Whether you’re into 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 today consider it an extremely valuable asset.
But what exactly is Bitcoin and how does it differ from Altcoins and Stablecoins? Let’s break down the key attributes of each and how they are similar.
What is bitcoin
Bitcoin is currently the most valuable crypto coin in the world. Like all other cryptos, it is a decentralized digital currency and is currently the first known crypto in circulation. It was founded by Satoshi Nakamoto in 2009 after the recession. However, many believe that this is a pseudonym used to hide the true identity of the founder.
We don’t have a lot of information about the founder, but Satoshi wrote the Bitcoin whitepaper and developed its original reference implementation.
In July 2010, not long after Bitcoin was founded, a BTC was worth between $ 0.0008 and $ 0.08. Less than a year later, it jumped from $ 1 to $ 26.90. It experienced ups and downs over the next few years, peaking at over a thousand dollars in 2013, but then falling back to just over $ 300 by early 2015. Although the price rose, Bitcoin remained pretty unknown to most for the first few years of its existence until the crypto boom in 2017.
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You may have heard of crypto by 2020, but it wasn’t uncommon if you haven’t. The crypto industry was still unknown to most of the people, but that was about to change. People started investing in Bitcoin for a number of reasons: the decentralized nature of the currency, the industry’s rising market cap, and fears of macroeconomic instability.
This increased investment in Bitcoin has driven the price to highs no one could have predicted. At the end of the year, a coin was worth $ 27,000. Since then, Bitcoin has certainly seen its fair share of ups and downs, but it still remains the most popular and valuable cryptocurrency in the world.
So now we 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 is not 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 is still considered the standard crypto, known by those who don’t even have an interest in the crypto industry. In addition, other cryptos were only developed after Bitcoin’s success was evident, so they are viewed as a continuation of the original, so to speak.
In short, it is a portmanteau of “alternative” and “coin” as people see altcoins as alternatives to bitcoin. You could take the term “altcoin” as a generalization as it is used to categorize thousands and thousands of crypto coins. But most of the altcoins use Bitcoin’s blockchain ecosystem as their own template, so Bitcoin remains the first decentralized digital currency with this revolutionary blockchain structure.
Currently, the most valuable altcoin in the world is Ethereum, or ETH. Ethereum was developed in 2015 and was born out of its creator’s disdain for centralized systems. Vitalik Buterin decided that decentralization was the future when the creators of World of Warcraft nerfed his favorite character in the game. He developed Ethereum a few years later, and the coin experienced some ups and downs between then and 2020.
Back then, like Bitcoin, Ethereum saw an exponential increase in value in 2020 and is now considered the most expensive altcoin in the world. Several other altcoins have been successful in recent years, each developing their own blockchain ecosystem with different goals, objectives, and functions. But these success levels are not the standard for all altcoins.
Lots of people develop their own altcoins only to find that they will be of no value anytime soon. There are also many fraudulent coins or token coins out there. People usually develop these fake coins to attract investors and then get off the ship once the currency hits a decent price. Squidcoin is an example of this type of rug-pull scheme.
However, there are still plenty of altcoins that are doing incredibly well. Polkadot, Ripple, Tezos, etc. are some of the viable coins that would make a smart investment option, but it’s always important to do your research first!
Now let’s discuss the last part of this trio of terms: stablecoins.
What are stablecoins?
As the name suggests, stablecoins are cryptocurrencies that are much more stable in value than conventional cryptocoins. This is because they are covered by what is known as a currency reserve. These are external assets that are controlled by monetary authorities, such as traditional currencies such as the US dollar.
Unlike a typical crypto coin, you usually won’t see any major price hikes or crashes with stablecoins. If you bet on investing in crypto and watch it rise, stablecoins are likely not the right choice for you. The whole point of stablecoins is to allow users to own a decentralized currency and remain anonymous without having to worry about fluctuations in value.
Some stablecoins like Tether are pegged to the value of the US dollar. Therefore, one tether (USDT) is equivalent to one American dollar. This is known as a fiat-backed stablecoin because the American dollar is used as collateral for the issuance of tether.
As you can see in CoinMarketCap’s graph above, Tether’s price swings are small compared to what you see for typical cryptocurrencies. Even the striking high you see on the right-hand side of the chart is an increase of just $ 0.0118. Other examples of fiat-backed stablecoins are DAI and TerraUSD.
So, if you want to spend cryptocurrency and take advantage of its secure and decentralized nature, stablecoins could be an excellent option for you.
Before you buy bitcoins and altcoins, do some research
Before spending any money on crypto coins, it is important to know what type of coin performs which function so that you can match your needs to that of a particular coin. Once you know which coins serve which purpose, you can better decide which currency is right for you. Do not worry; You have a wide choice!
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About the author
Katie Rees
(131 published articles)
Katie is a staff writer at MUO with experience writing content in the travel and mental health fields. She has a particular interest in Samsung and has therefore chosen to focus on Android in her position at MUO. She has written pieces for IMNOTABARISTA, Tourmeric and Vocal in the past, including one of her favorite pieces about staying positive and strong in difficult times, which can be found at the link above. Outside of her work life, Katie loves growing plants, cooking and practicing yoga.
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