Bitcoin, Altcoins, and Stablecoins: What's the difference?

5
min read

Bitcoin, Altcoins, and Stablecoins: What's the difference?

5
min read
Bitcoin, Ethereum, and Tether symbols highlighting the distinctions between these digital currencies
Lesson
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Duration
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minutes

Bitcoin needs no introduction. It’s the OG of cryptocurrencies, the one that started it all. But the crypto world didn’t stop there-thousands of new digital currencies have emerged since, each bringing something different to the table. Enter altcoins and stablecoins. 

Let’s break down what they are and why they matter.

Altcoins: Bitcoin’s many competitors

Altcoins (short for “alternative coins”) are any cryptocurrencies that aren’t Bitcoin. The first altcoin appeared in 2011, and since then, developers have been tweaking and innovating to create coins that are faster, cheaper, and more energy-efficient. Some altcoins run on Bitcoin’s blockchain, while others, like Ethereum, have their own unique networks designed for different purposes-think smart contracts and decentralised apps.

Can you trade Altcoins on Deriv?

Absolutely! Many traders love altcoins for their volatility-big price swings mean big opportunities. But with great opportunity comes great risk. That’s why, on Deriv, you don’t need to buy or own altcoins to trade them. Whether you’re trading CFDs or using multipliers, you’re simply predicting price movements. If your prediction is right, you profit-without the hassle of wallets or private keys.

Of course, risk is still part of the game. A good trading strategy, risk management tools like stop loss, and solid technical analysis can help keep you on the safer side.

Stablecoins: The steady side of crypto

Not all cryptocurrencies are rollercoasters. Stablecoins are designed to be just that-stable. Their value is pegged to something less volatile, like the US dollar or gold, usually at a 1:1 ratio. This means they’re less prone to wild price swings and are often used for transactions within the crypto world.

But don’t be fooled into thinking stablecoins are completely risk-free. The infamous Terra crash in 2022 proved that even “stable” assets can lose value in a flash. So, while they may be steadier than Bitcoin or Ethereum, they still come with their own set of risks.

Can you trade stablecoins on Deriv?

Yes, you can! Just like with altcoins, Deriv lets you trade stablecoins without actually owning them. Since stablecoins move less dramatically than other cryptos, they’re not as popular for day trading. But even minor price fluctuations can be worth it if you’re trading large volumes or prefer lower volatility. Plus, you can open a crypto account with stablecoins, making them a useful option for trading other markets too.

Quiz

What makes stablecoins different from altcoins?

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Stablecoins have no risk at all.
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Stablecoins are pegged to a stable asset, while altcoins fluctuate freely.
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Stablecoins are just another type of Bitcoin.
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FAQs

Why do altcoins exist if Bitcoin was the first cryptocurrency?

Bitcoin paved the way, but it has limitations-slow transactions, high fees, and energy-intensive mining. Altcoins were created to solve these issues and introduce new features like smart contracts and faster payments.

Are stablecoins safer than other cryptocurrencies?

They’re less volatile, but not completely risk-free. If the system backing them fails (as seen with Terra), they can lose value quickly.

How can I start trading crypto without risking real money?

Use a Deriv demo account! It’s loaded with USD 10,000 in virtual funds, so you can practice trading without any financial risk.