Whether you’re interested in crypto or not, you’ve probably heard of Bitcoin, the world’s most popular cryptocurrency. Its value has skyrocketed over the past decade, and many people consider it an extremely valuable asset today.
But what exactly is Bitcoin, and how does it differ from altcoins and stablecoins? Let’s break down the key attributes of each, as well as how they’re similar.
What Is Bitcoin?
Bitcoin is the world’s most valuable crypto coin at the moment. Like all other cryptos, it is a decentralized digital currency and currently stands as the first known crypto in circulation. It was created in 2009 after the recession by Satoshi Nakamoto. However, many believe this is a pseudonym used to hide the founder’s real identity.
We don’t have much information about the founder, but Satoshi authored the Bitcoin white paper and developed its original reference implementation.
In July 2010, not long after Bitcoin’s creation, one BTC was worth anywhere from $.0008 to $.08. Less than a year later, it jumped from $1 to $26.90. It experienced highs and lows over the next few years, reaching a peak of over a thousand dollars in 2013, but then falling back to just over 300 dollars by the start of 2015. Though the price was increasing, Bitcoin remained pretty much unknown to most for the first few years of its existence until the crypto boom in 2017.
Before the year 2020, you may have heard of crypto, but it wasn’t unusual if you hadn’t. The crypto industry was still unknown to most people, but that was all about to change. People began investing in Bitcoin for several reasons: the decentralized nature of the currency, the increasing market cap of the industry, and fears of macroeconomic instability.
This increased investment in Bitcoin took its price to heights no one could have predicted. By the end of the year, one coin was worth twenty-seven thousand dollars. Since then, Bitcoin has certainly seen its fair share of highs and lows, but it still remains the world’s most popular and valuable cryptocurrency.
So, we now know about the most popular cryptocurrency out there, but what about the rest?
What Are Altcoins?
People use the term “altcoin” to refer to any cryptocurrency that isn’t Bitcoin. This is mainly because Bitcoin is so incredibly well-known, while many other cryptocurrencies are not. Additionally, Bitcoin was the first currency of its kind and still stands as the default crypto known by those who don’t even have an interest in the crypto industry. On top of this, other cryptos were only developed after Bitcoin’s success was evident, so they’re sort of seen as a sequel to the original.
In short, it’s a portmanteau of “alternative” and “coin” given that people see altcoins as alternatives to Bitcoin. You could consider the term “altcoin” to be a bit of a generalization, given it’s used to categorize thousands upon thousands of crypto coins. But most altcoins use Bitcoin’s blockchain ecosystem as a template for their own, so Bitcoin remains the first decentralized digital currency with this revolutionary blockchain structure.
Currently, the world’s most valuable altcoin is Ethereum or ETH. Developed in 2015, Ethereum’s creation stemmed from its creator’s disdain for centralized systems. Vitalik Buterin decided that decentralization was the future when World of Warcraft’s developers nerfed his favorite in-game character. He developed Ethereum some years later, and the coin saw a few rises and falls between then and 2020.
Then, like Bitcoin, Ethereum saw an exponential rise in value in 2020 and now stands as the world’s priciest altcoin. Several other altcoins have seen success over the past few years, each developing its own blockchain ecosystem with different goals, aims, and features. But these levels of success aren’t the standard for all altcoins.
Many people develop their own altcoins, only to realize that they aren’t going anywhere in value anytime soon. There are also a lot of scam coins or sh**coins out there. People usually develop these phony coins to reel in investors and then jump ship once the currency has reached a decent price. Squidcoin stands as an example of this kind of rug pull scheme.
However, there are still plenty of altcoins out there doing incredibly well. Polkadot, Ripple, Tezos, etc., are some of the viable coins that would make for a wise investment option, but it’s always important to do your research first!
Now, let’s discuss the last of this term trio: stablecoins.
What Are Stablecoins?
As the name suggests, stablecoins are cryptocurrencies designed to be considerably more stable in value than traditional crypto coins. This is because they are backed by something called a reserve asset. These are external assets controlled by monetary authorities, such as traditional currencies like the United States dollar.
Unlike a typical crypto coin, you won’t typically see any huge price hikes or crashes with stablecoins. If you’re betting on investing in crypto and seeing it soar, stablecoins probably aren’t the right fit for you. The point of stablecoins is to allow users to own decentralized currency and remain anonymous without worrying about fluctuations in value.
Some stablecoins, such as Tether, are pegged to the value of the US dollar. Therefore, one Tether (USDT) is equal to one American dollar. This is known as a fiat-collateralized stablecoin since the American dollar is used as collateral for the issue of Tether.
As you can see in the graph above from CoinMarketCap, Tether’s price fluctuations are minor compared to those you’d see for typical cryptocurrencies. Even the prominent peak you see towards the right-hand side of the graph equates to an increase of just $0.0118. Other examples of fiat-collateralized stablecoins are DAI and TerraUSD.
So, if you want to spend cryptocurrency and benefit from its secure and decentralized nature, stablecoins could be an excellent option for you.
Do Your Research Before You Buy Bitcoins and Altcoins
Before spending any money on crypto coins, it’s essential to know which type of coin serves which function so that you can align your needs with that of a particular coin. Once you’re aware of which coins serve which purpose, you’ll be able to decide better which specific currency is right for you. Don’t worry; you have plenty to choose from!
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