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If you’re an avid cryptocurrency investor, you’re no doubt aware of how closely connected the cryptocurrency market is. Cryptocurrencies, although different in many ways, are still highly dependent on each other. When one crypto starts to rise or fall, it is likely that other cryptos will follow the same trend. For example, every time the price of Bitcoin rises, the price of altcoins also rises. But why does this happen? If you’ve ever thought about the correlation between cryptocurrencies and why altcoins are following Bitcoin, this article is for you.
Altcoin is a combination of two words; “alt” which means alternative, and “coin” which is short for cryptocurrency coin. When combined, these two words represent a category of cryptocurrencies that are substitutes for Bitcoin. Simply put, it is an alternative cryptocurrency that was launched soon after the success of Bitcoin.
We can easily say that the entire cryptocurrency market consists of Bitcoin and altcoins. Altcoins leverage the decentralized concept of Bitcoin, but enhance it with additional features. Ethereum, the largest altcoin by market value, projects itself as a better replacement for Bitcoin. It introduces the concept of smart contracts, namely code that can automatically execute contracts between two or more parties through blockchain technology.
Other altcoins target Bitcoin’s weaknesses to come up with competitive solutions. For example, most altcoins offer better functionality, faster transaction speeds, and scalability. However, Bitcoin, compared to all other coins, still has the largest market capitalization at just under half the market.
There is no doubt that Bitcoin and altcoins share the same basic framework. Bitcoin was the first successful cryptocurrency and therefore, its design and technology became a benchmark for the development of other cryptocurrencies. Unfortunately, it has many drawbacks such as the time and energy consuming PoW consensus mechanism. Additionally, Bitcoin’s smart contract capabilities are also very limited. Therefore, here are some important differences between Bitcoin and altcoins.
Bitcoins: Goal — replace the traditional fiat currency system
alternative currency: Goal — fix Bitcoin’s limitations
Bitcoins: Market capitalization — occupies more than 40% of the entire cryptocurrency market
alternative currency: Market capitalization — combined, the two account for more than 55% of the cryptocurrency market
Bitcoins: Liquidity — high liquidity
alternative currency: Liquidity — thin liquidity
Bitcoins: Energy Consumption — very high energy consumption
alternative currency: Energy Consumption — reduced energy consumption
Bitcoins: Credibility — growing demand for Bitcoin as a store of wealth for individual and institutional investors
alternative currency: Credibility — will likely be lost if practical use is lacking
Cryptocorrelation is a term used to describe the behavior of one cryptocurrency relative to the behavior of other cryptocurrencies. Market analysts and experts discovered the first correlation between cryptocurrencies in 2017 when the crash of Bitcoin led to a decline in the capitalization of all other cryptocurrencies. The fact that Bitcoin jump-started the entire crypto industry has allowed it to have the final say regarding market sentiment. Additionally, traders and investors almost always examine Bitcoin before deciding whether or not to sell their altcoin positions.
At the same time, there are times when a drop in the value of Bitcoin causes a surge in the value of altcoins. The most reasonable explanation for this is that investors will usually withdraw their capital from Bitcoin investments and channel it into promising altcoins. These actions lead to a fundamental increase in certain altcoins. In addition, promising altcoins that receive market hype are capable of rising on their own. Therefore, it is not entirely true that all altcoins are dependent on Bitcoin.
There are several reasons why altcoins are following Bitcoin in general. These reasons can be summarized as follows:
- Bitcoin Pioneers the Crypto Industry: Bitcoin is the cryptocurrency that put all other cryptocurrencies on the map. Additionally, despite debuting over a decade ago, Bitcoin has cemented itself as a secure store of value with a very high level of popularity. Anyone involved in the crypto industry likely owns some Bitcoin.
- Bitcoin has the Most Secure Network: Bitcoin uses a PoW (Proof-of-Work) consensus mechanism to secure its network. Despite receiving a lot of criticism for its intensive energy consumption, it is one of the most secure protocols up to date. This ensures that the blockchain network remains secure and resistant to hacking.
- Bitcoin Considered a Reserve Currency for Cryptocurrencies: Bitcoin is comparable to USD on global stock markets. If you check many exchange platforms, altcoin prices are usually measured in Bitcoins. This is because the majority of them do not propose fiat for crypto trading thanks to regulatory and compliance measures. Therefore, most traders are forced to buy altcoins first using Bitcoin.
- The Majority of Altcoins Are Imitations/Clones: Thanks to Bitcoin’s soaring popularity, there has been an increase in the number of Bitcoin clones. For example, Litecoin uses a copy of the original Bitcoin code to become a faster and lighter version. Other companies like Bitcoin Cash, Bitcoin Gold, and Bitcoin Diamond are all doing the same thing. Therefore, it is completely understandable why their prices rise or fall along with the price of Bitcoin.
Altcoins are very popular nowadays with new altcoins appearing every day. Therefore, popular altcoins and even new ones are listed on altcoin exchanges.
Altcoin exchange is any exchange platform that allows you to buy, sell or trade any altcoin. Most often altcoin exchanges have popular alts like Verge, Ravencoin, Zilliqa, Solana, Cardano, Ripple, etc. However, because new meme tokens create a lot of hype and traction when they first appear, altcoin exchanges tend to be quick to list them. as well.
Swapzone is one of the best altcoin exchanges on the market. This is not a simple altcoin exchange, it aims to save you time and money by providing a list of exchange rate offers from various altcoin exchange providers. You can search by exchange rate, transaction speed, exchange rate to find the star deal out of millions.
If you are confused about how to buy altcoins with Bitcoin or where to buy altcoins, don’t worry. Altcoins can be found on every major altcoin exchange in the market. Swapzone is no exception. The following is a detailed explanation of how to exchange altcoins to Bitcoin on Swapzone:
Step 1. Visit the official Swapzone website.
Step 2. On the homepage, you will see “choose a partner” tab.
Step 3. Enter whatever altcoin you want to trade in “send” part along with the amount you want to exchange.
Step 4. In “get up” section, simply select BTC as the cryptocurrency you want to receive.
Step 5. Swapzone will soon offer you several conversion value offers from a number of their exchange partners. You will see that there is an option to filter the results. Take your time and figure out which offer you want.
Step 6. Select the offer you like and click “exchange”.A new window will appear asking you to provide the necessary details to complete the exchange.
Step 7. Once you have entered these details and want to continue, click “continue to exchange” to start a transaction.
Step 8. The transaction will start. It may take a while, so be patient as the process progresses.
Step 9. The exchange partner you choose will process your transaction and you will receive Bitcoins in your wallet. At this point, take a moment and rate the exchange partner.
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