Altcoin vs. Bitcoin: Which Coin to Invest in

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Bitcoin dominates the cryptocurrency market, but it is getting tough competition from other digital assets termed Altcoins or alternative coins. Fortunately, today investors have several alternatives. However, to create a highly profitable portfolio, they need to be clear about the difference between Altcoin and Bitcoin.

Before digging deeper into the Altcoin vs. Bitcoin let’s understand some crucial points. Note that Altcoins’ identity isn’t specific to variations of Bitcoin. Altcoins enhance the features or functionalities that aren’t there in Bitcoin. While alternative coins may prove beneficial for investors, not every cryptocurrency has equal value. Some of them advance and thrive on speculation and hype. 

Now let’s get into Altcoin vs. Bitcoin and determine which has the edge over the other. 

What is Bitcoin?

In October 2008 a pseudonymous individual – Satoshi Nakamoto came up with the concept of Bitcoin. Launched in January 2009, it’s the world’s first cryptocurrency. It’s a decentralized peer-to-peer online currency used for e-transactions recorded in a digital public ledger accessible to everyone. The transactions where the digital currency is involved aren’t the liability of a financial institution or intermediary such as a bank.

Bitcoin paved the way for 12,000+ tokens. The aim of creating such a currency was to establish a reliable network allowing decentralized and secure payments. The transactions are completed using a reliable and safe peer-to-peer network. BTC tokens are easily transferable to anyone across the globe using wallet addresses that have details of the wallet owner. After the user gets Bitcoin in their wallet they can transfer it to another account only with the private key. 

The Bitcoin transactions facilitate the users with e-ledger security. It is one of the best ways to keep transactions safe and secure from fraud. The digital currency uses a consensus model – proof of work to verify the transactions for legitimacy. 

What Are Altcoins?

Altcoins is the short form of “Alternative Coins”. Going by the name, we can determine that Altcoins are alternatives to cryptocurrencies Bitcoin runs on blockchain technology for secure and safe transactions. They were introduced after Bitcoin was successfully accepted as a digital currency. However, there is a slight change in the rules applicable to this digital currency (for this reason, it appeals to a different set of users).  However, Altcoins are thousands in number, but a few have gained high popularity in the market, including Litecoin, Shiba Inu Coin, Ethereum, Solana, Dogecoin, Ripple, and Cardano.

Are you wondering, “Should I buy Altcoin”? Here is your answer.

Difference between Altcoin vs. Bitcoin

Both Bitcoin and altcoins run on blockchain technology, but the purpose, operation, and features of these digital assets differ. Read on to learn how Altcoin and Bitcoin are different and which option is worth considering for investment. 

1. Functions and purpose 

Altcoins and Bitcoins are different in terms of both purpose and function. Bitcoin is generally used for making payments for various digital transactions. Whereas, altcoins are considered stable assets or governance tokens to the United States dollar (such as USDC and USDT).

Bitcoin serves as a benchmark for creating new Altcoins. The market capitalization of all major cryptocurrencies is based on Bitcoin. Also, Bitcoin uses a huge network. Hence it can support small as well as high-value transactions securely. Given its functions and purpose, Bitcoin is a precious and reliable tool for businesses worldwide to process transactions at a low fee.

2. Potential

Decentralized finance, or DeFi, is a major factor differentiating Altcoins from Bitcoin. It’s a way to conduct economic and financial operations differently. Generally, Altcoins are used in DeFi projects such as NFTs, decentralized exchanges, etc. Projects like these are transforming the world of digital currencies and taking them to the next level. The worth and value are no more limited to the digital payment system. Generally, DeFi projects use Altcoin chains and not Bitcoin. Altcoins supports a large selection of tokens which means more contribution to token prices and DeFi technology, which is profitable for retail investors.

3. Driving factors 

Institutional investors have a huge influence on Bitcoin’s price. They invest BTC worth billions of dollars as both a hedge and investment shield against rising inflation. On the other hand, retail investors (small investors) are the driving factors in the case of Altcoins. Floki Inu is a perfect example here. Altcoin’s price has increased by around 2,000% to date since its launch due to a huge pool of small investors associated with it. Is Altcoin better than Bitcoin? In terms of driving factors, Altcoin is a clear winner. 

4. Uses

Altcoins are used in multiple areas including digital payments, insurance, etc. They use smart contracts to automate the process of insurance where individuals submit their insurance claims. The final amount depends on the smart contracts. It increases the industry’s efficiency to a great extent.

Besides, Altcoins are used for NFTs which are leveraged by the government to store public records to reduce online fraud. In addition, they also come in handy to automate tedious tasks by leveraging intelligent contracts like real estate transactions and legal disputes. 

Investing in Altcoin vs. Bitcoin – Final Word 

There is no clear answer to Altcoin vs. Bitcoin, which is better. Both have their unique features, weaknesses, and strengths. However, Bitcoin still holds the largest share in the cryptocurrency market, but it isn’t too dynamic. There may be a lot of fluctuation in the price of Altcoins, but they also come with high-risk – failing to give satisfactory returns to the investors. 

When deciding on Altcoin vs. Bitcoin long-term results, individuals must consider their risk-taking tolerance, investment length, and project quality. Bitcoin may be the largest digital currency with best-in-the-class support, but that doesn’t mean Altcoins aren’t worth considering for investment. It’s best to make informed decisions and create a diversified investment portfolio to reduce risk.