Bitcoin is the most popular cryptocurrency in the world by a mile. But with so much competition, how do we know that it will remain on top? The answer lies in the differences between Bitcoin and any of its competitors—which are significant enough to ensure that other coins don’t threaten Bitcoin’s position as king.
What is Bitcoin?
Bitcoin has been around since 2009 when it was created by Satoshi Nakamoto (an anonymous developer). Bitcoin, the first cryptocurrency and best-known of all altcoins, is a cryptocurrency that runs on a network of computers worldwide.
The currency can be transferred between individuals by means of a digital signature verified by other users, creating a public ledger known as the blockchain. A decentralized network of computers keeps track of all transactions within this public ledger, preventing double-spending and fraud.
What Are Altcoins?
Altcoins are cryptocurrencies that aren’t Bitcoin. Altcoins can be thought of as the equivalent of the “forks” in the software world, where an existing project is copied and modified to create something new.
In the cryptocurrency world, altcoins exist primarily to experiment with new features or create a cryptocurrency blockchain with different parameters (such as block size), but they are not created to be used as currency units like Bitcoin is.
The most popular alternative to bitcoin is Litecoin, but there are over 400 altcoins available in total. The reason for this variety is because altcoins provide a different set of trading pairs (BTC/USDT or CQT USDT) to choose from. There’s no need to trade them back into your native currency; all you have to do to find the right pair is look at how much money you have and what type of currency it is.
What Differentiates Bitcoin From Other Projects
Network and Recognizability
One major difference between bitcoin and other networks is its recognition. Bitcoin has become widely recognized as value and can be used to purchase gift cards or make donations to major charities. It’s already accepted at some hotels and even some small businesses.
Bitcoin is also interesting because of its network effect—the more people who use it, the more useful it becomes for everyone else on the network. As more people join, the total number of transactions conducted on the network increases, increasing transaction fees along with it (which then decreases again when fewer people use bitcoin).
High Level of Reliability
What differentiates Bitcoin from other projects is the high level of reliability. The Bitcoin network has been running continuously for 8 years, and is currently processing more transactions per second than all other cryptocurrencies combined. There have been no significant security breaches, and all attempts to attack the network have failed.
This is a stark contrast to other cryptocurrencies, which are plagued with problems including severe security vulnerabilities, compromised wallets, and an inability to scale to support transaction volumes as large as those of the Bitcoin network.
Antifragility
What differentiates Bitcoin from other projects is its antifragility. Antifragility is the opposite of fragility, and it refers to systems that gain strength in adversity. In a way, this phenomenon has always been true for Bitcoin—when bad things happen, the price goes up, so people want to buy more because they see it as a bargain.
This also applies to good things happening: when the price goes up from $200 to $600, people are more inclined to sell their bitcoins because they see them as valuable and don’t mind taking some profit. The result is a self-correcting market that doesn’t rely on outside forces for its security or value.
Do Altcoins Create Inflation for Bitcoin?
Bitcoin is actually a deflationary currency, so altcoins aren’t really going against its nature. Bitcoins are only mined at a set rate, but there’s no limit on the amount of altcoins that can be created.
However, there are some important ways in which altcoins do not create inflation for Bitcoin.
First, each altcoin has its own blockchain; a new altcoin doesn’t automatically alter Bitcoin’s blockchain.
Second, the fact that a lot of people are working to create more altcoins will eventually make them appear less valuable since there are so many to choose from.
Third, many people who buy into an altcoin do so just to get free money.
Even if they have to pay for their initial investment in mining equipment or contracts, eventually that investment pays off and all subsequent coins earned are for free.
Why Won’t a Superior Altcoin Overtake Bitcoin?
Bitcoin is the first and most popular cryptocurrency. It has a large network effect, as well as a larger amount of liquidity than any other altcoin (although this may not be true for long). Bitcoin also has more user adoption, developer adoption and merchant adoption than any other altcoin.
Therefore, there is no reason why an altcoin would overtake Bitcoin in terms of market cap or value because it is impossible to compete with something that already has such a big head start in all categories except perhaps price volatility.
Differences between Bitcoin and Altcoins
The main difference between a Bitcoin and an altcoin is that there’s no central authority behind Bitcoin, whereas altcoins rely on a central authority or developers/founders who control how they operate.
Another key difference between these two types of coins is security; while Bitcoin transactions are very secure and cannot be reversed (since they’re recorded on blockchain), this isn’t necessarily true for all altcoins.
While some might offer high levels of security, others may not keep transaction records very securely. Meaning that someone could potentially manipulate them later on down the line if they had access to them.
Another way in which you can tell whether something is an altcoin or not: look at its price. If it has a high value compared with other currencies like US dollars then it’s likely an asset-backed currency like USDT rather than anything else. But if its value goes up significantly without any tangible backing behind it then chances are good that we’re talking about something else entirely here.
