From a fad that only a few internet addicts knew about to now being a global phenomenon, it’s clear that the different types of cryptocurrency are now a part of our daily conversations.
A study from April 2021 shows that 14% of Americans owned some cryptocurrency. As 2023 approaches, one can only expect that this number has risen at least ten-fold.
If you’ve decided to join them and being investing in crypto you want to ensure you know what to put your money in.
Here’s our guide for the beginner cryptocurrency investor:
Being Discerning When Buying Crypto
The first-time crypto investor feels strained when buying crypto due to the sheer number of options available.
We all know about Bitcoin, but have you heard any news about Litecoin? How is Bitcoin Cash different from Bitcoin? Is Ethereum still as popular and what’s the case for buying Dogecoin?
These are some of the many questions roaming around in the crypto investor’s head. But to determine where you should put your money you have to understand the different types of crypto.
You need to understand their purpose as well as why they’ve become popular. This will help you decide which cryptocurrencies to invest in. You want to also speak to a financial advisor before making any decision as the crypto market is still volatile.
What Is Bitcoin?
For the purposes of this guide, we’ll discuss the difference between Bitcoin and altcoins. The term altcoins refers to all cryptocurrencies apart from Bitcoin.
Bitcoin is the original cryptocurrency and it has been the inspiration for many other ‘altcoins’ that have followed.
Bitcoin remains the preferred digital currency and one expects this to remain as is. It should be noted that Bitcoin and crypto are often discussed as separate entities.
Let’s look at some of the reasons why Bitcoin has become so popular and why many investors only stick to it.
Bitcoin was launched in 2010, two years after the global financial crisis. It started as an alternative to fiat currencies. For the average person, Bitcoin is an investment asset.
The average person wants to buy Bitcoin at a low price and then sell it for a high price. But this is the wrong approach to Bitcoin. More and more, the philosophical understanding behind Bitcoin is reaching the public consciousness.
Bitcoin, unlike fiat currencies, has a fixed supply for circulation. There are only 21 million Bitcoins in existence. It’s impossible to create more Bitcoin. As a result, the value of Bitcoin remains constant which is a contrast to the fiat system.
Bitcoin isn’t managed by any government, central bank, or company. It was created by Satoshi Nakamoto but he doesn’t manage it. No one can take hold of Bitcoin and manipulate its’ code. It’s a currency that can get used by anyone but is controlled by no one.
Now let’s understand where altcoins come into play.
What Are Altcoins?
The altcoin market is overwhelming and the average person struggles to know whether they should invest their money in Dogecoin or whether Marscoin offers promise.
A great way to understand the relationship between Bitcoin and altcoins is to study the difference between Ripple vs Bitcoin.
You want to truly understand these differences so you can decide whether an investment is worth it. For example, as of the beginning of December 2022, the cost of one Bitcoin is around $17K.
Compare this to most altcoins that usually retail for less than $100 per token. Altcoins are often more desired because of their cheaper price.
Altcoins often don’t require any technical expertise. Most exchanges offer a plethora of altcoins that one can buy using fiat currency. This is part of the reason why altcoins as a whole have tremendous staying power.
Toxic Bitcoin Maximalism
Following the fiasco of FTX and the news that countless individuals lost a fortune from the exchange, the phrase ‘toxic Bitcoin maximalism’ has entered our lexicon.
This refers to Bitcoiners who will push a crypto investor to only focus on buying Bitcoin and ignoring anything to do with altcoins. Often, their manner and tone might even be harsh and off-putting to some.
As a result, ‘toxic Bitcoin maximalism’ is seen as an insult to some. But many Bitcoiners have proudly adopted the phrase and have used it as a moniker to describe themselves.
This is because many Bitcoiners feel this is the only way to assert the supremacy of Bitcoin. They also feel it’s the only way to assert the dangers of altcoins.
But what are the dangers of altcoins that these toxic Bitcoin maximalists often discuss?
Let’s explore this next so you can determine what your opinion on the matter is.
Increased Financial Tyranny
You might not think about it as you go about your daily life, but the existing financial system is tyrannical for all of us. Some people are affected more than others. But even if you live in the United States or another First World country, you too are a victim of the fiat system.
The fiat system creates inflation which makes the cost of living much higher. It means that we have to essentially become slaves who have to work non-stop just to survive.
Yet, even with all this existing tyranny, another great financial threat is underway. This is the threat of Central Bank Digital Currencies (CBDCs). In simple terms, this will be a digital version of whichever fiat currency your central bank issues.
For many, this will be a welcome change. After all, don’t you prefer to pay with your credit card than having to always find cash and spare change?
Digital money is indeed a great convenience as Bitcoin has shown. But CBDCs also offer something more sinister that contrasts with the philosophy behind Bitcoin.
Bitcoin represents freedom whereas CBDCs represent control. CBDCs will track every transaction so that no citizen will have financial privacy.
CBDCs can also get turned off at a whim. This means that your funds can get frozen by the central bank. CBDCs can also have expiration dates so you have to spend your money and can’t save it to protect your wealth.
Crypto Is the Trojan Horse
So, where does crypto come into play for this? For many Bitcoin maximalists, crypto is the Trojan Horse to make citizens comfortable with CBDCs.
Crypto is a convenient digital currency. But it’s tied to your identification and doesn’t offer the privacy that Bitcoin does.
Crypto tokens get managed by companies that can surveil you and collect your data. Many crypto organizations are working in tandem with large international organizations.
As a result, many who are wary of CBDCs are also wary of crypto. They feel that data collected by crypto companies will get shared with totalitarian governments. They feel that governments will be in the background to control how these crypto companies operate.
It’s up to you to do your research on whether all types of cryptocurrency are a Trojan Horse or whether some or none are a threat. Always do your own research but make sure you listen to all sides.
Don’t ignore the “toxic Bitcoin maximalists” even if you find them off-putting! You must take the time to study the literature to get a full understanding of Bitcoin, crypto, and the changes to the fiat system.
Will There Be More Types of Cryptocurrency?
The current question on everyone’s mind is if there’ll be more types of cryptocurrency.
On one hand, the demand for crypto is so high that one can only expect more cryptocurrencies to get developed. But with the controversies surrounding networks such as Celsius and FTX, there are also those who believe that crypto’s days are numbered.
But the same attitude goes for Bitcoin. More people own Bitcoin today than ever before. But at the same time, some have given up on Bitcoin, some have always been skeptics, and others want to attack Bitcoin.
Most people don’t see Bitcoin as a form of money. They see it as an investment asset. As a result, they feel it’s no longer valuable since its’ price has fallen from $60K to $17K!
These are the people who have given up on Bitcoin as well as those who have always been suspicious of it.
What about those who wish to attack Bitcoin? While some governments are adopting Bitcoin as a legal tender, others are trying to discourage its use or even criminalize it.
The future of both Bitcoin and cryptocurrency isn’t certain. But what we do know is that if you don’t pay attention you’ll miss out on something important. Use this guide to decide your route.
The Monetary Revolution
Now you know the different types of cryptocurrency and can decide what digital currency or currencies you want to focus on.
Bitcoin is the biggest player in the game and is likely to remain as such. It’s seen as the best way to fight against fiat currency and growing financial tyranny.
Altcoins offer greater convenience and more variety than Bitcoin. Many see a space for altcoins while others see it as a Trojan Horse for tyranny. You have to decide what’s best.
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