In today’s world, there are several ways that an individual can grow their savings or money, to be precise. There are several ways to invest one’s money.
There are several types of cryptocurrencies, and bitcoin is one of the most used cryptocurrencies that has also given rise to other cryptocurrencies. Two of these are 1. Stablecoins and 2. Altcoins.
Stablecoins vs Altcoins
The difference between stablecoins and altcoins is that stablecoins do not experience a spike in their values as they are restrained to an external budget of funds. On the other hand, altcoins are more likely to experience a volatile spike in their values. Although, stablecoins are a type of altcoins.
The cryptocurrency whose price is tethered to a cryptocurrency or fiat money or for trading commodities like valuable metals is known as stablecoins.
They are the alternate coins. The characteristic features of altcoins are somewhat similar to bitcoins, but there are some features of altcoins that are different from bitcoins.
|Parameters of Comparison||Stablecoins||Altcoins|
|Meaning||The cryptocurrency whose price is tethered to a cryptocurrency or fiat money or for trading commodities like valuable metals is known as stablecoins.||All the cryptocurrencies other than bitcoin are known are altcoins.|
|Subtypes||Fiat-collateralized stablecoins, Commodity-collateralized stablecoins, Crypto-collateralized stablecoins, Non-collateralized stablecoins etc.||Ethereum, Binance Coin, Thether, Cardano, Polkadot, XRP, Uniswap, THETA, Litecoin, Ripple, Dogecoin, Stellar Lumens etc.|
|Advantages||They make several financial processes quicker. They charge lower fees. They are borderless. They offer complete translucency. New features can be added to them according to the changing requirements.||They primarily serve as an option to Bitcoin. Their function is unique. They offer several solutions. The transactional fees are less.|
|Disadvantages||Third-party is necessary. They require external audits. The return on investment is less.||Less exposure, Limited usage, They have volatile values.|
What are Stablecoins?
The cryptocurrency whose price is tethered to a cryptocurrency or fiat money or for trading commodities like valuable metals is known as stablecoins. Stablecoins were introduced in early 2015.
A stablecoin’s value is collateralized by another cryptocurrency if it is a cryptocurrency-backed stablecoin. If the stablecoins are fiat-backed, then their value is completely based on the value of the currency that backs them.
The stablecoins that are not asset-backed are also known as seigniorage-style stablecoins or non-collateralized stablecoins. They use a Seigniorage Shares System.
Several advantages of stablecoins include faster financial processes, lower fees, borderless system, complete transparency, it is easily programmable, and new changes can be added according to the changing requirements. Although some disadvantages include the necessity of third-party, the requirement of external audits, less return on investment etc.
What are Altcoins?
All the cryptocurrencies other than bitcoin are known are altcoins. The Namecoin is considered the first form of altcoins that was introduced in April 2011.
Any cryptocurrency that is not a bitcoin is contemplated as an altcoin. Although altcoins were introduced after Bitcoin. The first altcoin, Namecoin, has several characteristics.
Altcoins provide capabilities in addendum like smart contracts and thus distinguish themselves from bitcoins. The limitations that are possessed by Bitcoin are overcome by altcoins.
Several advantages of altcoins include unique functionality, fewer transaction fees, provide solutions etc. Although some disadvantages include less exposure, limited usage, volatile values etc.
Main Differences Between Stablecoins and Altcoins
- The two main types of stablecoins are asset-backed stablecoins and stablecoins that are not asset-backed. On the other hand, the types of altcoins include Dogecoin, Peercoin, Litecoin, Ethereum, Monero, Cardano etc.
- The stablecoins are not that prone to experience a spike in their values. On the other hand, altcoins are more likely to experience a spike in their values.
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