Bitcoin vs. Altcoin: Which is Right for You? / Technology news
A altcoins is a compound word of “alt” which refers to “alternative” and “currency” which refers to “cryptocurrency”. Therefore, all currencies other than Bitcoin are altcoins.
Bitcoin (BTC) was the cryptocurrency that introduced blockchain technology to the world after the global financial crisis of 2008–2009. BTC has established itself as the “gold standard” of cryptocurrencies and has revolutionized the world of finance.
It has become the stable balance between technology-based cryptocurrencies. block chain because of its first-mover advantage. Alternative cryptocurrencies have been created to improve the technical and practical challenges of Bitcoin.
The birth of altcoins was followed by the introduction of second- and third-generation blockchain-based cryptocurrencies like Litecoin (LTC) and Ether (ETH). While Bitcoin is frequently traded in dollars, yuan, euros, and other fiat currencies, altcoins (alternative cryptocurrencies) are usually denominated in BTC.
In this note we will answer several questions: How to buy or sell altcoins? What is the difference between Bitcoin and altcoins? Are altcoins better than Bitcoin?
Ether is the most famous altcoin in the world.
Types of alternative currencies or altcoins
Altcoins can be categorized as proof-of-work (PoW) and proof-of-stake (PoS) altcoins (based on consensus mechanisms), stablecoins, and decentralized finance (DeFi) altcoins.
Alternative currencies or altcoins PoW and PoS
The Bitcoin network follows the PoW consensus method to verify and process transactions. Other PoW altcoins include LTC, Bitcoin Cash (BCH), and Zcash (ZEC). Instead, validators (rather than miners) verify transactions in the PoS model.
Ethereum is heading towards the PoS consensus mechanism due to the energy-intensive nature of the PoW method. Cosmos (ATOM) and Tron (TRX) are other examples of PoS altcoins.
stablecoins
Cryptocurrencies whose value is pegged to traditional currencies such as the dollar are called stablecoins or “stablecoins“. The value of the stablecoin is equivalent to one unit of the fiat currency to which it is pegged. For example, Tether (USDT) is a stablecoin whose value is pegged to the dollar (USD).
To achieve the peg, the issuer of the stablecoin usually keeps in its reserve cash or other assets equal to the number of coins in circulation. This way, if the coin fails or has any issues, the holders will be compensated.
DeFi Alternative Currencies
Blockchain-based DeFi stablecoins allow holders lend and borrow your cryptocurrencies to earn passive income in return. Compound (COM), Synthetix (SNX), and Uniswap (UNI) are examples of DeFi altcoins to buy.
Tether (USDT) is a stablecoin whose value is pegged to the dollar (USD).
What is the difference between Bitcoin and altcoins?
Altcoins are distinguished from BTC by expand its capabilities and close the gaps left by alleged Bitcoin flaws. Various altcoins like LTC, ETH, BCH, and ZEC are compared to BTC in the sections below.
litecoin vs bitcoin
On October 7, 2011, Litecoin was introduced with the aim of realizing small improvements to the original Bitcoin technology. Litecoin is largely based on Bitcoin, but differs in a few key ways.
For example, LTC has reduced the time it takes to build a block of 10 to 2.5 minutes hoping that increasing the number of transactions performed in a given amount of time would increase the speed of the network.
However, the decrease in blocking time is at the expense of orphan blocks which the miners solved but were not chosen for the next blockchain route.
As a result, miners were unable to process the large number of transactions at an adequate rate in December 2017, resulting in a loss of Litecoin. scalability challenges.
To solve the above problems, Litecoin adopted Segregated Witness (SegWit), Mimble Wimble and Lightning Network to reduce congestion on the network. Additionally, Litecoin has chosen a different bitcoin algorithmrely more on the memory of a mining computer than on the original code.}
This gave it better efficiency with more processing power. Bitcoin uses the SHA-256 encryption algorithm, while Litecoin uses Scrypt. LTC differs from BTC in that the total coin supply has increased by 21 to 84 million.
This means that the same exchange of Litecoin would cost 2 units instead of 0.5 units in Bitcoinwhich makes it more realistic in appearance and more useful for those with low number skills.
Litecoin has chosen a different algorithm from Bitcoin.
Ethereum versus Bitcoin
Ethereum, which was born on July 30, 2015, is very different from Bitcoin in terms of features, like LTC. Instead of using Bitcoin as a digital currency model, Ethereum uses the blockchain concept to create a complete decentralized Turing virtual machine.
The Ethereum virtual machine is a decentralized computer that can process scripts and code from anywhere on the network. Ethereum also featured smart contracts to the world, demonstrating the fundamental logic of decentralized applications.
With an unlimited supply, 14 second block times and blocks limited by their computational cost, the inner workings of Ethereum differ radically from that of Bitcoin.
Bitcoin has no intrinsic value, while smart contracts, speed, scalability, disinflationary supply and the move to a PoS algorithm and Ethereum’s innovation layer all add value to the network, providing to ETH one intrinsic value.
Although cryptocurrencies are represented as physical currencies in the media, they are 100% digital assets.
BitcoinCash before a Bitcoin
On August 1, 2017, Bitcoin Cash was formed as software update (fork) from the original Bitcoin network to use SegWit to solve Bitcoin scaling issues.
However, later users changed their approach to expand the block size from 1MB to 8MB, which allowed multiply by eight the number of transactions every 10 minuteswhich reduced transaction costs.
In addition, BCH supporters believe that it is more suitable as a medium of exchangewhile Bitcoin is more suitable as a store of value.
Bitcoin Cash was created as a software upgrade (fork) of the original Bitcoin network.
Zcash versus Bitcoin
Zcash was introduced on October 28, 2016, with reduced blocking times from Satoshi Nakamoto’s original proposal from 10 minutes to 2.5 minutes. Zcash extends Bitcoin’s idea of ”pseudonymization” (where owners are unknown but addresses are publicly available) to anonymous transactions.
To account for aggregated data in its most complicated transactions, ZEC chose a block size of 2 MBwhich is twice as much as BTC.
Zcash develops the idea of ”pseudonym” of Bitcoin.
How to buy alternative currencies?
If you’re wondering “should I invest in altcoins?” and want to know how you can do it, follow the steps below.
Determine the percentage of altcoins you want to add to your portfolio
Your altcoin investment strategy It depends on your risk aversion. or the degree of risk you are willing to take. Depending on the level of risk-reward you expect, determine a portion of altcoins you want to add to your portfolio.
Investigate altcoins for investing
For trading altcoins, first determine the best altcoins by looking at the project websitesocial media managers and the team behind the project.
All of these factors will help you discover the authenticity of the project. Also find out if your current wallet supports the altcoin you want to buy or if you need a new cryptocurrency wallet.
Choose a stock exchange and find a currency pair
Some exchanges may not support buying altcoins with pesos or dollars, so you will need to buy BTC to continue. After acquiring BTC, you will need to discover one or more exchanges that accept your altcoin. You will need to register once you have decided on the best exchange.
You must transfer some of your BTC to the exchange after completing registration. Remember that you are working with currency pairs; therefore, BTC will become your altcoin.
Exchange BTC for your favorite altcoin
You are ready to start buying altcoins once your money or BTC has arrived in your exchange account. Place an order for your favorite altcoin when you are ready to trade BTC for altcoins.
Save your altcoins to a crypto banknote
After the transaction is completed, your valuable Altcoins should be stored on the exchange (“Exchange”). However, their crypto assets they should be stored off the market and kept in a wallet if you are buying for the long term.
You might want to choose one of hot, cold, web, mobile or desktop wallets for your altcoin wallets.
The Legder is a cryptocurrency cold wallet.
When is altcoin season?
The term “altcoin season” refers to a period in the cryptocurrency market when several altcoins have higher price increases than BTC and fiat currencies such as the US dollar.
The first instance of an altcoin season occurred during the pico of bitcoin and 2017when Ethereum’s smart contract functionality fueled the development of a host of new coins.
Many crypto investors have reaped great rewards due to the increase in Bitcoin price. On the other hand, other investors are trying to make a fortune by investing in the altcoin market, leading to an altcoin season.
There’s no surefire way to predict a cryptocurrency season. However, the Blockchain Center offers a one-of-a-kind instrument called the Altcoin Season Index, which measures market sentiment and calculates whether BTC or altcoins are dominating the cryptocurrency market.
madness for non-fungible tokens and coins like Dogecoin and Shiba Inu have also led to the development of an altcoin seasonal cycle.
Start investing in Tether and get Free Bitcoin when you buy or sell 100$ or more when you register in Coinbase