The corporate world is adapting to digital transformation, empowered by revolutionary tech advancements. As the world awaits the official launch of Metaverse, companies, entrepreneurs, and investors are currently focusing on various types of cryptocurrencies, including Altcoin and Stablecoin.
Both Altcoin and Stablecoin originated from other prominent cryptocurrencies. In this post, you will learn about what each of these coins is and the differences between them.
What is an Altcoin?
Altcoin, also known as Alternative Coin, encompasses various cryptocurrencies except for Bitcoin and Ethereum. The cryptocurrency developer can design Altcoin based on a unique perspective with distinctive features. This helps each Altcoin different than other crypto coins available out there.
The architecture of Altcoin is peer-to-peer network-based. The process involves solving complex problems while carrying out economic web transactions. While Altcoins may be vulnerable to attacks in some instances, you can easily detect any attempts of penetration. There are mainly six types of alternative coins, and here is a quick review of each of them.
- With governance-based altcoins, you can access DAO, allowing you to bid on proposals created by cryptocurrencies. You enjoy full decision-making authority without any interference from a superior command or central authority.
- Memecoins enjoy exceptional attention in the market due to user interest by the likes of Elon Musk and other celebrities. Dogecoin and Shiba Inu as some of the prominent examples of Memecoins. However, beware of the market volatility as the rise and fall of these altcoins’ prices is entirely spontaneous.
- You can create proof-of-work altcoins by solving mathematical problems. Some of the most common examples of proof-of-work altcoins are Zcash and Litecoin.
- Pre-mined altcoins are precisely the opposite of proof-of-work altcoins, meaning you can mine them without having to solve mathematical queries. XRP by Ripple is the common pre-mined Altcoin available in the market.
- You can scrutinize security assets with security altcoin tokens. As a company, you can prove your ownership of digital assets by security altcoins.
- You can stake stake-based altcoins and also use them for transactional purposes. You can find users to verify your blocks of altcoin transactions and compensate the users in return.
What is Stablecoin?
If you are looking for a cryptocurrency with stability like a traditional fiat currency and assets such as gold and the dollar, Stablecoin is a perfect candidate. You can use Stablecoin to trade, borrow, and lend digital assets available on various platforms.
Many experts believe Stablecoins to be the future of payment methods. With an adequate design, Stablecoin can offer efficient and stable payment alternatives compared to Altcoins. Here are the six types of Stablecoin you can leverage for various purposes.
- With Public Algorithm Stablecoins, you can apply automatic defensive techniques to buy and sell your coins. DAI, IRON, Basis, and Fei are some of the standard public algorithm Stablecoins.
- Centralized firms issue public reserve-based Stablecoins. Some of the cash-equivalent benefits of this coin include deposits, T-bills, etc.
- Private Stablecoins originate from non-financial or financial entities. You can perform internal financial transactions amongst users’ accounts within the same network.
- In a crypto-collateralized Stablecoin, you can use various cryptocurrencies as collateral for your Stablecoins. Havven and MakerDAO are the most prominent crypto-collateralized Stablecoins. However, using this protocol is one reason there are protocols in place to keep the monetary value of Stablecoin at $1.
- As the name suggests, in a non-collateralized Stablecoin, you do not need the backing of any other cryptocurrencies as collateral. These coins are similar to traditional currencies and operate on the same principle. That is one reason why such coins are monitored by the central bank of the country. Basis and Carbon are the two most common examples of non-collateralized Stablecoin.
- A commodity-backed stablecoin has the backing of powerful assets such as precious metals. Of course, gold, the most valuable precious metal, enjoys the status of a kingmaker. Another major backing asset is the lubricant industry, including oil.
Differences between Altcoin and Stablecoin
Now that you know what Altcoins and Stablecoins are. Here are some of the common elements that make each coin a solid player in its own right.
· Buying Process
Gemini and Coinbase are the most common options when it comes to buying Altcoins. On the other hand, you can buy Stablecoins from a digital exchange. All you will need for the latter is a digital wallet account.
· Market Volatility
Altcoins experience extreme price volatility, whereas Stablecoins are comparatively stable due to their fixed cash revenue amount.
· Mining Method
You can use various options to mine Altcoins, such as Zcash, Grin, and ECOS. In contrast, you can mine Stablecoins on Binance USD, Dai, Tether, and Terra USD.
· Size of ROI
Altcoins come with a promise to offer huge returns on investment due to their large market cap. On the other hand, Stablecoins have smaller ROI due to interest rates between 5% and 20%.
Altcoin or Stablecoin: which is Better?
After familiarizing yourself with both types of crypto coins, the next logical question you must ask is which is best for you. Well, if you wish to invest in either of the crypto coins, you must determine which of the two fulfills your needs best.
For instance, if you are looking for a Bitcoin substitute, Altcoin is an ideal choice. This coin not only offers you a myriad of options with low transactional costs but also has an exclusive user base. Furthermore, the price of Altcoins tends to fluctuate a lot. If you know the marketplace well and read the trends, you might be able to yield huge profits.
On the other hand, if you are looking for a value-store crypto coin, Stablecoin is worth looking into. That said, this type of coin is not ideal for trading due to its expected volatility and smaller returns on investment. However, you may enjoy economical packages with flexibility.
Always know your requirements and desired outcomes when choosing between Altcoins and Stablecoins. If you are new to cryptocurrency trading, investing, buying, or selling, it is best to seek experts’ advice. If you have any questions regarding cryptocurrencies, speak to our blockchain development team today.
