Should I Invest In Bitcoin or Altcoins
It has been said repeatedly that one should never put their money into something that they do not fully comprehend. This is why I’m going to walk you through how digital currencies came to be, what bitcoin is, and what altcoins are. why you should invest in bitcoin or other cryptocurrencies, and their relationship.
Before the creation of money, people would trade products and services using salt, livestock, and cereals as means of payment. Metal artifacts were used as money for trade as early as 5000 B.C. Originally introduced in 1690, paper currency in the United States was a representation of bills of credit or IOUs.(google.com)
As the world is moving gradually to the digital economy, it gave birth to the concept of a cryptocurrency coin that has existed for quite some time. It was first brought to light with the creation of bitcoin in 2009.
what is a coin?
It is a sort of digital money that is frequently native to its blockchain, and it holds value in addition to acting as a means of exchange. This type of coin is called a crypto coin. Coins only exist inside a digital economic network as a means of trade or a store of value. Most blockchain networks work as a decentralized, shared database that keeps track of and verifies each transaction. Relax and Permit me to explain what is meant by the term “Bitcoin.”
According to oxford languages, Bitcoin is a type of digital currency in which a record of transactions is maintained and new units of currency are generated by the computational solution of mathematical problems, and which operates independently of a central bank. let me break this down, bitcoin simply means a type of digital currency that doesn’t have a central bank and keeps a record of all transactions. New units of currency are made by solving mathematical problems with computers using blockchain technology. Do you get it now?
“Bitcoin has become a popular investment for speculators”
Investopedia also revealed that “Bitcoin is a digital asset and payment system with a market capitalization of around $747.34 billion as of April 12, 2022. It is considered by many to be one of the most successful digital currencies ever created.”
For what purposes do Bitcoins exist?
Bitcoin was developed in other to facilitate online money transfer, the idea behind the digital currency was to create a decentralized payment system that was functionally equivalent to conventional cash (fiat currency).
Given your knowledge of Bitcoin from the explanations above, it will be simpler for you to comprehend what Altcoin means.
What is Altcoin?
Alternative coins are simply referred to as “altcoins.”
Altcoins are generally defined as all cryptocurrencies other than Bitcoin (BTC). However, some people consider altcoins to be all cryptocurrencies other than Bitcoin and Ethereum (ETH) because most cryptocurrencies are forked from one of the two. These forks generally have more than one reason for occurring. Most of the time, When paths split or developers disagreed, there’s usually birth of new coin. Whenever a team of engineers has strong disagreements with one another, they usually fork off and create their own cryptocurrency.
Many alternative coins, like ether on Ethereum’s blockchain, are put to practical use by being paid as transaction fees. To compete with Bitcoin, several programmers have constructed forks of Bitcoin and recently emerged, such as Bitcoin Cash.
The famous meme coin, Dogecoin, was reportedly established as a joke. It split off from Litecoin, which had split off from Bitcoin in 2011. Regardless of the motivation for its inception, it was ultimately conceived as a means of electronic payment.
Types of Altcoin
- Payment Token
- Security Tokens
- Utility Tokens
- Meme Coins
- Government Tokens
Altcoins: The Pros and Cons
Benefits of Alternative Coins Explained
- Altcoins are sometimes referred to be “improved copies” of the original coin from which they were formed because of their focus on addressing perceived flaws in the original.
- Altcoins that have greater usefulness, like Ethereum’s ether, have a higher chance of surviving since they can be put to use.
- Investors have access to a broad range of alternative coins, each of which serves a distinct purpose in the cryptocurrency ecosystem.
Altcoin’s Downsides Explained
- Other cryptocurrencies like Litecoin and Dogecoin have a far smaller potential investor base than Bitcoin. Since May of 2021, Bitcoin’s share in the worldwide cryptocurrency market has maintained a steady 40%.
- With fewer people buying and selling altcoins, the market is notoriously light on cash.
- Investing in the right coin might be difficult because of the ambiguity around the various coins and their use cases.
- There are a number of “dead” altcoins that were unsuccessful and lost money for investors.
In other words, which alternative cryptocurrency should you put your money into?
Your personal finances, investment objectives, risk appetite, and market conditions all play a role in determining the best cryptocurrency to invest in. If you need assistance deciding, a financial counselor may be of great assistance.
Top 3 AltCoins?
Ethereum, USD Coin, and Tether are the three most popular alternative cryptocurrencies in terms of market capitalization (USDT).
Should I Invest In Bitcoin or Altcoins?
Which cryptocurrency is superior is a debatable topic since it depends on the individual’s investment objectives, risk tolerance, and personal values. Before making any bitcoin purchases, you should consult a qualified financial adviser. Because it is not always simple to differentiate between many Altcoins and the use cases that are associated with each of them, making judgments on investments is even more difficult and complex.
This article is not a suggestion by Ibraheem Abdul-rasaq to invest in cryptocurrencies or other Initial Coin Offerings (“ICOs”) due to the high level of risk and speculation involved. Financial choices are complex and should never be made without first consulting a specialist. Wishing you the best.
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Because it is not always simple to differentiate between many Altcoins and the use cases that are associated with each of them, making judgments on investments is even more difficult and complex.