The birth of Bitcoin heralded a new era of digital money. However, only true enthusiasts understood the implications of the technology on which it was based and how it can change our world for the better. But then, other cryptos appeared. Litecoin, Ethereum, and others saw the flaws that existed in Bitcoin and wanted to repair it one way or another. In the past couple of years, hundreds of altcoins sparked up. Let’s see how they co-exist and interact with each other.
What are altcoins?
Basically, every cryptocurrency that uses the similar technology to Bitcoin is called an altcoin. At the time first altcoins appeared, they were merely considered an alternative to the main crypto that Bitcoin represented. However, things changed nowadays, as some of the altcoins are seriously threatening to take the throne from Bitcoin and become the most popular ones.
But, it is not likely to happen any time soon – although, the future in the crypto industry is quite unpredictable. Let’s take a look at the advantages and disadvantages of Bitcoin and altcoins.
Bitcoin – advantages and disadvantages
Firstly, Bitcoin is the first crypto which is currently worth the most. The hype created around it is the biggest, which is one of the reasons of its popularity. Secondly, Bitcoin is a global cryptocurrency, which means that you can send and receive it from anyone in the world who has a crypto wallet.
When it comes to disadvantages, one would say transaction fees are pretty high. Overall, the altcoins are made to offer lower costs as well as better speed. When you trade small amounts, it may not represent as big of a problem. However, people who own Bitcoin usually perform significant transactions – this is when the fees really start to hurt. An average transaction fee is $0.40. This is not a lot when you compare it to the fee from December 2017 ($55) when the BTC to USD price was at its peak. On the other hand, other altcoins offer a much lower transaction cost.
More importantly, Bitcoin is slow. At least slower than most altcoins. The average confirmation time for Bitcoin is 10 minutes, and that figure is much lower with some of the altcoins.
Finally, Bitcoin is just a cryptocurrency. It is based on blockchain technology which can be used for so many things, but it doesn’t have any purpose apart from making payments. As you will see, some altcoins saw this flaw and created blockchain-based multi-functional platforms.
Altcoins – advantages and disadvantages
The main advantage of some altcoins is their comprehensiveness. Let’s focus on Ethereum for a bit. Ethereum is not a cryptocurrency – it is a whole system that allows creating decentralized platforms with no main governing body – something that can create the revolution in the world. Ethereum uses a crypto of its own called Ether to support applications development.
Another positive aspect of altcoins is speed. Just for comparison, the average time required for one DASH transaction to be conducted is a bit more than 2 minutes and 30 seconds. In the crypto world where the prices change almost every second, people who trade coins need the transactions to be as fast as possible to make the most out of them. The difference between 10 minutes and 2 minutes is huge in this industry.
We also mentioned fees, and they are also best explained by a comparison. The average Bitcoin fee is considered the highest in the crypto market. One of the most affordable altcoins at the moment is Dogecoin which has a charge of only $0.0048 on average.
Altcoins aren’t perfect, though. They certainly explored the blockchain technology more and further upgraded it. But there is one big problem with all of them – they are all too weak in comparison to Bitcoin. The capitalization of Bitcoin is somewhere around $110 billion at the moment (53% of the total market cap). The next behind it is Ethereum which has $20 billion. The difference is still huge, and it means that Bitcoin controls the market more or less.
So, there’s probably no valid answer to the initial question – it is better to invest in both Bitcoin and altcoins, as they all have their unique features that can be valued and bring profits. The best way to get the most out of the cryptocurrencies is to follow the news about all of them and try to conclude where to invest. However, you should not limit your investment to only one crypto, simply because the industry is unpredictable. Literally anything could happen.
Therefore, investing in cryptos is a risk itself, but a risk worth taking. Start small and see how that goes. Stay updated, read forums, news, and follow the experts’ analyses. It takes time, but it is definitely rewarding.