Bitcoin or altcoins? What to choose?
Bitcoin or altcoins? In this article, we finally answer this question!
Bitcoin or altcoins?
Today, for many beginners who have come to the world of cryptocurrencies and want to make money, the question arises what to buy: bitcoin or altcoins? Indeed, for a person who does not understand the basic concepts of the market, it is extremely important to know the basic rules of diversification and risk management in order not to lose all their funds and not be disappointed in the cryptocurrency market.
What is bitcoin and what are its benefits?
To understand what investment strategy to follow, it is worth analyzing what bitcoin is. Why do you need bitcoin at all, how exactly can you make money on investments in this asset? At the same time, it is important to know what altcoins are, why they are needed and whether they bring profit.
Bitcoin is a digital currency. The main advantages of bitcoin include decentralization, anonymity, transparency, a limited number of coins.
Positive properties of bitcoin
In simple words, bitcoin does not have a single center of control and functioning. It is controlled by millions of computers around the world that are connected to its network. Thanks to the blockchain that runs Bitcoin, it is anonymous. This means that no one will be able to find out that it was you who transferred the assets to a specific address. But, on the other hand, the bitcoin blockchain is open and transparent. Each user will be able to log in and check absolutely any transaction within the network. However, he will not be able to find out that a certain bitcoin wallet is assigned to you.
The main plus of bitcoin is its limited emission (issuance of coins). This suggests that, even if you really want to, the number of bitcoins will never physically overcome the mark of 21,000,000 coins. Therefore, when demand increases, supply cannot increase, and therefore the price will only increase.
All these properties make bitcoin an attractive investment asset. The price of “digital gold” will only grow over the years. This means that if you buy bitcoin today, you will most likely be able to make a profit in a few years.
Bitcoin final valuation
As a result, we can say that bitcoin is the most popular, recognizable and reliable cryptocurrency in terms of investment. And, indeed, for beginners, this is the first and most optimal option for investing money. In the future, bitcoin can give a good profit, but this will have to wait.
But what if you want to earn money right now? In this matter, it is best to consider altcoins.
What are altcoins and how can they be dangerous?
Altcoin is the common name for all other cryptocurrencies besides bitcoin. This term comes from the words “alternative” and “coin” (from the English coin – a coin). This name appeared among netizens. They decided to conditionally separate the very first cryptocurrency – bitcoin – from the rest, which began to appear later.
All altcoins have one interesting property for making money in the cryptocurrency market. They can rise in price very sharply and quickly and thus give huge percentages of profit. But with the same probability they can quickly and dramatically lose more than 50 or even 100 percent of their value. It depends on the quality of the project that produces this or that altcoin. Therefore, buying any cryptocurrency is always a risk.
Are altcoins a scam?
As a rule, altcoins are created for specific purposes and endowed with different functions. Not every one of them has value and benefit to society. Many altcoins are created only for the purpose of enriching the creators. They absolutely do not carry useful functions or pretend that they bring something innovative. Although in reality it is not. Most of the altcoins are scams (or deceptions) of gullible users who will invest all their money in them, and then lose them very quickly, as the price will fall or practically will not rise.
Are there useful altcoins?
Yes, a lot of altcoin cryptocurrencies have been created that are really useful. There is a great demand for them, which means that the price can rise a lot and give a good profit in a short or medium term.
For example, useful altcoins include Ethereum . This coin is the second most popular after bitcoin. The blockchain it runs on is unique because it makes it possible to create other coins or projects on it. In essence, the Ethereum network gives life to projects that cannot or do not want to create their own blockchain for their coins. Also, the Ethereum network is the progenitor of the smart contract function, which is extremely useful in the digital world. Because of this demand, people are ready to buy a coin and are interested in Ethereum . Therefore, investing in such a strong project can be justified.
Final assessment of altcoins
What conclusion can be drawn from altcoins? Investing in altcoins is always risky. However, such risks can be justified by really large percentages of profit in a short or medium period of time. There are many really useful altcoins that bring innovation to the industry. However, there are many scam projects and their altcoins, the price of which may not rise, because the altcoin is not in demand (because there are no useful features / innovations behind it).
That is why the most important thing is to choose the right altcoin (and hence the project) in which you will invest your money.
What is the best strategy to follow?
What to choose in this case? Bitcoin or altcoins ? What is the best strategy to follow?
First of all, you should adhere to the rule of asset diversification. Diversification is separation. To protect yourself from unnecessary losses, you need to buy both bitcoin and altcoins in the correct percentage. If you invest in only one asset, there is a high chance of losing all your funds. If your funds are split into different coins and one of the assets becomes unprofitable, you will have other assets to recover and increase your capital. And the percentage of losses will not be so tangible.
The answer to the question of what to choose – bitcoin or altcoins , is not so difficult.
You can choose anything, the main thing is to follow 2 simple rules:
1) adhere to the diversification rule so as not to lose all your money due to one failure;
2) remember that investing in altcoins is a very risky strategy, since there are many scam projects among them. Therefore, before investing in any cryptocurrency, you need to understand it. You can read reviews, chat with real people who are also interested in a particular altcoin and its project. It is worth doing a little research on a project that offers you the purchase of tokens. You can also ask for advice from experienced traders in the cryptocurrency market, that is, weigh the pros and cons and invest a small percentage of your funds in the asset you have chosen.
When it comes to any investment (and it doesn’t even matter whether it is a cryptocurrency or the stock market), it is important to remember about the risks. You should never take rash actions with a “hot head” that can lead to financial losses. By following these simple rules, you can become a successful investor!