A Guide to the difference between Bitcoin, altcoins, and stablecoins

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A Guide to the difference between Bitcoin, altcoins, and stablecoins

 
As the first digital coin ever introduced, Bitcoin needs no introduction. As the original cryptocurrency, it reserved the right to stand alone, whereas all the subsequent cryptocurrencies fell under the umbrella of altcoins.

What are altcoins?
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Altcoins are alternative coins to Bitcoin, or in other words, any cryptocurrency that is not Bitcoin. 
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The first altcoin was created in 2011, and thousands of new coins have since appeared. The main goal of the first new alternative cryptocurrency was to improve the original Bitcoin’s functionality and, of course, create competition. With altcoins, developers aimed to reduce energy consumption, lower transaction costs, and speed up transactions.
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The cryptocurrency market has evolved, and many altcoins serve a completely different purpose than Bitcoin, a decentralized payment method. Some operate on identical blockchains but as separate entities, while others are based on entirely different blockchains. The Ethereum blockchain, for example, was designed to create decentralized apps, and Ether was created as a form of payment on this blockchain. 
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Can you trade altcoins on Deriv?
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Definitely yes. Due to their high volatility, many altcoins are very popular for day trading, as traders are attracted by the huge price swings that bring multiple trading opportunities. However, high volatility also means high risk, and the internet is full of stories of people losing their savings because of a massive price drop.
 

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On Deriv, this risk is mitigated because you don’t need to buy or own the actual crypto coins to trade them. Whether you choose CFD trading or multipliers, you only predict the future price direction of a crypto asset and profit if your prediction is correct. However, this doesn’t mean that the risk is eliminated. It is crucial to have risk management tools such as stopping loss in place to protect yourself from losing more than you anticipate.
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In addition to managing your risks, it’s also essential to understand what affects crypto prices and set a proper trading strategy. Technical analysis is one good way to do this, as it offers multiple tools to help you evaluate the market and make educated trading decisions.
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Moreover, Deriv offers one more option for crypto fans. You can trade on any market with crypto. In this case, you must create a cryptocurrency account first and buy some crypto. Your potential payouts will be in cryptocurrency, too, so trading with crypto allows you to get more crypto without buying it.
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Suppose you prefer trading on crypto prices but are uncomfortable with high volatility. In that case, the crypto world has something to offer you, too, as not all altcoins are subject to significant price jumps. Stablecoins, for example, have a whole different concept. 
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What is a stablecoin?
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Stablecoin is a cryptocurrency that has its value attached (or pegged) to another asset that is less volatile/that has a more stable value, such as fiat currency, commodities, or another crypto at a 1:1 ratio. In most cases, it’s USD or gold. That’s precisely where the part “stable” comes from, as the value of stablecoins is considered much more stable, and their prices are less volatile compared to other cryptocurrencies.
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The first stablecoin was issued in 2014 to create a secure medium of exchange within the crypto ecosystem that will maintain its value without experiencing significant losses or gains. Nowadays, traders use stablecoins to complete various crypto transactions, such as buying and selling volatile crypto assets, without interacting with the traditional financial system.
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However, Terra's crash in May 2022 made it clear that even stablecoins can lose their value in just a few hours, which means they still carry traditional crypto risks.
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Can you trade stablecoins on Deriv? 
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Yes, you can. Just like with other altcoins trading on Deriv, you don’t need to buy the actual stablecoins to be able to trade them. Predict the future price movements, set your risk management tools, and you are good to go without risking losing the entire value of a coin even if it crashes. 
 

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In general, stablecoins are not very popular for day trading activities due to their low volatility. However, even though most stablecoins have their values pegged to another asset with a 1:1 ratio, their prices can still fluctuate. It’s not a significant fluctuation, usually – less than a cent. But if you are trading large volumes or do not favor big price swings, this slight fluctuation can still make a difference.
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On the other hand, stablecoins are pretty popular to trade with, and Deriv has quite a few options for stablecoins crypto accounts. Trading with stablecoins is no different from trading with fiat money, and your payouts will also be done in crypto, just like with any other cryptocurrency account.