Even if you aren’t an active cryptocurrency trader, you must have heard of Bitcoin. Since its launch, this single cryptocurrency has been enjoying a dominant position in the crypto world ever. But as newer and innovative blockchain-backed digital currencies are being rolled out, Bitcoin’s dominance is slowly beginning to dilute. It can be best understood from the fact that from holding a whopping 70% share in the cryptocurrency market, Bitcoin is now down to only 39%. While Ethereum, the most popular altcoin, is catching up to Bitcoin in terms of popularity, demand, and market valuation, it is the other smaller altcoins that pose more threat to Bitcoin’s share in the years to come.
It is why many cryptocurrency traders are slowly making a shift to altcoins that project a promising future with a robust roadmap. Altcoins like Ripple, Cardano, Avalanche, Solana, Polkadot, MATIC, and others are gaining massive popularity in recent times. So you might want to trade some BTC for altcoins or cash out BTC in INR to invest the same in promising altcoins of your choice. But before investing in altcoins, if you’re looking for exact reasons on why altcoin is gaining over Bitcoin, read this article till the end. We have listed down all the top reasons responsible for the shift.
Cryptocurrency Users are Looking Forward to Diversify
The market may have thousands of altcoins, but not all altcoins are just cryptocurrencies. The underlying technology of some altcoins can be used for real-life utility other than peer-to-peer payment transfer. Crypto traders are now more interested in investing in cryptocurrencies that facilitate more use cases across different sectors/industries and are not limited to just a peer-to-peer financial transfer platform.
The crypto space and its members are now leaning towards altcoins that support Defi, NFTs, smart contracts, play-to-earn games, distributed storage platforms, and more. Since Bitcoin has one use case, altcoins filling the gap are now attracting maximum attention from investors.
Altcoins Cost Less than Bitcoins
Not all altcoins are cheap, but you can indeed find the ones that are reasonably priced yet valuable. Bitcoin has traded for as high as $60,000 over the past years, making it inaccessible for many crypto enthusiasts. Conversely, altcoins cost much less than Bitcoins and are highly accessible to almost all investors. It even provides an easy entry point for crypto enthusiasts who have always wanted to own cryptocurrency and get hands-on experience of trading the same.
Take Ripple, for example. It is an altcoin with high potential as it aims to replace SWIFT in the coming decades. And do you know the best part? It costs less than Bitcoin. While the current Ripple price in INR is not cheap, it certainly isn’t as expensive as Bitcoin. Another reason that is making investors pick altcoins over Bitcoin is the related asymmetric risk. The upside potential is way bigger than the downside risk of falling to zero when investing in cheaper altcoins.
Altcoins Keep Innovating with Time
If you check some of the recently growing altcoins, you’ll notice their use cases are varied, innovative, and very much in-demand. One significant aspect where altcoins are gaining an advantage is Bitcoin’s shortcomings. Though Bitcoin offers a secure and fast medium for peer-to-peer financial transactions, it doesn’t provide functionalities like advanced smart contracts.
Solana, for example, is offering a scalable, secure, and more affordable solution at costs lower than Bitcoin and Ethereum; Ripple is mining its tokens in a simpler and scalable way than Bitcoin, others are offering automation, and much more. According to experts, altcoins that provide reliable and secure solutions to the limitations of existing digital coins and blockchains will ultimately affect Bitcoin’s demand and market valuation.
The Fundamentals are Changing
Every cryptocurrency works on its own protocols or framework. Bitcoin, for example, works on a cryptographic protocol that allows users to securely trade Bitcoins within the network. When it comes to altcoins, the framework varies from one altcoin to another. In the end, whichever network has the highest activity on a given protocol wins the valuation race. There are several thousands of cryptocurrencies at present, and the market is amid a chasm.
Cryptocurrencies with a robust infrastructure on their underlying blockchain technology will eventually lead to greater adoption. Today’s investors are more interested in investing based on the cryptocurrency’s actual usage, unique growth drivers, underlying token economic model, etc.
Institutional Investments are Growing
When cryptocurrency was in its early stage, institutional investors were not showing much interest in investing in it. But as it is gaining widespread acceptance, investors, both retail and institutional, have started taking these digital currencies seriously. Of all the thousands of currencies available in the market, institutional investors are betting more on altcoins. Since they have huge funds to put on speculative investments, they can take the risks retail investors cannot.
Institutional investors have now realized the importance and impact blockchain-based digital currencies have in different sectors. And it is one prime reason that has resulted in the shift from “should we invest in cryptocurrency,” to “which cryptocurrencies to invest.” The same trend can be noticed in retail investors too. According to experts, this trend is hinting toward one of the biggest tech paradigm shifts waiting to take place in the coming decade.
Bitcoin is a popular cryptocurrency with a strong use case. But there are several new altcoins that offer the same function Bitcoin does in addition to many other real-life utility services. As altcoins continue to take advantage of Bitcoin’s limitations, the former will continue gaining an edge over the latter. If you’re an investor eyeing long-term profits, you should consider diversifying your portfolio by investing in altcoins you believe in.
Invest in any cryptocurrency after conducting thorough market research and gaining enough knowledge of the cryptocurrency you plan to invest in. It will keep you relatively on the safer side of the trading journey. But before investing in any altcoin, remember that these are risky investments and are subject to wild price swings every minute.