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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minutes

Bitcoin needs no introduction. It’s the original cryptocurrency, 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') refer to all cryptocurrencies other than Bitcoin. The first altcoin appeared in 2011, and since then, developers have introduced enhancements and innovations 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 applications.

Can you trade Altcoins on Deriv?

Absolutely! Many traders love altcoins for their volatility. Large price fluctuations can offer major opportunities, but with increased risk. On Deriv, you don’t need to buy or own altcoins to trade them. Whether you’re trading CFDs or using multipliers, you’re speculating on 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 for stability. Their value is pegged to assets like 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.

However, stablecoins are not without risk. 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?

You can trade stablecoins on Deriv, just as you can altcoins. Since stablecoins move less dramatically than other cryptos, they’re less suited for day trading due to lower volatility. But even minor price fluctuations can be worth it if you’re trading large volumes or prefer lower volatility. Additionally, Deriv allows you to launch a crypto account using 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.

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