Over the last few years, there’s been a lot of discussion regarding Bitcoin and other cryptocurrencies. Decentralized digital currencies on the blockchain are taking the globe by storm in terms of financial innovation.
More individuals are becoming aware of how the current fiat system may be in desperate need of a replacement, which the cryptocurrency market could theoretically provide.
So should you go with Bitcoin or altcoins?
Bitcoin vs. Altcoin
It’s an exciting time in history. We now have an asset class that promises to be entirely censorship-resistant, offers actual scarcity, and can’t be confiscated — for the first time. A monetary system with qualities like these could be quite appealing to investors.
Bitcoin provides all of the aforementioned benefits and more.
However, numerous other tokens have emerged over the years since its introduction, all attempting to improve on the original concept that Bitcoin first brought to light.
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These altcoins may appear appealing to investors as well, and many of them have the potential to be truly creative in a variety of areas.
From an investment standpoint, take a look at both Bitcoin and altcoins. (However, keep in mind that this isn’t investment advice and should only be used as a single, preliminary step for your own thorough research.)
IM Academy explains Bitcoin and altcoins’ pros and cons – including their risks – to help you make a more informed decision.
What is Bitcoin? IM Academy Explains
Bitcoin is a decentralized digital currency that works independently of any central authority or oversight by governments or banks. Instead, it’s based on peer-to-peer (P2P) software and cryptography.
All bitcoin transactions are recorded in a public ledger, and copies are kept on servers throughout the world.
Bitcoins are also generated through a mining process by which transactions are created.
The subject can be a bit overwhelming, but mining, in its most basic form, is a method of extraction.
Computational algorithms are used to solve a difficult mathematical puzzle in this extraction process. And as a result, when one puzzle is completed, one mining block is mined, and the user or programmer is rewarded.
This reward comes in the form of a Bitcoin.
IM Academy provides much more detailed information, but let’s go ahead and take a brief look at the edge Bitcoin currently has over altcoins.
Bitcoin Pros
Bitcoin’s key advantage is its widespread acceptance and use. It is by far the most widely accepted form of a cryptocurrency payment. Many financial institutions embrace Bitcoin, and it’s undoubtedly the cryptocurrency the majority of people have heard about.
Plus, Bitcoin has a large user base that is committed to its long-term development, and it contains a large pool of miners who keep the network running and secure.
Bitcoin Cons
Although Bitcoin offers numerous advantages, it is not without its flaws. Bitcoin’s price has risen from around $20,000 in December 2017 to about $68,521 in November 2021. The price is very high, but many analysts wonder if it can rise much further than it already has. Others are convinced that a crash or price correction is imminent that could drop the price of Bitcoin dramatically.
Another key setback that is becoming more apparent is the Bitcoin transaction fees. One of the major selling features of Bitcoin was its ultra-low transaction costs. But, because miners can select which transactions to execute, they will prefer those with larger fees.
Finally, many individuals and organizations complain about the high energy consumption needed for Bitcoin mining. Many environmentally conscious users perceive this as a threat to the environment and are advocating for a more eco-friendly option.
What is Altcoin? IM Academy Explains
Altcoins are basically cryptocurrencies that aren’t Bitcoin.
“Alt” is short for alternative, which means alternative coins to Bitcoin. Altcoins share some traits with Bitcoin, but they differ in other aspects. Some altcoins, for example, use a different consensus technique to generate blocks or validate transactions.
Alternatively, they differentiate themselves from Bitcoin by offering new or enhanced features, such as smart contracts or low-price volatility.
There are around 10,000 cryptocurrencies as of November 2021. Altcoins accounted for approximately 60% of the total crypto market cap, according to CoinMarketCap. Some of the top Altcoins in the market are Ethereum, Ripple (XRP), Bitcoin Cash, Litecoin, EOS, Stellar Lumens, Monero, and Dash.
Altcoin Pros
One of the primary perks of altcoins is that they, by definition, serve as a substitute for Bitcoin. If the all-powerful Bitcoin were ever to collapse, there are altcoins to fall back on.
And several altcoins serve a specific purpose. For example, Po.et (POE) is based on a platform that allows content creators and publishers to simply manage their licensing.
Many cryptocurrencies differ from Bitcoin in terms of systems and processes and therefore have more room to grow in the future. For example, Ethereum and XRP are two different cryptocurrencies that have been popularly adopted and used in a variety of businesses.
Altcoins Cons
The primary downside of altcoins is their lack of acceptability and exposure. While Ethereum, Bitcoin Cash, and XRP have widespread acceptance, others do not.
Furthermore, many altcoins have a limited number of outlets and ways to use them because they haven’t been popularized to the same extent that Bitcoin has.
High Reward/High Risk
Engaging with either Bitcoin or Altcoins is not something to be taken lightly. The technology is still in its early stages, and each project faces numerous hurdles in order to fulfill its objectives.
These hurdles include technological (can the crypto developers deliver on their commitments?), regulatory (will they be permitted to do so?), and competitive (are other developers attempting to do the same thing and even better?).
That said, those who want to engage with cryptocurrencies should avoid spending more than they can afford to lose, and you should only do so after thorough research into the coin you want to invest in.
The less research you do, the greater the risk of your investment.
IM Academy’s Final Take on Bitcoin and Altcoins
Keep in mind that while Bitcoin is the largest cryptocurrency and has the most backing, that does not indicate that altcoins are not as good for investment.
To learn more about crypto and digital currency markets, IM Academy offers its extensive DCX Academy program. Participants learn how to vet altcoin and Bitcoin movements to recognize the most promising potential investments. Go to IM Academy now to learn more, and develop the skills that you need to engage with these two exciting coins!
Learn more about IM Academy: https://www.youtube.com/watch?v=-591-ywDd9Q
Note: IM Academy is an educational forum for analyzing, learning, and discussing general and generic information related to markets and strategies. IM Academy does not provide personalized recommendations or views as to whether a market approach is suited to the financial needs of a specific individual. Before deciding to participate in the forex or other markets, you should carefully consider your objectives, level of experience, and risk. Most importantly, do not risk money you cannot afford to lose. You should take independent financial advice from a professional in connection with, or independent of, research and verify any information you find on the IM Academy website.
Cryptocurrency-dominated investments may expose you to great risk. Cryptocurrencies are not FDIC-insured, are often not exchangeable for other commodities, are subject to price volatility, and little to no regulation. Speculating in cryptocurrencies should only be performed by sophisticated investors that are prepared to lose their entire investment.
