Bitcoin vs Other Cryptocurrencies
Bitcoin is widely considered to be the top dog when it comes to cryptocurrencies – but how do other cryptocurrencies compare and contrast?
It’s probably worth beginning this conversation by introducing the concept of the ‘Bitcoin maximalist’ or Bitcoin maxi.
A Bitcoin maxi is a person who believes Bitcoin is the only worthwhile cryptocurrency and that all other cryptocurrencies are a waste of time. Bitcoin maxis often refer to non-Bitcoin cryptocurrencies as ‘shitcoins’. A less pejorative term is ‘altcoins’.
Interestingly, many so-called shitcoiners – who buy other cryptocurrencies and either have no Bitcoin or very little – do actually agree with Bitcoin maxis that Bitcoin is a superior technology to anything else.
However, where they differ from Bitcoin maxis, is that they hope to make more money from their altcoins than they would if they only held Bitcoin.
I mention all of this just so you are aware there can exist quite a lot of tension between buyers of the various cryptocurrencies.
Blockchains, Coins, Cryptocurrencies & Tokens
There’s a heck of a lot of confusing jargon coming up, so let’s establish some semantic ground rules first:
A Blockchain is a decentralised digital ledger in the internet. Many blockchains exist, for example, Bitcoin, Ethereum, and Solana.
Most blockchains have their own native Coin. These coins – annoyingly – usually have the same name as the blockchain:
- The Bitcoin blockchain’s native coin is Bitcoin, also known as BTC.
- The Ethereum blockchain’s native coin is Ether, also known as ETH.
- The Solana blockchain’s native coin is Solana, also known as SOL.
Top 10 Cryptocurrencies
Here are the Top 10 cryptocurrencies, in terms of market capitalisation, at time of writing in early October 2024:
| Cryptocurrency | Market Capitalisation (approximate) |
|---|---|
| Bitcoin | $1,206,000,000,000 |
| Ethereum | $285,000,000,000 |
| Tether | $120,000,000,000 |
| BNB | $79,000,000,000 |
| Solana | $65,000,000,000 |
| USDC | $36,000,000,000 |
| XRP | $30,000,000,000 |
| Dogecoin | $15,000,000,000 |
| Tron | $13,000,000,000 |
| Toncoin | $13,000,000,000 |
You can see at a glance that Bitcoin is the biggest cryptocurrency. It’s about 4 times larger in market cap than its second-place rival, Ethereum.
And Ethereum itself is noticeably larger than Tether, BNB and Solana in 3rd, 4th and 5th places respectively.
It’s worth drawing your attention to the fact that all of these cryptocurrencies – and several others below the Top 10 – have massive value. Toncoin in 10th place is roughly a $13 billion asset. That’s huge!
What’s the Point of the Other Cryptocurrencies?
That’s a question Bitcoin maxis often ask. Bitcoin has proved to be a fantastic store of value over the last 10 years – better than any other asset class – and is used to send money all over the world and is gradually being adopted by retail merchants so you can actually pay for stuff.
So, what do the other cryptocurrencies bring to the table? There’s no one answer. There are literally 1,000s of coins and tokens, each one with a different story. Nonetheless, we can group some of them into broad categories. Here we go:
Utility Coins / Tokens
A utility coin, or token, is a type of cryptocurrency that gives holders access to specific services, products, or features within a particular blockchain ecosystem.
Utility coins serve a specific purpose, such as paying for transaction fees, accessing premium services, or participating in governance.
Examples of utility coins include:
Ethereum (ETH) – used to pay for transaction fees (gas) and interact with decentralised applications (dApps) on the Ethereum network.
Binance Coin (BNB) – used to pay for discounted fees on the Binance exchange and participate in Binance Smart Chain (BSC) dApps.
Chainlink (LINK) – used to pay for oracle services that connect smart contracts to real-world data.
Some of the above will sound like mumbo jumbo. Just ignore it, and read on:
Stable Coins
A completely different category of coin are ‘stable’ coins. Some of these are incredibly successful and perform an important role around the world as we shall see.
Let’s look at the largest stable coin by market cap called Tether. Tether is, in essence, a kind of digital US dollar. If you buy $100 of Tether, you have bought an amount of the Tether cryptocurrency equal to $100.
Using an easily downloadable wallet, you can send your Tether dollars wherever you want, swap them into another cryptocurrency including Bitcoin, convert them back into real dollars, or buy more Tether dollars with cash you deposit into the app.
Stable coins like Tether are popular in countries suffering from high inflation. Look at this table showing inflation rates in certain countries (as of July 2024):
| Country | Inflation Rate |
|---|---|
| Venezuela | 398% |
| Lebanon | 224% |
| Sudan | 138% |
| Argentina | 113% |
| Zimbabwe | 86% |
| Turkey | 47% |
| Nigeria | 33% |
| USA | 2.9% |
| Euro Area | 2.6% |
People living in the USA and Europe, generally speaking, have relatively low inflation rates.
In the other countries in the table, that’s not the case. Inflation varies from a very high 33% in Nigeria to an astronomical 398% in Venezuela.
Inflation is an insidious evil that destroys the purchasing power of your currency. It’s why prices are going up all the time. So what can you do about it?
Well, imagine you live and work in Turkey and earn 15,000 Turkish Lira a month. That’s equivalent to about US $550 at the current exchange rate (July 2024).
At an inflation rate of 47%, if you keep your 15,000 Turkish Lira in the bank, it will have an effective purchasing power of only 7,950 Lira in a year’s time.
What happens if, instead, you convert your 15,000 Lira as soon as you earn it into Tether? You would get about $550 worth of Tether. After one year on the 2.9% inflation rate of the US Dollar, your Tether dollars would have a purchasing power of about $534. If you then convert those $534 Tether dollars back into Turkish Lira in your smartphone app – assuming the Lira-USA currency exchange rate hasn’t changed – you would receive 14,567 Lira.
Just let that sink in. Keep your 15,000 Turkish Lira in the form of Lira and see it go down to a purchasing power of 7,950 Lira. Or, convert it into Tether Dollars and see a small purchasing power reduction to 14,567 Lira. What a difference.
Not surprisingly, Tether is a financial life-saver for many thousands of people around the world who have the misfortune of living in high-inflation countries.
Other US dollar-based stable coins include:
- USDC
- First Digital USD
- PayPal USD
- TrueUSD
You can even get stable coins in non-dollar currencies such as the Euro, but the US-based stables coins are far more popular.
Meme Coins
Now let’s go from the inflation-resisting sublime of stable coins to the comical ridiculous of meme coins. This category of cryptocurrency is really silly, but very popular.
Meme coins are often based on a popular character, idea, animal, meme or other cultural trend. Many of these coins derive from internet-based culture. Here are some meme coins and the character they are associated with:
| Coin Name | Associated Character | Ticker |
|---|---|---|
| Dogecoin | Dog | DOGE |
| Shiba Inu | Dog | SHIB |
| Pepe | Frog | PEPE |
| Dogwifhat | Dog | WIF |
| Bonk | Cat | BONK |
| Andy | Dog | ANDY |
| Brett | Dog | BRETT |
| Mog | Cat | MOG |
As you can see, animals are very popular as meme coins.
Unlike utility coins or stable coins like Tether, meme coins have absolutely no intrinsic value. They are just a bit of fun.
Despite this, small fortunes can be made and lost in a short space of time by trading meme coins. They are highly volatile and some have achieved massive valuations. Look at the market caps of the Top 3 meme coins (as of early October 2024):
- Dogecoin – $15.3 billion
- Shiba Inu – $9.6 billion
- Pepe – $3.8 billion
That’s a serious amount of cash invested in a bunch of funny animals. On the surface, meme coins don’t appear to make any sense at all. But the reality is that thousands of people love them and are prepared to risk their money by investing in them. If you can happily hold both Bitcoin and a meme coin, you are a Doublethink black belt.
Summary
- Bitcoin is widely recognised as the best cryptocurrency ever invented.
- Some of the other cryptocurrencies are trying to provide a useful service, such as making the financial world more efficient.
- Stable coins are a vital invention for people living in high-inflation environments.
- Meme coins are mad, but very popular and some have huge market caps.
Useful Resources
> If you want to explore other cryptocurrencies, coins and tokens beyond Bitcoin, a good place to start is CoinMarketCap: coinmarketcap.com
Where to Next?
If you’ve been reading the sections in order, the next page we recommend is Who’s Who in Bitcoin.