**Bitcoin is not “crypto”**. There are more than 5,000 crypto coins accessible to Nigerians, but there is only one Bitcoin, the rest are called Altcoins or let me say Alternative coins.
Bitcoiners may sometimes mention these Altcoins. But what are these altcoins? Why do these other coins exist, and how can you decide which might be a better fit for you in the Nigerian market?
This article explores five key differences between Bitcoin and Altcoins, helping you decide which might be a better fit for you in the Nigerian market.
But first, let me take a few seconds to clarify a question that might be on your mind.
In case you need lay words of the difference between Bitcoin and Altcoin, here is it: Bitcoin is the first cryptocurrency, and it was invented in 2008. Altcoin is any cryptocurrency that came after Bitcoin, the first Altcoin is Ethereum which was created between 2013 to 2015. I hope that is clear enough!
Understanding the Altcoin Universe
The term Altcoin simply means an Alternative Coin you can buy, sell, or hold that is not Bitcoin.
This vast and ever-expanding universe of alternative cryptocurrencies offers a variety of features and functionalities that can be quite different from Bitcoin.
Understanding these key differences is crucial for Nigerian investors venturing into the exciting, yet sometimes volatile, world of cryptocurrency.
Why Consider Altcoins?
Bitcoin might be the established name, but Altcoins bring fresh ideas and unique features to the table. They’re not just mere copies; they’re innovators offering potential solutions to specific needs within the market.
There are currently over 5,000 altcoins on the market, and these are the top 10 according to CoinMarketCap today:
- Ethereum - ETH
- Tether USDT - USDT
- BNB
- Solana - SOL
- USD Coin - USDC
- XRP
- Toncoin - TON
- Dogecoin - DOGE
- Cardano - ADA
- Avalanche - AVAX
Here are some reasons why Nigerian investors might consider exploring Altcoins:
Growth Potential: Many Altcoins are still young and have the potential for significant growth compared to the more established Bitcoin.
Diversification: Adding Altcoins to your portfolio can spread out your risk and provide more balance in your cryptocurrency holdings.
Specific Features: Some Altcoins are designed for specific purposes, like faster transactions or more energy-efficient mining, which might cater to your investment goals.
Altcoins might offer exciting possibilities, but they also come with higher risks. They tend to be more volatile (meaning their prices can fluctuate rapidly) and have less liquidity (meaning it might be harder to buy or sell them quickly) compared to Bitcoin.
Now that you understand the basics of Altcoins, let’s explore the factors that differentiate Bitcoin from Altcoins in the Nigerian crypto market.
Bitcoin vs. Altcoin: Market Capitalization and Liquidity
Bitcoin’s market cap in Nigeria is substantial, with the Nigerian Naira rates showing a market cap of 1989.33 trillion NGN. Altcoins also have a growing presence, with the entire cryptocurrency market projected to reach US$32.6m in 2024. Liquidity in the Nigerian cryptocurrency market is an important factor, as it influences the ease of trading without drastic price changes.
For Bitcoin, the massive market cap signifies strong investor interest. However, Altcoins are carving their own space with the influence of Bitcoin and their combined market presence reflects a growing trend of diversification among Nigerian investors.
Liquidity, how easily assets can be bought and sold without the price going up or down too much, is another key factor. Bitcoin’s high liquidity makes it easier for Nigerian traders to buy and sell it quickly. Altcoins, on the other hand, exhibit varying levels of liquidity depending on their popularity. Popular Altcoins might offer sufficient liquidity, while less popular ones might face limitations.
The regulatory environment and availability of local exchanges supporting specific cryptocurrencies also influence liquidity. Despite these hurdles, the Nigerian crypto market has shown resilience, with peer-to-peer platforms helping maintain liquidity.
Bitcoin vs. Altcoin: Technological Differences
Bitcoin’s blockchain technology laid the groundwork for the entire cryptocurrency space. It introduced the concept of a decentralized ledger, a secure and transparent way to record transactions without relying on a central authority. It, however, comes at a cost. Its Proof-of-Work (PoW) consensus mechanism requires miners to solve complex puzzles, consuming significant energy. Despite this, Bitcoin’s technology offers Nigerian businesses a reliable and secure way to transfer value, particularly for international trade where the dollar and other foreign currencies are scarce.
Altcoins, on the other hand, aren’t content with simply replicating Bitcoin’s features. They push the boundaries of blockchain technology by introducing innovative functionalities like Smart Contracts. Take Ethereum for example. This Altcoin introduced the revolutionary concept of smart contracts. Imagine self-executing agreements written directly into code which then eliminates the need for intermediaries in complex transactions. In the Nigerian context, smart contracts have the potential to revolutionize industries by automating processes like land registration, making them more efficient and transparent.
Another key difference lies in how transactions are validated. While Bitcoin relies on energy-intensive mining, some Altcoins utilize a more sustainable approach called Proof-of-Stake. With staking, users hold onto a specific Altcoin to validate transactions and earn rewards in return. This not only conserves energy but also presents an attractive investment opportunity for Nigerians interested in earning passive income with their cryptocurrency holdings.
Finally, some Altcoins leverage sidechain technology. This allows them to operate alongside established blockchains like Bitcoin or Ethereum, offering benefits like increased scalability and the ability to interact with multiple cryptocurrencies. This could be a game-changer for Nigerian developers building applications that require high transaction volume or seamless interoperability with different digital assets.
Bitcoin vs. Altcoin: Use Cases and Adoption
Nigerians are actively using cryptocurrencies for various purposes. Bitcoin, the most established player, finds favour for cross-border transfers, a hedge against inflation, and even as a method of payment. Here are a few use cases:
Cross-border transactions: Many Nigerians use Bitcoin to send and receive money internationally, particularly for those working abroad or with international clients. Traditional money transfers can be slow and expensive, making Bitcoin a compelling alternative.
Preserving wealth: With inflation a concern in Nigeria, Bitcoin is seen as a way to store value, similar to how some invest in gold.`
Emerging payment method: Bitcoin is increasingly being adopted as a form of payment, allowing users to bypass traditional banking systems for transactions.
Altcoins, on the other hand, offer unique features that extend beyond simple monetary transactions.
Decentralized Finance (DeFi): Platforms built on Altcoin technology enable financial services like lending, borrowing, and earning interest without relying on traditional banks. This is particularly attractive in areas with limited access to banking services.
Smart contracts: Altcoins like Ethereum power smart contracts, which automate agreements within various sectors like real estate, fostering transparency and efficiency.
Beyond finance: Altcoins support a wide range of applications, from gaming to healthcare, by providing secure and decentralized platforms for transactions and data sharing.
Ultimately, the choice between Bitcoin and Altcoins hinges on your individual needs:
If your primary focus is protecting your savings from inflation or making large international transfers, Bitcoin might be the better option. But, If you’re interested in exploring new financial services, developing decentralized applications, or leveraging specific features, Altcoins offer a broader landscape of possibilities.
Bitcoin vs. Altcoin: Regulatory Environment in Nigeria
The Nigerian government and the Central Bank of Nigeria (CBN) have taken a cautious approach towards cryptocurrencies. They don’t consider them legal tender and have warned about potential risks like money laundering. While there are no specific laws banning crypto trading, the CBN previously restricted banks from dealing with cryptocurrency exchanges. This aimed to mitigate risks, but also limited Nigerians’ options for buying and selling crypto.
However, the ban was lifted at the end of 2023, suggesting a shift towards a more open, yet regulated, environment. This is positive, but navigating the evolving regulations requires careful consideration.
Despite these challenges, the Nigerian crypto community has shown resilience. Peer-to-peer (P2P) networks have become popular as they allow users to trade directly with each other, bypassing traditional banking channels. While convenient, P2P trading can also carry risks, so staying informed and conducting thorough analysis is essential.
In 2024, there were talks about declaring crypto trading a national security threat, potentially hindering P2P activity. However, the situation remains fluid, and the community awaits further clarification.
The key takeaway here is that the Nigerian regulatory environment is constantly evolving. While regulations can be frustrating, they also show the government’s acknowledgement of the potential benefits cryptocurrencies offer.
Bitcoin vs. Altcoin: Community and Developer Support
The Nigerian cryptocurrency community thrives despite challenges. While the Central Bank’s restrictions on banks dealing with cryptocurrencies created hurdles, the community adapted by leveraging peer-to-peer (P2P) platforms for direct trading. This ingenuity and resilience is evident in their use of Bitcoin to raise funds during the EndSARS protests, showcasing the power of community support within the crypto space.
This strong community isn’t alone. Local developers play an important role in creating blockchain products, auditing smart contracts, and building crypto-related applications. Their expertise tailors global cryptocurrency technology to address specific needs and challenges within the Nigerian market. For example, Nigerian developers are pioneering Africa’s first stablecoin, cNGN, designed to complement Nigeria’s digital finance landscape. This innovation highlights the impact of a robust developer community fostering and expanding the cryptocurrency infrastructure.
Most promising altcoins for 2024
Here are three Altcoins that have generated buzz for their potential in 2024:
1. Solana (SOL): Solana stands out for its blazing-fast transaction speeds and minimal fees, making it a favorite among developers and users. This efficient architecture, powered by a unique Proof of History (PoH) mechanism, allows Solana to handle a high volume of transactions without sacrificing speed or affordability.
The platform’s growing ecosystem strengthens its appeal, encompassing a diverse range of projects in DeFi, NFTs, and beyond. Solana’s impressive performance, with significant price gains and strong recovery, further underscores its potential as a major player in the cryptocurrency market.
2. Toncoin (TON): Toncoin has been gaining traction for its speed, user-friendly approach, and focus on decentralized applications. With a strong community and support for various functionalities like wallets and NFTs, Toncoin is attracting developers and building a robust ecosystem.
While its price fluctuates, analysts predict significant growth by the end of 2024 due to increasing developer engagement and its secure Proof-of-Stake model. This combination of features positions Toncoin as a potential rising star in the crypto space.
3. Notcoin (NOT): Notcoin stands out in a unique way with its innovative “tap-to-earn” model allowing users to acquire Notcoin tokens ($NOT) simply by playing a game on Telegram. This accessible approach has attracted a massive player base of over 35 million users, fostering a strong community.
To ensure fairness, Notcoin distributes tokens without private sales or special allocations, mirroring Bitcoin’s egalitarian model. The combination of straightforward gameplay and the potential to earn real-world value keeps users engaged.
Technically, Notcoin leverages the TON blockchain, known for its scalability and security – crucial for handling a large user base and transaction volume. Market predictions suggest Notcoin has the potential for significant price increases in 2024, making it an intriguing option for crypto enthusiasts and gamers alike.
Remember: This information is for educational purposes only and should not be considered financial advice.
Should you hodl Altcoin or Bitcoin?
Which one of the two deserves a spot in your Nigerian portfolio? Here’s a breakdown to help you decide:
With Altcoins, you can hold for:
Affordable Entry: Altcoins often come with lower price tags compared to Bitcoin or Ethereum. This makes them attractive for beginners and those looking to diversify their portfolios without breaking the bank. Names like XRP, APE, MATIC, and SOL are good examples.
High-Growth Potential: Emerging Altcoins offer the possibility of significant returns, especially during bull markets. Remember the 2021 Altcoin season, where coins like ETH, BNB, and SOL skyrocketed? Careful research and investment strategies can lead to substantial gains, even in volatile markets.
Short-Term Plays: Altcoins are popular among short-term traders due to their price fluctuations. Promising options like SOL, XRP, and ETH can be used for quick buying and selling opportunities.
And with holding Bitcoin, you get an edge over:
Inflation: Bitcoin can act as a shield against rising inflation and unpredictable market shifts within the crypto space.
Lower Volatility: Compared to Altcoins, Bitcoin experiences less dramatic price swings. This can be beneficial for investors seeking a more stable crypto holding.
Global Transactions: Bitcoin’s consistent value makes it a viable option for cross-border money transfers (remittances).
Overall, putting your money into both Bitcoin and Altcoins might be a smart move because it spreads your risk and allows you to benefit from the stability of Bitcoin as well as the growth potential of Altcoins.
Remember: The crypto market is unpredictable and demands constant monitoring and analysis to adjust your investment strategies based on changing conditions. This includes employing risk management and, more importantly, never investing more than you can afford to lose.
Conclusion
While Bitcoin currently holds the upper hand in terms of market cap and liquidity, Altcoins are gaining traction and offering a wider range of investment options. As the Nigerian market matures and regulations evolve, the liquidity of these assets will undoubtedly change.
Think about what you want: stability (Bitcoin) or high-growth potential (Altcoins). No matter your choice, keep your eyes peeled on the market and don’t invest more than you can spare. The future of Nigerian crypto is looking good, so buckle up for the ride!