Stablecoin vs Altcoin vs Bitcoin: How do they differ? What are their strengths?

Digital currencies, blockchain-based assets, and cryptocurrency have taken the world of investment by storm with Bitcoin outperforming gold 196 times since its time of public adoption. From creating millionaires in a fickle of time to providing next-level transactions across the border, cryptocurrency seems to have arrived at the right time and in the right era.

However, despite immense involvement and growth, information concerning what cryptocurrency truly contains is rare amongst the populace. To non-crypto enthusiasts, cryptocurrency is Bitcoin and Bitcoin is cryptocurrency. Although this is also one of the truths as Bitcoin was the pioneering asset that set the path for other existing projects, there is more to what the eyes see.

This article will discuss what cryptocurrency truly is, differentiate stablecoins, altcoins, and Bitcoin, and discuss each of their strengths.

What is Bitcoin?

Starting with Bitcoin, a decentralized currency created by the wonderful ideologies of the anonymous Satoshi Nakamoto. Set out on a whitepaper in January 2009, Bitcoin is said to be the pioneer currency that started all that cryptocurrency and the blockchain are today.

It began the era of decentralization, a financial system entirely away from the government or centralized administrator where users can send and receive bitcoins through a peer-to-peer network without requiring middlemen. The transactions are verified by the blockchain, a network bridge through a secured, recorders, and time-stamped distributed and synchronized ledger.

What is its strength?

Bitcoin arrived at a time when the centralized financial organizations were being unfair to the citizens and was widely adopted as it promises a financial system that offers lower transaction fees, financial liberty, and speed; all away from a decentralized authority.

How does it differ from fiat currencies?

Unlike regular banking that presents paper showing how its purchasing ability is, Bitcoin is abstract as it cannot be touched, seen, but represented as a value. Hence, it cannot be issued by a bank or government and is yet to be recognized as an official legal tender in most countries, with an exception of El Salvador.

What is an altcoin?

Despite its corresponding drawbacks, Bitcoin creation has trigged the development of over 10,000 cryptocurrency tokens using similar technology — this is how altcoins came to be.

Alternative digital coins of Bitcoin, shortly called altcoins are cryptocurrency coins launched after the success and wide adoption of Bitcoin.

What is its strength?

They rely on the same working mechanism of Bitcoin but seek to improve the drawbacks of what Bitcoin suffered. Hence, an altcoin seeks to create purpose and offer better benefits than Bitcoin and its preceding altcoins.

Logically, every other coin asides from Bitcoin is an altcoin, however, Financial experts exclude Ethereum and Litecoin from the discussions.

What are stablecoins?

Stablecoins are fiat-like cryptocurrencies. They differ from Bitcoin and altcoin because of their stability. A profound feature of Bitcoin and altcoin is their volatility, they obey the highs and lows of the price chart, making them risky as investors can gain and lose all immediately.

What is its strength?

To mitigate their loss, stablecoins are used to store their profits as they are stable. This stability is due to their value being pegged to Fiat currencies in a 1:1. Stable coins like USDT and USDC are legged to the dollar bill and will remain the same value as a dollar bill. They are the bridge between cryptocurrency and fiat currencies.