What is the Difference between Altcoins and Stable Coins?

Basically, any new cryptocurrency that came after the original cryptocurrency, Bitcoin (BTC) is considered to be an altcoin.

Altcoins or alternative coins, represent digital asset based on the prototype of Bitcoin with a vision of building new platforms or issuing new ICOs in order to improve the cryptocurrency market by offering improvements to some of the obvious issues regarding Bitcoin.

On the other hand, we also have stable coins, which are being issued in order to ensure price stability, scalability, and privacy alongside with being decentralized just like coins, tokens, or altcoins.

So, what is the in-depth difference between altcoins and stable coins?

What are Altcoins?

Cryptocurrency represents a digital asset made to store a value which can go up or down, much like Bitcoin, the first and original digital asset.

However, the blockchain space also shares its ecosystem with tokens, coins, and altcoins, with coins further being divided to hybrid coins, stable coins, value coins, where the majority of these cryptocurrencies are acting as mediums for transferring of different value, monetary being the primary object of transfer of value.

So, what are altcoins then and why do we need them if there are cryptocurrencies already working on transferring value through blockchain-powered platforms?

Altcoins are actually all currencies that have been modeled and issued by Bitcoin’s main code, promised to improve the overall performance of Bitcoin through new use cases, faster processing times, increased scalability, new and hybrid protocols, and more.

Altcoins are thus very similar to coins, as both of these types of assets store value; however, all currencies that have been issued after Bitcoin and in accordance with the original model of BTC are referred to as altcoins.

Some of the biggest altcoins in the blockchain space are Ethereum (ETH), Litecoin (LTC), Bitcoin Cash (BCH), Ripple (XRP), etc.

What are Stable Coins? How are Stable Coins Different from Altcoins?

Also a form of digital assets and cryptocurrencies, stable coins are set to transfer monetary value across blockchain-based decentralized ecosystems.

That is how stable coins are also decentralized and driven by blockchain technology.

Moreover, stable coins are set to deliver stability concerning the price, which isn’t the primary goal of altcoins as altcoins usually have other use cases than solely transferring value, often suppressed to price fluctuations in the market.

Also, while the value of altcoins is determined by demand in the market, the value of stable coins is usually supported by another value, like fiat currency or gold, hardly inclined to mass dips or sudden price pumps.

One of the most famous stable coins is definitely Tether (USDT), which is said to be supported by the US dollar, EUR, and Yen.

In the case of this stable coin, Tether is supported by the US dollar in 1:1 ratio, which means that one Tether should always be worth one dollar.

The main objective of stable coins is to become a way of paying for everyday purchases, that way representing new age instruments for digital storing of value.

Stable coins are usually made to have acquired stability in the market without response to the market trends, alongside privacy and scalability.



Disclaimer: The information on this site is provided for discussion purposes only, and should not be misconstrued as investment advice. Under no circumstances does this information represent a recommendation to buy or sell securities.