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$236.10

Bitcoin Vs. Altcoins: How Are They Different

Bitcoin Vs. Altcoins: How Are They Different

Investors and financial analysts regularly compare bitcoin vs altcoins trying to determine the best coin for investment. However, these digital currencies are different in their characteristics, mining process, improvements, security issues, etc. Our cryptocurrency experts have analyzed all the vital data in this review.

Are Bitcoin and Altcoin the Same

Bitcoins are not the same as altcoins, although both coins are based on a similar principle. Bitcoin is considered the first cryptocurrency that was launched in 2009. All other cryptocurrencies and alternatives to bitcoin are generally titled altcoins. Continue with our review to get to know the key differences between bitcoin and altcoins.

What Is Bitcoin

It is the first digital currency. Bitcoin is entirely decentralized, and it is used for P2P direct transactions without government regulations or any intermediaries like traditional banks. Bitcoin uses a special data transfer protocol. The newest cryptographic methods are used to guarantee the functioning and protection of the entire system. The total number of bitcoins is strictly limited to 21 million.

Features

Bitcoin has plenty of valuable features for its users. The most valuable and critical ones are:

  • Decentralization. The complete lack of control over the system by anyone. Millions of computers that mine bitcoins are included in this system. Transactions in the BTC network take place on a P2P basis. It means that third parties like governments, regulators, or banks can control money transfers.
  • Transparency. Any bitcoin wallet is anonymous and entirely transparent. It is effortless to create plenty of wallets without indicating your name, phone number, location, etc. Blockchain technology stores the whole history of transactions is stored in the bitcoin network. If you publicly announce that this wallet is yours, anyone will be able to find out your transaction history and the amount of BTC in the wallet.
  • Easy to use. It takes less than five minutes to create a new BTC wallet. It can be used instantly for any type of money transaction. Furthermore, the procedure is free and completely anonymous.
  • Irreversibility of transactions. After the cryptocurrency is transferred from a sender to a recipient, it can never be returned to the original account. So, for instance, if somebody gets access to your BTC wallet and buys a Ferrari using your cryptocurrency, you will not be able to complain to the Bitcoin support service and cancel the transaction.
  • Disadvantages

    Despite plenty of benefits, the most expensive cryptocurrency has significant drawbacks. The following ones should be emphasized while comparing bitcoin vs altcoins:

  • Difficult and expensive mining. The constant complication of bitcoin mining standards requires more resources to form new blocks in the Blockchain.
  • Long transactions. Bitcoin transactions are considered the longest ones. The average verification time for a bitcoin transaction is about ten minutes. Such factors as hash rate, overall network activity, and payment fees influence it largely.
  • Insufficient functionality. The main task of BTC is to be a reliable tool for P2P transactions. Unfortunately, this cryptocurrency has no such additional features as, for example, the creation of smart contracts.
  • No 100% anonymity. Even though bitcoin transactions are considered sufficiently encrypted, trace senders and recipients is still a possibility.
  • What Is Altcoin

    An altcoin is a general name for all cryptocurrencies alternative to Bitcoin. A considerable number of altcoins are forks of bitcoin with some minor changes. The first altcoins were launched in 2011. Their key purpose was to overcome all the technical limitations of Bitcoin.

    Features

    Altcoins strive to make cryptocurrency payments faster and more reliable and introduce innovative technologies in all spheres. The key characteristics of altcoins are:

  • Altcoins are used to organize decentralized trading platforms quickly. Altcoins provide a global virtual system organized to create DApps.
  • Such altcoins as ETH or Monero can launch advanced smart contracts to manage logistics chains.
  • Security and reliability. All computers in the Ethereum network are connected to one global network. Each user stores their piece of data. This ensures the protection of the system from cyber-attacks. The more users are engaged on a given platform, the more powerful the network becomes. Therefore, the more difficult it will be to break it in the future.
  • Altcoins help to create any type of NFT apps and utilities. Comparing bitcoin vs. altcoins, the latter allows digitizing of all physical assets such as manufactured goods, oil, gold, commodities, etc.
  • Types

    There are four main types of altcoins. These are stablecoins, utility tokens, mining-based altcoins, meme coins, and security tokens.

  • Stablecoins. These coins` value is tied to concrete assets such as US dollars, euro, gold, etc. The most popular ones are USD Coins and Tether.
  • Mining-based. You can mine these coins. These digital currencies are Ethereum, Monero, Litecoin, and ZCash.
  • Utility Tokens. This altcoin type is used for offering services in a given network. For example, consumers often use utility tokens to redeem rewards, pay service fees, or buy some services.
  • Security Tokens. These are digital equivalents of securities that certify ownership and allow proprietors to realize their investment interests. They are written in smart contracts.
  • Disadvantages

    Like bitcoin, almost all altcoins also have certain disadvantages despite their evident benefits. The key ones are explained below:

  • High market volatility. The prices of altcoins are very unpredictable because digital currencies have been still emerging as a type of asset. As a result, even within a single day, the price of a certain altcoin can drop sharply or skyrocket upwards. For example, this may be influenced by a statement or post by a famous person.
  • The altcoin investment market takes about 60% of the entire cryptocurrency market share. Bitcoin covers almost 40 percent of the total cryptocurrency market share. It means that altcoins have smaller investment opportunities because of thousands of them.
  • The altcoin trading market is not regulated. It also has no distinct measurement criteria for investments. Moreover, there is a danger of a possible ban on mining or owning cryptocurrencies in certain states. Therefore, fewer investors become interested in trading altcoins.
  • It is hard for investors to determine more or less exactly whether a certain altcoin can be a prospective investment. Consequently, it is hard for many consumers and businesses to make an investment decision.
  • Difference between Bitcoin and Altcoin

    There is a certain difference between mining bitcoin and altcoin. Our experts have analyzed such issues as transactions, updating, security, and source code rules. Please find the details below.

    Mining & Transaction Confirmation

    When comparing bitcoin mining vs. altcoin, it is evident that BTC mining is much more difficult and expensive. To form new blocks in the BTC blockchain. Altcoins provide alternative mining protocols. It lets miners do it without complicated equipment on home computers.

    Bitcoin transaction confirmation speed is about ten minutes. This is a deadly low speed for the modern world when payments must be processed instantly. Altcoins payments are much faster. For instance, it takes 3-5 seconds to process a Ripple transaction.

    Improvements & Updating

    In November 2021, Bitcoin developers activated the first cryptocurrency update since August 2017. It is called Taproot. This innovation must improve the privacy, scalability, and security of transactions in the system. Most of the changes relate to strengthening the overall digital privacy.

    As there are hundreds of prospective altcoins, they are updated almost thrice a year. It means Binance Coins, Monero, Zcash, or ETH regularly receive more new features, including enhanced transaction speed and additional security. This indicator is important while determining the key differences between bitcoin vs. altcoins.

    Source Code Rules

    Bitcoin operates on open-source code written in C++. It means that every single node operator in the network can select the definite Bitcoin version they wish to use. Therefore, the whole BTC network consists of thousands of nodes. And they run hundreds of various types of BTC software. Therefore, developers who regularly advance the BTC software can never change the BTC protocol source code rules because users can select any BTC software they want.

    The Ethereum source code and its full history are publicly available on Github and other network repositories. All codes are released under the LGPL-3 license, requiring all future derivative works to be released under the same license. There are currently more than 180 repositories for the Ethereum cryptocurrency. Each focuses on a certain nuance of the project, such as smart contracts, network compatibility, etc. Unlike bitcoin, more developers keep on working on developing the Ethereum source code.

    Security

    While comparing bitcoin and altcoins, security issues are among the most critical parameters. Bitcoin transactions are considered adequately encrypted. However, there is still a chance to trace senders and recipients. On the other hand, altcoins use supplementary encryption methods to add additional protection.

    Key observations:

  • Altcoins are all other cryptocurrencies after bitcoin.
  • As of February 20212, there are more than 17,600 cryptocurrencies. Bitcoin now has almost 40% of the crypto market share.
  • It is much easier to mine altcoins than BTC.
  • According to the market cap, ETH, BNB, Tether, and USD Coin are the largest altcoins now.
  • The total number of bitcoins is limited to 21 million. However, there are no limits for mining altcoins.
  • How Are They Similar

    Both altcoins and bitcoin have certain similar features. However, we have figured out the most distinctive ones:

  • Their market capitalization has already exceeded hundreds of billions of dollars. For example, as of February 2022, the BTC market cap is almost $727,3 billion, while the most expensive altcoin market cap, Ethereum, is more than $315 billion.
  • Decentralization. Any government or financial institution cannot regulate both digital currencies.
  • Ability to trade on cryptocurrency exchanges. Both BTC and altcoins are presented and can be freely traded on major cryptocurrency exchanges such as Binance or Coinbase.
  • Uncertain future and high potential risks. The main risk is that overly burdensome financial or tax regulations can significantly slow down the development of both bitcoin and altcoins. For example, Telegram CEO P. Durov's blockchain project TON was closed precisely because of the regulator. In addition, there is a risk of cryptocurrency theft by fraudsters, loss of the private key necessary for protection, and a collapse in prices.
  • High volatility. Altcoins and bitcoins are volatile investments regarding the possible daily price change.
  • Stable price growth. The Bitcoin price is growing due to the huge interest in this crypto from large corporations like Tesla or J.P. Morgan Chase. They use it for launching new funds and expanding their investment portfolio. On the other hand, Altcoins price is growing owing to the interest from startups mainly. For instance, Ethereum is one of the most commonly used altcoins in various blockchain projects.
  • Bitcoin Vs. Altcoins: Which One Is the Best for Investment

    Investors should seriously think it over before starting trading altcoins against bitcoin. Investing in both currencies can be profitable and risky at the same time. Before investing in any cryptocurrency, do market research. It is highly recommended that consumers limit cryptocurrency investments to a set sum they are not afraid to lose.

    For Trading

    Experts state that both altcoins and bitcoins are risky investments because their prices are not stable. You never know what the price will be even in the next 10 minutes. Using bitcoins and altcoin for trading purposes can bring either a huge investment triumph or a bitter disappointment associated with the total loss of investments.

    Altcoins and bitcoins can be purchased on all cryptocurrency exchanges without exception. Furthermore, exchanges allow trading altcoins freely against the dollar or gold, which is a significant advantage of this cryptocurrency.

    Some altcoins have grown in price tenfold, and this is not an exaggeration. What will be the fate of this cryptocurrency in the future? No one even knows exactly. However, the increased interest in this cryptocurrency and its growing popularity ensure its growth. If there is a desire to invest in cryptocurrency, and bitcoins are very expensive, then altcoins can be a good alternative for beginners and experienced investors.

    For Holding

    Depending on investing goals, both bitcoin and altcoins can be a good investment depending on investing goals. However, altcoins are considered a more risky investment for holding than bitcoin due to their high volatility. The latter is ten times more expensive than the most expensive altcoin like Ethereum.

    Ethereum has firmly established itself in second place regarding capitalization. Serious funds keep on investing in this project. Many potential investors consider it the future of digital currencies. As for now, if you do decide to hold money in cryptocurrency, bitcoin is a better option.

    For Using

    If comparing altcoins vs. bitcoin, they can be used for any daily purpose. You can use them for making payments for products and services globally. Please keep in mind that altcoin transactions are quicker and more protected.

    Conclusion

    Now you know all the necessary info on bitcoin vs. altcoins. The important features, differences, pros, and cons are depicted in this article. So, it is up to you to decide which coin is better for investment. Think about your primarily investment needs, short- or long-term prospective revenues, and don’t hesitate to invest reasonably. Nothing ventured, nothing have!

    Frequently Asked Questions

    Are Bitcoin And Altcoin The Same?

    No, they are not. Bitcoin is considered the first cryptocurrency that was launched in 2009. All other cryptocurrencies after bitcoin are titled altcoins.

    What Is The Difference Between Bitcoin And Altcoin?

    The difference between bitcoin and altcoin is in specific parameters. These issues include transaction speed, updating, mining process, improvements, security, and source code rules.

    Bitcoin Vs. Altcoins: Which One Is The Best For Investment?

    It depends on your priorities. For example, Bitcoin is considered a good investment for holding. In contrast, some altcoins are considered a better investment for trading and daily usage.