The alternative cryptocurrencies to Bitcoins are termed as “Altcoins” in the world of cryptocurrencies, all of which are token based. So, let us see why Altcoins were developed, how they differ from good old FIAT money.
The Concept Behind Altcoins
When a new service succeeds, then doors for potential entrants in the market are opened respectfully, and this was the opportunity that was availed by Altcoin developers who believed that the market could use a new cryptocurrency with a better interface, exchange rate, and more developed programming. This is when currencies like Ethereum, Litecoin, etc., started emerging and went on to create a global network of decentralized currencies.
If every incoming currency followed the same concept that Bitcoins did, then there would be absolutely no point entering the market considering how far Bitcoins had gone and that nobody will be willing to invest in something with such indefinite prospects of return. This is essentially why the newer currencies claim to be based on technologies which are, on paper, superior to Bitcoins and can actually change the financial network of organizational structures all over the world.
Some currencies like Ethereum have multiple ends to them, including the currency (Ether), the ledger where the transactions take place and are stored (Ethereum Blockchain), the codes executed upon fulfillment of a condition (Smart contracts), etc. These concepts allow for the expansion of the virtual currency market far beyond what it initially stood for, and these new and secure networks could be the reorganizing businesses need in the near future.
Benefits of Investing in Altcoins
As of today, Bitcoin is swooping at an all-time high of around $5680 and no one can see a potential end to this complete dominance in the market as far as this magnificent rate is concerned. If the Bitcoin is that high, then why would anyone be interested in any other currency?
The answer is uncertainty and affordability. Since the entire application of Bitcoins is decentralized and there is no particular group you can target in the event of a mishap, such a huge sum of money being given up might not be a very good idea, especially if you do not have enough in the first place. Altcoins are relatively new compared to Bitcoins and are well within the affordability range of people, and some of them have shown incredible progress in the past few years, further garnering the attention of investors. The benefits of Altcoins are:
- Faster Transaction Speed
The Bitcoin network was never designed to sustain the immense amount of traffic and transactions that it carries out, and even the blocks of data in the network are never misplaced or discarded, it takes about 10-15 minutes for a new block of data to be added on the network. Altcoins do not need that kind of extra time because the traffic on their network is not nearly as much and they are not dealing with transferring such expensive currencies
- Better Design
The initial design of Bitcoin will be its structure for the future because the network cannot stop now for maintenance and upgrading. Altcoins are designed keeping in mind the areas where the Bitcoin design failed, so the invention of these new areas of exchange will attract more people because the chances of them losing their investment to technical flaws will be minimal.
It is always wise to step in the world of a new exchange market from the bottom, so that even in the event of a loss the sum of money on the line is not enough to make you regret your decision. Altcoins are, overall, a lot cheaper than Bitcoins and things are bound to stay that way for the upcoming years because Bitcoin has established an irreplaceable customer backing in the market.
- Better Relative Returns
Bitcoins are indeed soaring high, but how long will it be before the currency finally meets its saturation point and begins to fall? Nobody has an answer to the question, but no one can say with certainty that this won’t happen either. Relative to Bitcoins, other currencies might offer a greater percentage increase in profit because the more money pooled into them the more they can be of use to the purchasers.
Comparison with FIAT Money
If you are confused because of all these technical terminologies used in the article, do not worry because Fiat money is simply the money you use in your regular life. It is basically the paper money and coins which have a value assigned to them by the government of a country, and the value fluctuates in a market of its own called the Forex market (Foreign Exchange). All countries in the world use fiat money as legal tender at one level, and rumors have been heard about how some countries like Sweden are planning to move towards a cashless society run solely on credit and, surprisingly, cryptocurrencies.
Will a market with Altcoins available as legal tender be better than one which uses standard Fiat money?
The answer to this question can only be given once a governance structure indeed does decide to introduce cryptocurrencies legally into its system. The major trouble in doing so is the fluctuating values of Altcoins, which makes them very unreliable, especially because no government reflationary or inflationary action can be taken since the causes affecting these currencies are pretty much unknown.
Finally, these currencies are not as secure because they have easy access from the internet and regardless of efforts made to make them more secure, third parties are feared to have access to them. However, there is no denying that Bitcoin and Altcoins will go on to play a significant role in our future.