Bitcoin (BTC), which came to public attention in 2009, still dominates much of the conversation about cryptocurrency. Many newbies to the world of crypto come into it with an awareness of Bitcoin and not much else.
But as of 2021, there are now more than 8,000 crypto coins in existence, each with different trading volumes and market capitalizations. If you intend to explore a new type of investment in 2022 and enter the crypto market, you might be overwhelmed by the many choices you have aside from BTC.
Are any of these alternative coins, or “altcoins,” actually worth pursuing? Or should you play it safe and go with Bitcoin, Ethereum (ETH), or another mainstream coin with strong brand recognition? To help inform your choice, here’s a briefer on how other altcoins are shaping up against Bitcoin—and why some of the promising altcoins, like Monero (XMR), are worth considering.
Bitcoin vs. Other Cryptocurrencies: An Evolving Market for Crypto Traders
With a market cap of more than USD 800 billion, a user base that totals more than 100 million, and up to 270,000 daily transactions, it’s safe to say that BTC is currently the king of the market.
Due to the breadth of its developer ecosystem, its liquidity compared to other crypto coins, and the largesse of its business network, many first-time traders see it as the most appealing option among other cryptocurrencies. Knowing that crypto is inherently risky due to its speculative nature, choosing a widely recognized and widely traded coin like BTC seems like the safest crypto-related decision that one can make.
But the crypto market has evolved greatly since the introduction of its progenitor, and coins that had nothing more than niche followings a few years ago have since emerged as dark horses. Both new and seasoned traders have begun exploring altcoins which not only have smaller market caps, but also possess technical features that Bitcoin lacks.
One example is Monero, a privacy token with more exhaustive security and anonymization features than BTC. Other key advantages of XMR are that it currently has the third-largest developer base next to BTC and ETH, that it has an unlimited supply of coins, and that there’s a wealth of free and open-sourced technology around it. Because of all these factors, it won’t be hard to find resources explaining how the altcoin works or a free Monero wallet to safely store your coins.
In summary, although popularity, availability, and market capitalization are definitely important factors to pay attention to with regard to the success of a coin, they aren’t the only factors that a trader should consider. In that sense, Bitcoin isn’t the only viable coin to invest in. It may be just as good a decision for a trader to explore an altcoin that matches their needs better.
Bitcoin vs. Altcoins: Some Important Considerations
If you’re still having doubts about whether to pool your resources behind BTC or one of its altcoin counterparts, here are some considerations that you should make:
The Coin’s Features
No two coins are alike in terms of the systems they utilize and the features that they showcase. In your study of BTC versus other coins, you’ll find out just how varied cryptocurrencies are in terms of the technology that makes them tick. Choose a coin that sports a menu of features that are appealing to you such as, for example, full anonymization or a low barrier of entry for mining.
The Coin’s Ease of Use
You might assume that only popular coins like BTC and ETH guarantee ease of exchange. However, there are several altcoins out there that have intuitive and user-friendly interfaces. Look for alternative coins whose exchanges are noted to be friendly towards beginners. The easier it is to acclimatize to the exchange, and the gentler the learning curve is for a beginner trader like you, the more fulfilling your crypto journey will be.
The Coin’s Liquidity
Another factor to pay close attention to is the coin’s liquidity. You’ll want to invest in a coin that’s driven by a healthy trading volume and that has a large enough pool of investors with legitimate assets. Markets as big as those of BTC and ETH have good enough liquidity and are therefore good options as far as liquidity is concerned. However, you might find the same quality in a smaller altcoin market with passionate and engaged traders.
The Coin’s Staying Power
Perhaps the most important consideration that you should make is whether the coin has staying power and whether you can depend on it to be a part of your long-term financial future. The crypto market will continue to evolve in ways that aren’t always easy to predict, and even a power player like BTC isn’t guaranteed to sit at the top forever. Whether you choose BTC or an altcoin like XMR, consider your coin’s potential in terms of expansiveness and innovation. The best investment will reflect your financial interests and hold its own in the long term.
One of the most amazing things about the world of cryptocurrency is that it’s evolving by the minute. For sure, it’s a more complex and exciting world than when it comprised only Bitcoin. If you intend to invest in crypto this coming 2022, be sure to read widely about market developments that involve not only BTC, but other up-and-coming altcoins as well.