Here’s the deal; the world was introduced to cryptocurrency in 2009, in the form of Bitcoin. Since then, Bitcoin has gained nothing but popularity (price too, I’ll come to that later). If you ask around, you’ll find that almost everyone knows or at least has heard about Bitcoin.
Now, did you know that there are other forms of cryptocurrencies apart from Bitcoin? They are called Altcoins. Again, Altcoins are not currencies of their own. Any other cryptocurrency that is not Bitcoin, is known as an altcoin. But that is just the superficial way to understand as to what Altcoins really are. I’m going to dive in, make sure you’re not left behind.
What Altcoins are
So check this out; Altcoins are an alternative to Bitcoin. Basically, those who do not want to use Bitcoin due to certain reasons choose Altcoins.
How Altcoins are made
To understand this, we need to understand the basics of Bitcoin first. When Bitcoin was introduced as an open software everything was transparent with those using it. Then, people decided to make an alternative to Bitcoin using the same software formula and change it up a bit; this resulted in a slightly different end product. For instance, this is how the altcoin Bitcash was created.
Why people do not want to use Bitcoin
Fact: people have no patience. They want things to be done quickly. They want to be done with their work beforehand so that they can relax or get something else done. This is the fundamental reason as to why Altcoins were created. Be warned Bitcoin lovers, you might not like all these points and you might actually end up ranting on how amazing Bitcoin is in the comments.
Since Bitcoin has an open system of working and eliminates the need for intermediaries, it is difficult to predict many things.
As we already know, the entire concept of Bitcoin is to make sure that there is no need for us to go to the banks and get our monetary work done. Also, Bitcoin eliminates the need for any currencies and provides everyone throughout the world with a standard currency. However, due to the lack of banks, it’s difficult to predict whether Bitcoin’s value will rise or fall.
Therefore, some of the reasons that led to the creation of Altcoins are:
Analysts are unable to understand as to why the prices of Bitcoin change so drastically which ends up making things difficult for them when they’re asked to predict the future of the cryptocurrency. They also say that Bitcoin’s lack of a set value contributes to the fact that its future can’t be predicted.
Not a Product, nor Money
Since time immemorial, we’ve been used to the concept of money that we can hold, touch, see or feel. Only in the recent past have we managed to shift to an online transaction up until which we would always go to banks to deposit or collect money. True; the world is advancing in many things as the days pass by but there are people who don’t want to see figures on a screen. When you apply this logic to Bitcoin, people don’t consider it as a product nor as money. Why?
People feel unsafe and are highly unsure of giving their money to someone or something that is obtained through mining and does not have a government.
Fact: the concept of mining Bitcoins is done by solving complex mathematical equations that have to be solved by miners. That’s how you get bitcoin. And honestly, people aren’t really comfortable with that.
Note: Bitcoin has been in existence for almost 10 years now. Many countries around the world have taken regulatory approaches toward cryptocurrencies. And how many countries do you think, have legalized it? Not many. Why?
That’s because neither the government nor the people are comfortable with giving up their power and money, respectively. But, just because it hasn’t been legalized, does not mean that Bitcoin has been banned in those countries.
Prone to Illegal Activity
Let’s not forget that there is no government body to control or monitor Bitcoin, which is why it’s the perfect breeding ground for illegal activities. Since there are no such things as taxes or interests people can send money overseas without following any standard regulations. And that is why a lot of terrorist groups invest a lot of money in Bitcoin.
Another thing to keep in mind is the fact that, Bitcoin can be hacked; it is difficult but possible though.
An Unregulated Space
Just imagine something to be going wrong when you are sending some money over to your friends, and it does not reach them. What will you do? Naturally, you’ll try and call up the bank and let them know about the issue. But when you’re transferring cryptocurrency like Bitcoin to your friend and the same situation occurs, there is nothing that you can do about it. All that you can is wait. You can’t call up anyone to know the status of your transaction nor will you be able to do anything about it. Simply because it is an unregulated space.
Why Altcoins are Falling Faster than Bitcoin
Now that we’re aware of the difference between Altcoins and Bitcoin, it becomes easier for us to understand as to why Altcoins tend to fall faster then Bitcoins. Altcoins are falling faster than Bitcoin and there are a few reasons for it.
The same Programme
Since Altcoins are formed using the same programme as Bitcoin’s they have a higher chance of falling. That’s because Altcoins still need miners to contribute to their network which makes them depending on Bitcoin.
The same Blockchain
The blockchain that Altcoins rely on – though a little different from that of Bitcoin’s blockchain – is still similar. To put it simply, Altcoins are created by diverging from the Bitcoin consensus rules (these are the basic Bitcoin rules). Hence, this makes it difficult for Altcoins to be able to survive on their own.
These are some of the reasons as to why Altcoins are falling faster than Bitcoins.
About the Author: Ana Farr is the Community Manager at ecommerce-platforms.com and Unblock.net. She is a matcha and mindfulness enthusiast and loves to chat about the implications of Blockchain technology.
Disclaimer: This article should not be taken as, and is not intended to provide any investment advice and is for educational purposes only. As of the time posting the writers may or may not have holdings in some of the coins or tokens they cover. Please conduct your own thorough research before investing in any cryptocurrency as all investments contain risk.