Bitcoins and altcoins are the main pillars on which the whole cryptocurrency industry stands. Bitcoin is the major cryptocurrency in the market and all other cryptocurrencies belong to the altcoin category. In the early stages of the emergence of cryptocurrency, Bitcoin used to dominate the industry. But now, many other profitable cryptocurrencies have emerged and investors are flocking into the altcoin industry more than before.
This guide will throw light on the major features of Bitcoin and altcoins, the key differences between the two, and the advantages and disadvantages of investing in Bitcoin as well as altcoins.
Major Features Of Bitcoin
The following unique features of Bitcoin have made it an attractive and sought-after asset among investors.
- Limited Supply: The total supply of the bitcoin is capped at 21 million. This cannot be changed without the consensus of the majority of stakeholders, which is not an easy process. This limited supply or perceived scarcity of the asset is a major feature that upholds the value of Bitcoin against other major cryptocurrencies.
- Immutable: Immutability refers to the inability of an entity to erase any transaction done on the Bitcoin blockchain. Each block is linked to another block and no block stays isolated. The blockchain acts as a public ledger where all transactions are recorded. All these transactions are verified by the node operators. Immutability is essential for maintaining the reliability of Bitcoins.
- Decentralization: The decentralization of the network is a quality that Bitcoin has followed from the very beginning. Any validation on the Bitcoin blockchain network requires unanimous consent from the majority of stakeholders as opposed to traditional finances that depend on a central authority for decision-making.
- Security: Bitcoin is a highly secure asset. Bitcoin mining is possible only after solving complex mathematical problems that help in validating transactions. Not everybody can get into the architecture and try and mutate its basic structure due to the tight security measures in vogue.
Major Features Of Altcoins
Altcoins also share most of the features of bitcoin such as decentralization and security. Other features of altcoins are explained in this section.
- Diverse Use Cases: Altcoins are used not only by the finance sector but also by other sectors such as healthcare, gaming, gambling, etc.
- Innovation: Many innovative altcoins have been launched recently. The new technology and innovative efforts used by altcoins are good enough to change the face of the cryptocurrency industry as a whole.
- Potential for Growth: Altcoins have a high potential for growth if the concerned project gains popularity and traction in the future.
- Fast and Cost-efficient Transaction: Most altcoins are less costly than Bitcoin and transactions are executed much faster than transactions on the Bitcoin network.
The Advantages And Disadvantages Of Bitcoin
Bitcoin is a decentralized financial instrument that provides many advantages to its users. The token also has many disadvantages. The major advantages and disadvantages of Bitcoins are discussed in the table below.
| Advantages | Disadvantages |
| Bitcoin is a widely accepted and recognized digital coin. | Like all cryptocurrencies, Bitcoins are also susceptible to price volatility and other market risks. |
| Bitcoin is easy to trade and use compared to some altcoins. | Unlike some altcoins that offer healthcare services, gaming, etc, Bitcoin has limited functionality as a mere decentralized currency. |
| Bitcoin has high value due to its limited supply and scarcity in the market. | The mining of Bitcoin is highly energy-intensive. |
| Bitcoins are less risky due to their large market capitalization and long-standing history. | In the case of Bitcoins, there are many uncertainties regarding their future due to the possibility of technical flaws. |
The Advantages And Disadvantages Of Altcoins
You can refer to the table given below to learn about the advantages and disadvantages of altcoins.
| Advantages | Disadvantages |
| Altcoins have high transaction speed and lower transaction fees. | Many people are still unaware of altcoins and their specific use cases. |
| They have a higher rate of survivability. | Altcoins carry a higher risk even if they have good market capitalization. |
| Investors can choose the coins as per their requirements. | The future of altcoins and details about which coin will rise or fall in the future is uncertain and unpredictable. |
| Altcoins are less volatile than Bitcoin. | Investment decisions based on Altcoins are difficult to make due to the large variety of altcoins in circulation. |
| Altcoins provide a high return on investment (ROI) compared to Bitcoin. | As there are fewer investors and less activity regarding many altcoins, they can have inadequate liquidity. |
Key Differences Between Bitcoin And Altcoins
Bitcoins and altcoins are unavoidable entities of the decentralized finance system. However, there are some key differences between the two, which we will discuss in detail here.
- Longevity: As you know, Bitcoin has been in the market for a long. However, many altcoins perished without being able to stand the test of time. Bitcoin is relatively on the safer side when it comes to longevity.
- Value: Bitcoin is highly valuable in terms of market capitalization where as many of the altcoins in the market are not as valuable as it is.
- Volatility: Due to its longevity and high value, Bitcoin is much less volatile compared to most altcoins.
- Market Dominance: Bitcoin is still the dominant player in the cryptocurrency market. On the other hand, most of the altcoins are much less significant than Bitcoin and have comparatively less market share.
- Technology and Functionality: Bitcoin primarily focuses on providing its users with secure, stable decentralized financial transactions. The technology used by Bitcoin even now is the same as the one used from its beginning. However, new altcoins are innovating in technology to bring in functionalities beyond simple money transactions such as gaming.
The Bottom Line
Bitcoins and altcoins have significance in the overall cryptocurrency market. However, they are different mainly due to their functionality. Investing in Bitcoin is always a good option. However, you should also consider the different altcoins before investing. Whatever coin you invest in, take care to thoroughly study its volatility and general market trends before confirming your investment decisions.
