So you’re either a new investor or someone with years of experience behind your belt. Regardless of your knowledge of cryptocurrency, there’s always a distinction that has to be made: the difference between Bitcoins and Altcoins.
Both new investors and old investors alike will find that while they are both decentralized, their internal mechanics are different. We’ll help by making that distinction between the two. This will help you become savvier when trading on crypto trading platforms like Monfex (www.monfex.com), making you a more intelligent investor.
What is Bitcoin?
Bitcoin is known as the primary cryptocurrency used amongst crypto traders. It emerged in 2008 after the Occupy Wall Street protestors accused big banks of misusing the system, charging high fees ad duping clients.
Bitcoin was made to prevent traders from being tied to a centralized organization (Banks, traders, etc.). Bitcoin’s goal was to eliminate the middle man, make transactions transparent, cut fees, hack corruption, and place the seller in charge.
They invented a decentralized system where you know what’s going on and have complete control over your funds. Bitcoin has gained popularity in a short amount of time.
All over the world, large companies such as REEDs jewelers, a private hospital in Warsaw, Poland, began to accept cryptocurrency.
Fortune 500 companies such as Microsoft, PayPal, and Expedia accept it as well.
In its simplest form, Bitcoin is a term used as a reference to the technology or the currency itself. Users can use Bitcoin (BTC), where you show the purchaser your wallet signature. This is a long line of security code that has over 16 symbols.
Bitcoin has a digital information exchange where you can buy or sell goods or services. The transaction gains its trust through running through a peer-to-peer system that’s similar to BitTorrent or Skype.
- Reduced Transaction Fees: Bitcoin’s transaction fees are lower in comparison to those made in debit and credit card purchases.
- Quick Payments: Credit card funds can take a week to process fully. However, with Bitcoin, the process is much quicker, taking a max of 2 days for the transaction to be cleared.
- Simple International Payments: Bitcoin isn’t tied to a country like fiat currencies (USD, GBP, CAD, etc.). This means that online sellers can make international payments without having to pay extensive border fees.
What are Altcoins?
New traders make the common misconception that Bitcoin is the only cryptocurrency available. However, that’s entirely false. There are thousands of alternatives to Bitcoin with unique differences, purposes, and functionalities.
Altcoin isn’t the name of one cryptocurrency, but the name of any coin that’s not Bitcoin. For instance, Ethereum, Ripple, ad Litecoin are technically altcoins. With that in mind, altcoins are used to describe coins that have lower market capitalizations.
Altcoins can be different than Bitcoin in a variety of ways. Some of them have a different economic model or alternative coin distribution method, like certain altcoins that were given to citizens in a specific country.
Others have different proof of work mining algorithms, which resists specialized mining hardware – or they don’t need to use proof of work systems at all. Several altcoins provide a more versatile programming range to choose from (i.e., Tron) while others have more privacy than Bitcoin (ie, Monero).
However, there are some altcoins that don’t do anything interesting at all. Some altcoins just provide minor tweaks that don’t matter much or provide something that appears useful but isn’t. For instance, if an Altcoin has a greater amount of total coins, then the value for each coin is going to be less.
As such, most altcoins don’t have a clear advantage over Bitcoin. Plus, they tend to use less hash power in securing them, less useful than because of the smaller network effects. So think wisely when investing in an altcoin.
- Variety: Most altcoins are less expensive, less popular, and much less competitive. In fact, they can be mined by beginners with CPUs. In fact, there are some CPU only altcoins!
- Popular Altcoins: Like Bitcoin, some altcoins have reached a similar level of mainstream success. The most popular altcoin in 2017 was Litecoin – a Script-based cryptocurrency that’s more stable than Bitcoin. Ethereum is another popular choice.
- Solves Bitcoin’s Problems: Bitcoin isn’t always the answer! Many altcoins were invented to help address concerns that were raised over the long-term and future viability of bitcoin.
Which One Should I Choose?
It’s up to you to decide which one is best for you. Use Bitcoin if you’re looking for stability and an all-around cryptocurrency that can be easily traded. With Bitcoin, you can easily trade for altcoins by converting it to the altcoin that you prefer.
Altcoins are a better choice once you’re experienced with trading. Altcoins are riskier, so its best that you conduct your research before investing in any particular coin. As a rule of thumb, we suggest that you start with Bitcoin and move to altcoins after having more in-depth knowledge.
There are some cryptocurrency trading platforms that are available. So far, Monfex has been a great resource. Give it a look and tell us what you think in the comments!