Altcoins are any crypto but Bitcoin, as bitcoin continues to grow in market capitalization, these altcoins are growing along, gradually chipping off bitcoins market share. The interesting fact is that Bitcoin is still the main leader on this market, and it is not a rare case that ups and downs related to this crypto affects the values of most other cryptocurrencies as well.
Notably the second biggest crypto, Ethereum, which has managed to take a huge chunk of the entire market share (19%), while the other altcoins are gradually showing a glimpse of threat against bitcoin long term dominance. Before you decide between investing in either bitcoin or altcoins, you will first need to understand the rate at which these altcoins are gaining momentum against a bitcoin and why.
Bitcoin is, without doubt, the most prominent cryptocurrency, and since its creation, Bitcoin has risen to become a very significant financial commodity. The current price of this unit is around $40,000. Also, frequent changes in values are quite common when it comes to BTC and other crypto as well.
The year 2021 was especially turbulent. The value started to increase significantly by the end of 2020, and then it managed to reach a new peak price of over $63k in 2021. People had a chance to see how big investors can influence the market since there was a case where Elon Musk managed to first cause a huge increase in value, and then a drop of over 30% during a period of several months.
It is the world’s biggest cryptocurrency in market capitalization, user base, and popularity. It operates using software built on blockchain technology, a decentralized database that runs on more than 15,000 computers (nodes) worldwide.
Advantages of Investing in Bitcoin
Bitcoin has over other altcoins in adoption. It enjoys broad acceptance globally, is the most widely accepted virtual payment method, and has a sizable user base committed to its long-term growth.
Finally, it contains a sizable pool of miners who guard the network and assure its security.
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Another strong argument for choosing Bitcoin over other options is the fact that the mining process is similar to 21 million units. Therefore, chances are much bigger for this option to reach higher stability at some point then those options with unlimited mining processes.
Disadvantages of Investing in Bitcoin
One flaw that is becoming more apparent is the Bitcoin transaction fees. At its early stage, what made bitcoin stand out was its extremely cheap transaction costs, one of its key selling features. But as time passed, the price of transactions gradually increased because miners had the freedom to select which transactions to execute; they naturally would prefer those with more significant fees.
Also, there is a growing concern about the massive energy consumption required for Bitcoin mining; they perceive this as a threat to our environment and would prefer to employ a more ‘eco-friendly’ option.
It is essential for the who world to invest more in new solutions related to energy sources. Besides the expensive electricity, we can notice huge increase in prices of hardware that is used in the mining process, like graphics cards.
You have to be aware of official regulations as well. It seems like most of the countries are looking for the right way to implement Bitcoin into current monetary flows. However, if some powerful economy decides to make it illegal, you can expect a drop in price.
Any coin or token that is not Bitcoin is inferred as altcoins. This word stems from Bitcoin’s being the first cryptocurrency, and all others are alternative coins. Thousands of alternative cryptocurrencies are accessible for investment, with more being created every month. Some altcoins managed to build a niche for themselves, such as Ethereum, XRP, Bitcoin Cash, EOS, Stellar Lumens, Litecoin, Monero, Dash, and more.
Advantages of Investing in Altcoins
There may not be as valuable as bitcoin, but one thing is sure you can make a lot of money investing in an altcoin. While they are very volatile, you will be smiling at the bank if you take advantage of the price margin during its pump and deep.
You must be sure of the token before investing; investing in the wrong coin is dangerous.
Many cryptocurrencies serve different unique purposes. Ethereum, for instance, offers smart contracts for transactions.
Finally, many cryptocurrencies vary from Bitcoin in terms of systems and procedures and therefore have more room to grow in the future. For example, XRP and Ethereum are two distinct cryptocurrencies that have been extensively embraced and used in various businesses.
The main advantage is that you might be able to find an incredibly cheap option and sell it for a much higher price later. The best example for that is Dogecoin. Those who bought it a couple of years ago made a huge profit during 2021.
Disadvantages of Investing in Altcoins
Altcoins’ most significant problem is their relative lack of publicity and acceptability. While Ethereum, XRP, and Bitcoin Cash have widespread support, others just do not. Furthermore, many cryptocurrencies have insufficient outlets and methods to utilize them because they haven’t been popularized to the same level as Bitcoin.
The stability for such a huge market with over 3,000 different cryptocurrencies is not realistic since it is challenging to reach proper stability. Keep in mind that only those crypto that is offering some advanced features and solutions, like Ether and smart contracts, can be able to rival the most popular option on the market, which is Bitcoin.
Just because Bitcoin is the most significant currency in terms of money cap does not mean there are no investment opportunities in other altcoins. Consider diversifying your investment portfolio by acquiring some Bitcoin and other alternative cryptocurrencies. The critical consideration is to reduce your risk and make an informed purchase.
There are risks similar to those when you are trading with stocks. Also, this market is even more volatile than the market of shares. Therefore, there is plenty of space for mistakes and financial losses if you start trading without a good plan and objectives.
Therefore, the best solution is to try to be more flexible and choose Bitcoin along with some other options that have a good potential to reach higher values during 2024. Also, you should keep up with the most recent news and changes of prices so you can make the right moves.
There are two main approaches to trading with crypto, day trading and hodling. The benefit of day trading is related to high volatility where you can make a profit by investing or selling crypto at the right moment every day. On the other hand, you can simply invest in some option and wait for a higher price.