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Interest in cryptocurrencies is growing, not only among experienced investors, but also among beginners. As the market heats up, new currencies appear daily and it is important to understand what each one represents, as well as its advantages and disadvantages.
To understand a little more about this universe, we consider here some concepts and differences between alticoins and stablecoins.
What are Altcoins?
Altcoins are alternative currencies to bitcoin (BTC), some having emerged from a fork of the BTC itself, in order to improve its characteristics, others emerged in parallel, through a completely new code.
In short, every digital currency is an alticoin, with the exception of bitcoin itself.
Each cryptocurrency has different characteristics and designs, which is one of the main reasons for such a large variety on the market. There are several types of altcoins on the market, some based on mining, others on security tokens, among others.
Altcoins are intended to provide greater competitive advantages, in addition to being used as a store of value, providing greater use of market appreciation.
What are stablecoins?
Stablecoins are a class of currencies created with the aim of reducing the impacts caused by volatility, maintaining a stable value, without a constant variation in value.
The most common currencies are linked to fiat currencies, such as the dollar and the euro, but it is also possible that these are supported by other cryptoactives with a stable value, or by algorithms that guarantee the stability of their value.
Main differences between altcoins and stablecoins:
The main difference between alticoins and stablecoins is in value stability. As we’ve already mentioned, stablecoins have a much lower volatility, in which value fluctuations occur at a very low frequency.
Although this is the main difference, and the one that usually attracts immediate attention, it is not the only one. Unlike other cryptocurrencies, the issuance of stablecoins is centralized, its regulator is the company that owns the blockchain system that performs them.
The big difference of stablecoins is the mobility it brings to the resources. For example, whenever there is a perception of downfall, the investor could transfer their alticoins, or bitcoins, to a stablecoin, avoiding devaluation.
The opposite is also possible, from an appreciation perspective, its resources would already be ready to be allocated to other assets, without the need to wait for a longer processing time.