A popular cliché structure follows the form of “there’s X, then there’s everything else.” This saying is used to illustrate that one thing is so much more important or above and beyond its competitors that you only need to break the group into two categories, the one thing that is so important and the rest. This is the best way of understanding Bitcoin vs. altcoins. 

Bitcoin is the original and by far the most popular and well-known cryptocurrency. Just like Coke or Kleenex, people often use the term bitcoin to refer to any form of cryptocurrency. For investors, however, popularity and renown does not necessarily make Bitcoin a better investment. There are pros and cons to investing in Bitcoin and altcoins. Here is what you need to know about these forms of cryptocurrency and what the differences are for investors. 

History of Bitcoin and Altcoins

The history of Bitcoin begins in 2008. That year, the domain name bitcoin.org was registered.  That was followed by a paper called Bitcoin: A Peer-to-Peer Electronic Cash System that was circulated in the cryptography world. The paper was written by an author named Satoshi Nakamoto. The following year, the mysterious Nakamoto – whose identity or identities are still not known – created the “genesis block”. This is the first block in the chain of Bitcoin. 

From there, Bitcoin was “mined” by people who wanted to acquire the digital currency. Being  awarded with Bitcoin involves computers working to solve incredibly complex equations. Mining is basically a lottery process for acquiring each of the 21 million Bitcoin that will ultimately be released. As of 2020, approximately 18.5 million Bitcoins have been mined. 

To say that Bitcoin has been a bit of a roller coaster for investors is quite the understatement. In 2011, when Bitcoin started taking off, it was valued at about $0.30 per Bitcoin. Just 6 years later, the price hit an all-time high of almost $20,000. In between, the daily and even hourly fluctuations have been incredible. Bitcoin is famed for turning teenagers into millionaires but it has also cost others their life savings. 

When Bitcoin started to achieve some level of success, people looked at it and started to think of ways to compete. They took the basic concept of blockchain-based cryptocurrency and started tweaking it in different ways to hopefully improve on or ultimately kill Bitcoin. As a group, these “alt”ernatives” to Bit“coin” became known as “altcoin”. 

Each altcoin promises something slightly different in its attempt to lure users away from Bitcoin. Altcoins can generally be categorized in a few separate groups. Mining-based altcoins are the most similar to Bitcoin and most of the top altcoins for investors fall in this category. The most popular mining-based altcoins are Ethereum and Litecoin. 

Stablecoin is an altcoin that is backed by some sort of currency making it less volatile than Bitcoin. Tether, backed by the US dollar is a good example of this. Security token altcoins are linked directly to companies and work like stock.  Utility token altcoins are sold to fund cryptocurrency development generally and can later be redeemed for a good or service. 

The Pros and Cons of Investing Bitcoin

Although Bitcoin gets the most press, it doesn’t necessarily make it the best option for all investors. Here are the pros and cons of investing in Bitcoin. 

Pros 

The pros of investing in Bitcoin start with simple name recognition, the popularity of the cryptocurrency and the “big win” appeal of the price fluctuations. The popularity makes Bitcoin a good investment because it is likely to be around for longer than many altcoins. Also, even though it may not be the ideal cryptocurrency to achieve eventual mainstream acceptance and use, it is certainly the closest to achieving that status due to its popularity. 

The other big draw for Bitcoin is the opportunity that some risk-loving, aggressive investors love: the chance to make millions in a flash. Especially for day traders of Bitcoin, the market’s volatility is a real asset for those hoping to make a large amount of money in a very short period.  

Cons 

On the other hand, the cons of investing in Bitcoin include the high cost of entry and the “big loss” concerns of the price fluctuations. To the midpoint of 2020, the price of a single Bitcoin has been between a low of around $5,000 to a high of around $10,000 with the price generally staying around $8,000-9,000. That is very expensive for one unity so if you are not mining Bitcoin yourself or you didn’t get in much earlier, it is an expensive investment to start. 

The other downside is actually the same as the second upside above. There is great risk involved in the Bitcoin market. Although it could make you rich, it could also bankrupt you. If you are an investor who is at all risk-averse or conservative, Bitcoin is not the best cryptocurrency option. 

The Pros and Cons of Investing Altcoins

Investing in each individual altcoin has pros and cons, as does investing in altcoins as a category. Here are the pros and cons of investing in altcoins.

Pros

This day trading article from Cove Markets notes that altcoins have a variety of strengths and uses. The first pro is less volatility. You might enjoy the Las Vegas-like aspect of trading Bitcoin, but you can find that same thrill in some altcoins.  Many altcoins are much more stable investments. Stablecoins, as the name suggests, are much more stable coins backed by an asset. These security tokens are not all that different from trading on a stock exchange.

You can also find altcoins that trade at a much lower price than Bitcoin lowering the barrier to entry so you can be more comfortable dabbling in investing or trading without risking huge sums of money. Some altcoins have all kinds of different functions, features, and long-term goals, so you should be able to find an altcoin that fits both your investment strategy and vision of the future of cryptocurrency. 

Cons 

You can find plenty of reasons against investing in individual altcoins.  Always do your research on the specific cryptocurrency you are considering and pay attention to the two main issues associated with the overarching market. First, although Bitcoin and many of the altcoins are definitely here to stay, there are also many that are not. Altcoins can come and go in a fairly abrupt fashion so investing in the wrong one can make your investment disappear. 

Similarly, there are just not many brand names in altcoins yet. Although many altcoins may have great potential, right now they just aren’t in the same ballpark as Bitcoin in terms of name recognition and market share. For the greatest safety, you may want to invest in the biggest names in altcoins such as the ones mentioned above. 

Conclusion 

Hopefully, you now have a better understanding of Bitcoin vs altcoin. There are pros and cons to investing in each.  Which one you choose is up to your personal investing style and risk tolerance. The cryptocurrency market is currently a case of Bitcoin then everything else, chances are that will someday change as certain altcoins start to breakout.