Bitcoin’s popularity has skyrocketed in recent years, with some predicting that it is the future of today’s form of currency. In fact, 2021 was a significant year for the cryptocurrency as it reached a new all-time high price and more institutional buy-in from major companies. However, it’s important to remember that Bitcoin is not the only contender when it comes to cryptocurrencies. As of this year, there are over 14,000 existing cryptocurrencies of which Bitcoin and Ether account for about 60% of the market. What makes up the other 40% are called Altcoins. Derived from Bitcoin, these currencies are quickly gaining attention amongst crypto enthusiasts.
As more and more people invest in cryptocurrencies, there are also many different tools that traders and miners can use to make their endeavors simpler and more efficient. An example is the ELLIPAL cold wallet where you can store your crypto offline, making it more secure than ever before. There are even ELLIPAL offers devices that create mnemonics to help investors generate random phrases to keep their wallets safe. Being secure is important when it comes to trading crypto, but which currency you invest in may also matter. Here’s how Altcoins are different from Bitcoin and why it matters for anybody investing and trading.
Bitcoin is a form of cryptocurrency that was created in 2009. Cryptography keeps the currency secure, and there are no physical bitcoins that exist. This digital currency was created with the promise of lower transaction fees and a decentralized system that would be governed by the blockchain. The blockchain works by keeping all transactions and balances on a public ledger that everybody has access to, though each record is encrypted. Bitcoin transactions are verified via computing power in a process called “mining.” Moreover, based on cryptocurrency trends from 2020 and 2021, Bitcoin has led the pack as the most popular type of cryptocurrency. Despite its ups and downs with the market, like the 2018 crash, it has managed to prove its staying power.
One reason why Bitcoin is resilient relative to other cryptocurrencies (like Altcoins) is that investors perceive it to be the most digital currency at the moment. While there is still some volatility, it remains to be one of the most established crypto tokens to date. People who are new to investing in crypto may be apprehensive about putting their money into newer, smaller currencies like Memecoin, which are more unstable and volatile compared to Bitcoin.
Altcoins are named as such because they are alternative cryptocurrencies to Bitcoin. Essentially, they are cryptocurrencies that are not Bitcoin, but they use the same technology under blockchain to allow secure peer-to-peer transactions. What makes Altcoins different from Bitcoin are the slight changes in rules that appeal more to different users.
For instance, Bitcoin only mines every 10 minutes, while Altcoins like Litecoin products coins every 2.5 minutes, making payment processing faster. Litecoin would then also produce more coins than Bitcoin due to the mining rate. The latter also costs more energy to be produced since it relies on expensive computer hardware, whereas Litecoins can be mined with common computer hardware. Many Altcoins are becoming popular alternatives to Bitcoin, such as Ethereum, Monero, and Stellar. The advantages of investing in Altcoins are improvements on Bitcoin’s flaws and lower transaction fees. However, these cryptocurrencies are also quite volatile and highly susceptible to scams and fraud.
Which is Better?
Whether you’re considering purchasing and exchanging cryptocurrencies like Bitcoin or Altcoin, keep in mind what you are hoping to gain and willing to risk. When Bitcoin goes up on the market, the tendency is for Altcoin to rise as well. And while the rise and fall of Altcoin are more volatile than Bitcoin, some investors still see an upside to investing in the competition, especially when Bitcoin is trading near record highs. Still, the best advice is to invest only however much you’re willing to lose.
Submitted by Christine Clarke for ellipal.com