The cryptocurrency sector comes with a lot of different currencies. Apparently, we have a new altcoin coming into the scene almost every day that can change the cryptocurrency field. Knowing where to invest your money can save a lot of hassles and time. There is no right decision or wrong decision in the crypto market, as everything depends on objectives and application areas. Having the right knowledge can help the user to make well-informed decisions and can minimize their investment risks.
Bitcoin – How it came to be a Dominant Force among other Coins?
- First, Bitcoin was considered to be the original cryptocurrency. In 2009, it was created and released; it revealed largely about the blockchain technology and the principle of proof-of-work. Since its inception, Bitcoin had fully developed to become one of the most leading cryptocurrency.
- Further, there are more than 17 million coins valued at 113 billion dollars in circulation. Also, this figure outnumbers any other altcoin. The second-biggest cryptocurrency following Bitcoin is Ethereum according to its market capitalization.
- Bitcoins are mined, and the mining process is an important part of its presence. Further, Miners mine new Bitcoins and circulate in the market for rewards. Also, they are solely responsible for validating transactions of Bitcoin on the ledger.
Advantages of Bitcoin
One of the main advantages of Bitcoin is its acceptance and extensive adoption. Further, it had been widely accepted as a form of payment. Several financial institutions are supporting Bitcoin and people have heard of Bitcoin because of its popularity. Bitcoin has a wide network of users who are committed to long-term development. Lastly, it has a large pool of miners who continue to support the network and makes sure it is secure.
Disadvantages of Bitcoin
- Even though Bitcoin has certainly had a lot of advantages, it has a few disadvantages. Recently, Bitcoin had taken an enormous hit in December 2017, when it rose to sky-high of 20,000 dollars, still the price remains positive; making analysts wonder it will ever maintain the same returns.
- Another drawback is Bitcoin’s transaction fees. It was meant that Bitcoin has very low transaction fees, which is one of its USPs. When miners choose which transaction to process, they might go for higher fees automatically.
- Regarding mining, several people comment on heavy energy consumption that is required when Bitcoin is mined. This is seen as damage to the environment, instead of this, more eco-friendly alternatives can be used.
What is the next Alternative to Bitcoin?
Altcoins can be used as an alternative to Bitcoin which has great potential. Bitcoin is looked at as an original cryptocurrency; hence any new currency is looked at as an alternative. Currently, thousands of altcoins are available for users to invest, and several more are developed regularly. Few of them have high demand, such as Ethereum and XRP, while others fall through. Some of the Altcoins are given below –
- Bitcoin Cash
- Stellar Lumens
Advantages of Altcoin
One of the major advantages of altcoins is they serve as an alternative to Bitcoin. If the Bitcoin collapses, then users can switch to altcoins. However, several altcoins have a unique function. Few altcoins offer various processes and systems when compared to Bitcoin and have a wider scope to develop in the future. Ethereum and XRP are two different altcoins that have been adopted widely and used by several industries.
Disadvantages of Altcoin
One of the disadvantages of an altcoin is the lack of acceptance and exposure. Altcoins like XRP, Ethereum, and Bitcoin cash are well received and have great support from users; other altcoins are not much recognized. Besides, there are restricted numbers of outlets where few altcoins can be used as they have not been widely adopted as Bitcoin.
Comparison between Bitcoin and Altcoin
- Bitcoin had been developed in such a way to face hard challenges. It offers high security when compared to convenience. People who are interested in altcoins will claim that Bitcoin is very slow when compared to other cryptocurrencies and expensive too.
- Several Altcoins trade cheaper; ease of transaction and faster when compared to Bitcoin. Having said that, purchasing Bitcoin currently is not a wise decision in terms of return on investment.
- By Popularity and Brand awareness, Bitcoin is well-known and widely adopted. Currently, Bitcoin is the most stable currency, and it is heavily traded. Moreover, people are investing in Bitcoin when they feel it is safe, which cannot be taken lightly.
- With a high market cap of 250 Billion dollars on any day, it cannot predict Bitcoin doubling its price any time shortly. Furthermore, it is doubtful that Bitcoin’s current trend might continue its due course.
- On the other hand, Altcoins has smaller prices and larger amounts of coins; as a consequence, a larger market cap and more potential for increased profits.
Even though Bitcoin is the biggest currency in supply and has wider support, it does not mean that altcoins are useless. People can consider diversifying their investment by purchasing a few Bitcoins and some major altcoins. The advantage is it helps to minimize the risk of their investment portfolio. Moreover, Altcoins can make more money compared to Bitcoin, yet it is a lot risky and people could lose their investment abruptly.