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Bitcoin has been the crypto of choice for a long time and has maintained its position as the largest cryptocurrency by market capitalization. However, the crypto market comprises several thousand other digital assets – alternative cryptocurrencies known as “altcoins.’ Although Bitcoin is still the most popular asset and is largely considered the primary standard, other assets are strong enough to compete and offer users distinct advantages absent on the Bitcoin network.

There are several altcoins with strong market momentum continuously compared with Bitcoin, especially for investment and earning purposes. These assets offer holders unique functions such as fast transaction speeds via scalable layer 2 blockchains, staking opportunities, AI-powered crypto market analysis, and a vibrant community. Despite these perks, crypto investors may have difficulty choosing which cryptocurrency investment is right. Making the right choice requires understanding the differences between both options.

Core Differences between Bitcoin and Altcoins

1. Adoption and Utility: Bitcoin adoption is widespread, with the asset commonly used as a store of value among people who want to protect their funds from inflation. Bitcoin’s high market capitalization easily makes it the most liquid asset and contributes significantly to its stability.

On the other hand, the adoption rates and use cases of altcoins vary significantly. For instance, Monero and Zcash are privacy-focused cryptocurrencies, while XRP is focused on transaction speed and scalability. Also, the Ethereum blockchain is known for its popularization of smart contracts, which support the decentralized finance (DeFi) industry.

1. Market Position: Bitcoin is the first major decentralized cryptocurrency and has dominated the crypto space by consistently commanding a larger market share than others. Bitcoin’s dominance, according to data from CoinMarketCap, is currently at 59.5%, with Ether (ETH), the second largest crypto by market cap, at a distant 10.2%.

While Bitcoin has more stability and is described by investors as “digital gold,” altcoins cover a range of cryptocurrencies with varying levels of liquidity and stability. For instance, ETH is the most popular network for the DeFi sector and is applied as the underlying framework for several assets. Other tokens, like Solana (SOL), are also quite popular and used in DeFi, especially because of their high scalability and impressive throughput. While BTC processes about 6 to 8 transactions per second (TPS), Solana is much higher, at 400 TPS.

1. Volatility: Nearly all decentralized cryptocurrencies are volatile. However, Bitcoin is considered less volatile than altcoins for several reasons. These include strong adoption by institutions and corporate entities, along with a large market capitalization that helps Bitcoin withstand extreme price fluctuations.

On the other hand, altcoins can be very speculative, especially with new projects and low-cap assets. While some can gain significantly in short periods, others can crash without warning.

Advantages of Bitcoin Investments

1. Longevity: Bitcoin has stood the test of time and has mostly returned annual profits to investors. Although BTC suffers its fair share of crashes, it is still the world’s most valuable crypto, much more valuable than every other individual altcoin. Today, several hedge funds, private institutions, and publicly traded companies have added Bitcoin to their portfolios. At least 20 states in the US have introduced legislation to establish Bitcoin reserves.
2. Security: The Bitcoin network sets a high standard for security and decentralization and has withstood nearly every attempt at a breach. In addition, Bitcoin has yet to suffer a downtime since 2013, a much better situation than several altcoin networks that have gone offline repeatedly. Generally, Bitcoin is less susceptible to hacks and technological vulnerabilities than most other altcoins.
3. Institutional Adoption: Bitcoin has enjoyed significant institutional adoption, especially through futures contracts and exchange-traded funds (ETFs). Since liquidity is high, institutional entities can buy and sell large volumes of Bitcoin without significantly affecting the market price.

Advantages of Altcoin Investments

1. Opportunity to Diversify: Entering positions in the altcoin market provides investors the opportunity to diversify their portfolio via exposure to different sectors in the industry. Investors can take up positions in tokens focused on gaming, DeFi, or NFTs, which reduces dependence on Bitcoin’s performance and mitigates risks posed by volatility.
2. Unique Use Cases: Acquiring altcoins allows investors the opportunity to join varying communities focused on new or groundbreaking technology beyond possibilities on the Bitcoin blockchain. For instance, investing in Chainlink (LINK) exposes investors to advancements in blockchain interoperability, which could be advantageous to enthusiasts who believe in the sector’s long-term growth.
3. Growth Potential: Altcoins have the potential for significant growth, leading to much larger yields than Bitcoin. Early investors in today’s largest altcoins, such as Ethereum and Solana, received impressive gains as the networks grew and their rates of adoption increased. Although altcoins are more risky, the potential rewards are remarkable.

Should You Invest in Altcoins Over Bitcoin?

Whether or not altcoin investments should take precedence over Bitcoin depends on a few factors. People who prefer stability and long-term security might prefer Bitcoin because of its established market position and high institutional adoption. On the other hand, people with high tolerance who are seeking large returns may prefer altcoins since the opportunities they offer are much more lucrative.

Conclusion

The best option for crypto investment is to diversify a portfolio such that it contains a spread that covers Bitcoin and several altcoins. The altcoins can be chosen based on several factors, including market cap, sector, and adoption. However, the ultimate decision depends on the individual, their risk level, and the overall investment goal.