🪙 Bitcoin vs Altcoins: What's the difference and how to build your strategy?

If you're just starting in the crypto world, the first two words you'll hear are Bitcoin (BTC) and altcoins. Understanding the difference between them is the first step to not getting lost and knowing where to invest your money wisely.

1. Definition of concepts

  • Bitcoin: It's the "leader." The first digital currency in the world, launched by Satoshi Nakamoto in 2009. It's the benchmark for decentralized digital currencies.

  • Altcoins: Derived from the words "Alternative" and "Coin." In short, any digital currency other than Bitcoin is considered an "altcoin." Examples include: Ethereum (ETH), Solana (SOL), and Ripple (XRP).

2. Bitcoin vs Altcoins: What's the difference?

Instead of complex tables, here's the gist:

  • Symbolism and nickname

    • Bitcoin: Called "digital gold" and is the market leader. It is considered a safe haven and the most stable asset.

    • Altcoins: Similar to shares of emerging tech companies. Ethereum, for example, is referred to as "digital silver."

  • Issuance quantity (scarcity)

    • Bitcoin: Capped at only 21 million coins, which makes its value high due to its scarcity.

    • Altcoins: Vary from project to project. Some have unlimited issuance, while others have a "burn" mechanism to reduce the supply.

  • Profits and volatility

    • Bitcoin: It is the market indicator; its volatility is considered lower compared to altcoins.

    • Altcoins: "High risk, high reward." Their prices move wildly, which attracts investors looking for quick profits.

  • Purpose and function

    • Bitcoin: Primarily focuses on being a store of value and a means of payment.

    • Altcoins: Go beyond the idea of payment; used in smart contracts, NFTs, and decentralized finance (DeFi).

3. Why do we need altcoins?

It didn't come out of nowhere; it came to solve problems or add features that aren't present in Bitcoin:

  • Technical development: Such as faster transactions and lower fees (e.g., Litecoin).

  • Scalability (Smart Contracts): To run applications (DApps) on the blockchain (e.g., Ethereum, Solana).

  • Specific purposes: Such as high privacy or stablecoins pegged to the dollar.

4. Tips before you invest (DYOR)

  • Dominance: Monitor Bitcoin's market share. If Bitcoin's dominance drops, it's often the start of "Altcoin Season".

  • Volatility risks: Altcoins can boost your wallet, but they can also lead to significant losses in a short time. Don't gamble with money you can't afford to lose.

  • Delisting risks: The likelihood of an altcoin project failing or being removed from exchanges is much higher than Bitcoin.

💡 Summary: Bitcoin is the backbone of the market, and altcoins are the engines that make the blockchain world diverse and evolving. The secret is in "portfolio distribution" according to your risk tolerance!