactions
Transactions are another side where Bitcoin is behind Altcoins. Right now, Bitcoin doesn’t play a leading role in crypto transfers anymore as many Altcoin transfers are far cheaper, safer and faster than it.
What are Altcoins?
Altcoins, as the name suggests, are alternatives to Bitcoins. The first one, Namecoin, was created two years after Bitcoin, works with the same algorithm as the first crypto coin and also has a limited supply of 21 million coins.
Advantages
- Interesting Prospects
As mentioned earlier Altcoins were created as alternatives to Bitcoin, however, at some point, some of them developed unique features that set them apart.
For instance, NEO is a smart contracts platform, much like Ether, but it can furthermore execute 10,000 transactions per second while Ether can only do 15.
New altcoins are released to the market every day and many have innovative features that can greatly influence or improve our lives in the future..
- Diversification
Another benefit of Altcoins is that you can buy several of them. This can be very good for your crypto portfolio as a trader or hodler.
Having many Altcoins in your portfolio can help greatly with risk management. If dealing with many coins at the same time becomes a hassle, just use a crypto tracker and make your life easier.
Disadvantages
- Shitcoins
The number of crypto coins is now over 4,000 and, as the number keeps growing many of these coins turn out to be scams. These coins are famously known among crypto investors as shitcoins.
- Manipulations in the market
The market capitalization of BTC currently is $139 billion. However, most crypto coins have much lower market caps. This gives way to large scale market manipulations such as pump and dump schemes. As the liquidity of many assets is low, it is easy to buy a large number of coins creating speculation and increasing the price and then sell all of them decreasing the price rapidly and earning more money from this scam.
Which one to invest in?
The main question now is which one is more worth your investments.
Well, firstly let’s take a look at a study done in 2017, which looked at two scenarios. In scenario A the person invested $10,000 in Bitcoin in 2016 and a year later earned $86,000. In scenario B the same person invested $10,000 in the TOP 10 Altcoins by market cap at the same time. By 2017, the person earned $194,730.
Of course, 2017 was a very strange year for crypto-assets as the price shifts were enormous, however, there are still some other things to consider. One of them being that Altcoins have the potential for increasing their funds on a much larger scale.
As we’ve mentioned before Bitcoin and Altcoin prices are linked to each other. Moreover, during a bull market Altcoin prices in many cases increase much more than Bitcoin. As the value of Bitcoin exceeds other coins many times, it is harder for the first coin to double its price. Hence, investing in Altcoins can give you better returns than Bitcoin.
If you want to become a great crypto investor, look into this crypto portfolio tracker guide.