Home CryptoCurrency News We Know Bitcoin, What is All the Fuss About Altcoins?

We Know Bitcoin, What is All the Fuss About Altcoins?

Many people have heard about Bitcoin, it is practically impossible not to have heard about an asset that delivered more than 1500% gains in 2017. In fact, Bitcoin has delivered almost 3000% gains in the last three years. However, what many people may not quite understand is that Bitcoin didn’t spring out of a vacuum. Bitcoin is a cryptocurrency and cryptocurrencies are one of the many applications of blockchain technology.

Nonetheless, Bitcoin is still making headlines as it continues to drive conversations around the need for decentralized money that is free of government control. There’s also an unending argument on whether Bitcoin is money or an asset – yet, the fact that its value rises and falls in relation to demand and supply suggests that there’s an opportunity to profit from its price difference.

If you have invested (or tried investing) in cryptocurrencies, you’ll most likely have heard about Altcoins. If you go deeper into the process of getting to know cryptocurrencies, you’ll discover that there are more than 1000 altcoins in the market. This piece seeks to provide a straightforward non-technical guide to understand altcoins as a sector of the general cryptocurrency markets.

What are Altcoins?

Altcoins is coined out of the words “alternatives to Bitcoin” and they emerged out of the insatiable human need to make constant and never-ending improvements to products, services, and systems. Altcoins generally try to fix some of the limitations/shortcomings of Bitcoin: for instance, Monero is a more anonymous version of Bitcoin, Ripple is a cheaper means of moving money across borders and Bitcoin cash seeks to keep to original idea ideals of Satoshi Nakamoto for Bitcoin.

Altcoins can differ from Bitcoin along many fundamental lines. For instance, some altcoins have a different economic model to Bitcoin – case in point, Ethereum. Some altcoins have a fundamentally different distribution model – some altcoins are experimenting with proof of stake instead of the proof of work distribution model of Bitcoin. Some altcoins require that developers learn new programming language while some altcoins are built on existing languages. Interestingly, not all altcoins are created for a monetary/financial target, some altcoins are created for industry-specific use cases such as a tokenization of the supply chain or blockchain-based ID management systems.

Here’s how Bitcoin’s bullish case affect Altcoins

It is somewhat hard to predict how a bullish run in Bitcoin could influence the general altcoin market. However, it is important to note that many people who want to buy altcoins usually start off by buying Bitcoin since there’s practically no market for buying altcoins directly with fiat currencies. Likewise, investors who want to liquidate their altcoin positions often need to liquidate to BTC first before they can convert it to fiat. Hence, the altcoin market is massively dependent on the performance of Bitcoin.

However, when Bitcoin is in a bullish uptrend, it could potentially weaken the demand for altcoins as investors choose to put their funds in the brand recognition of Bitcoin. Hence, a rallying Bitcoin could cause the price of other altcoins to fall. Interestingly, a Bitcoin rally could trigger a commensurate rally in altcoins especially when the cryptocurrency industry is witnessing a new wave of market adoption.

Here’s how Bitcoin’s bearish case affect Altcoins

Conversely, when Bitcoin is suffering a decline, the general altcoin industry could stagnate as altcoin investors choose to stay on the sidelines in the hopes of getting direction from Bitcoin. In fact, when Bitcoin sneezes, the general altcoin market could catch a serious cold, because a seemingly minor decline in the price of Bitcoin can be amplified into exponential losses in the prices of altcoins.

However, in some circumstances, a weakness in Bitcoin could cause the value of altcoins to soar. investors could seek higher better returns in altcoins; thereby causing the value of some altcoins to rise in contrast to the weakness in Bitcoin.

Carlos Teodoro
Cryptocurrency enthusiast and everything they represent, Carlos is responsible for writing articles, creating images and belongs to the Crypto Economy team since 2017. He is also in charge of the commercial department, social networks and the revision of translations. Carlos continues to train every day to become an expert in the blockchain.
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