Can You Save Money Using Altcoins to Settle Bitcoin Transactions? Don’t Even Think About It

As the Bitcoin network faces transaction congestion and high fees, many people have begun to consider choosing other cryptocurrencies to avoid these problems. During peak trading periods, some cryptocurrency supporters suggest using altcoins to improve settlement time and save miner fees. However, using altcoins to save transaction fees may bring unexpected troubles.

Settlement costs, times and risks of altcoins

Recently, many people have complained about the high transaction fees and long confirmation times for Bitcoin. Some say it is best to wait patiently for Bitcoin developers to implement a scaling solution, but no one knows when that will be. Some have already proposed using altcoins to increase transaction speed and reduce the fees required. But is this necessary?

Bitcoin and Altcoin Exchange

Before you can use altcoins, you must first purchase specific digital currencies on an exchange. However, most altcoins on exchanges require Bitcoin to be traded. This means you still have to use the Bitcoin network, pay miner fees, and wait for a while. In addition, registering on an exchange platform requires account verification, which you have to wait for. There are some platforms like Shapeshift that do not require registration, but the registration process on most exchanges is mandatory.

In addition, third-party trading platforms also have the risk of fund custody, which may be stolen at any time. The closed altcoin exchanges such as Mintpal and Cryptsy lost their users' funds without their knowledge. In addition, exchanging Bitcoin for altcoins requires paying Bitcoin mining fees, altcoin mining fees, and exchange transaction fees.

Altcoin Volatility

There is also the issue of volatility when using altcoins instead of Bitcoin for transaction settlement. In the eight years since Bitcoin was created, its volatility has been greatly reduced. However, this is not the case for the hundreds of cryptocurrencies currently on the market. Bitcoin's market volatility is lower than all altcoins, and this attribute will only become stronger. Bitcoin supporter and analyst Willy Woo has detailed the reasons for Bitcoin's low volatility. In addition, Woo believes that within two years, Bitcoin's volatility will be similar to that of some major fiat currencies.

I am sure that Bitcoin is about to become the most stable currency in the world.

Saving money with altcoins could result in greater losses if transactions are not settled in a timely manner. Sending funds using altcoin secondary wallets could even result in heavy losses, as large price fluctuations can absolutely affect one’s purchasing power. The volatility of altcoins is likely to pose a higher risk than the increasing transaction fees of Bitcoin.

Infrastructure and Merchants

The Bitcoin network has a far-reaching impact and has the most complete infrastructure compared to other altcoins. There are more than 100,000 merchants around the world that accept Bitcoin payments, while the acceptance of altcoins is very low. Therefore, it is not so convenient to save money with altcoins, after all, there are few places that accept digital currencies other than Bitcoin. Bitpay's merchant service does not provide altcoin support, and most global payment processors and debit cards only accept Bitcoin.

Because exchange systems are too fragile, users must hold altcoins in secondary wallets, which inevitably requires using their limited infrastructure. Most altcoins do not have infrastructure at all. Users may need to download the QT client for a particular altcoin because there are too few light wallet options. And most altcoin light wallets are unaudited and can easily lead to fund loss.

The Problem with Altcoin Blockchains

Altcoins will eventually face the same problems that the Bitcoin network currently has, such as long confirmation times and network attacks. For example, a few months ago, an attacker caused a lot of trouble for ETH network users. In the second half of 2016, the ETH network suffered multiple DDoS attacks. The Geth client was implicated, and some users had to switch to Parity. Moreover, the transaction processing time at that time was several hours or even days.

In 2014, the Dash community conducted a series of forks in an attempt to deploy a new masternode system, but suffered an unexpected fork. At that time, some users' wallets could not be synchronized, and some major altcoin exchanges also suspended Dash deposits and withdrawals. Dash holders suffered huge losses due to market volatility during the fork. Before the system encountered problems, the price of Dash peaked at $15, and then fell to $5 in the following months.

Bitcoin has problems, but they are not nearly as severe as altcoins

Replacing Bitcoin with altcoins is definitely not in the best interest of users. Altcoins may have a role in emerging areas such as anonymous services, but using them to save money is simply not worth it. The fact is that altcoin settlement risk is high. Even with higher fees and slower confirmation times, Bitcoin's advantages over other cryptocurrencies continue to eclipse.

However, if the Bitcoin network continues to be unable to expand and the transaction fee market continues to expand, a large number of users will sooner or later flock to competing coins.