Topic: Why altcoins are backed by Bitcoin? (Read 267 times)

You must understand that Bitcoin is the Symbol of Cryptocurrencies . meaning the market and investors stand by this so what can you expect to be the effect of correction?

and also Bitcoin price drops almost 50% from the ATH now so is it fair if bitcoin fall will cost altcoin fall also.
The most complete and Valuable reply , I almost learn about Mining advantage from your Post man, Thank you so much .

I will be copying the whole post for my completely understanding , reading this multiple times will benefits me for sure...

I agree. Altcoins were originally invented to cover specific niches. But now the main issue is that for every such niche, we have 100 or 200 different altcoins. And in most of the cases, the white paper and algorithm is plagiarized from other projects. And since hype decides the market fate of these projects, in most cases the fake projects are able to perform well backed up with good social media campaigns, while the original projects lose out. But ultimately, the promoters will dump their coins for BTC or fiat and make the exit.

I agree with you, because not every case is true according to that thinking.

But in general, the things that are initially created will have solutions-oriented products... And obviously in this market so far altcoins are about taking bitcoins, maybe my way of thinking is not appropriate in the growth of this market, but it is still happening so far.

Bitcoin is still what we most want in this market.

This is because bitcoin is currently dominating the entire crypto market, bitcoin is the first crypto to come on board so lets say its the first to start this journey, so because of this, it it the most trusted coin by big whales, millionaires and billionaires, a lot more money and investments are tied in bitcoin than all the altcoins put together, so this is why bitcoin currently has the highest market dominance and also can control the entire market, in the future when big investors start to trust in other coins and bitcoin dominance comes down to lets say 1 percent, it will no longer have the power to control the market, when this time comes, every altcoin will be able to go up or down on their own, not minding which direction bitcoin is going.

Lots of interesting replies so here is my reply.

Pow coins are mined with power.

In my case I mine

Ltc/Doge
Btc
Eth

so I look at all of my gear and always study price of earnings per watt.

I have been mining a long time I am not a huge farm but my gear is paid off.
My power cost is fully managed.

So for 2000 watts  I pay 6 cents. x 24 hours is $1.50

what do I earn.

if i run an s17 pro set to 2000 watts it does 55th at 21 cents a th that is 11.21-1.50= 9.71
if i run 13 3060ti gpus set to 2000 watts it does 780mh at 10 cents an mh that is 78-1.50 = 76.50

for the same power.

now if I believe in eth I wont mine the btc I would double up my gpus.

but if I believe in btc I would mine both and dump the garbage eth for btc.

since all my gear is paid off I only need think of watts and fiat earned.

so I swap all my mined eth for btc.

this helps lower the price of eth as I am dumping it asap
it helps raise btc as i am creating a demand for it.

So what do i do if btc crashes and eth crashes.

I may panic and do eth to fiat. still hodl the btc.

add in my doge/ltc and those ratios favor mining doge/ltc not btc.

Since my bias is btc and all the coins above are linked by power to earnings they are all going to move up and down close to each other.

When they get out of synch crashes happen.

eth pays too much per watt
doge/ltc pays too much per watt
btc pays too little per watt.

if true btc will rise a bit and the others will drop a bit.

essentially they offer very similar features at least doge,ltc,btc do

eth is another animal if it was not controlled by mr v i would like it more. so the good features are lessoned by mr v having too much power.

this is how four pow coins are link via earnings per watt. which binds the prices somewhat together.

obviously pos are not really accounted for in this explanation but they are about as stupid as nfts, charile bit my finger sold for 720k yeasterday.

This is the most simple question ever asked.  Altcoins were created to grow the Bitcoin stash of their creators.  Using the Bitcoin received to back the altcoin would be them giving up money that could be in their pocket to add value to an altcoin they created to cash in on.  Backing it with the Bitcoin would be a little bit like opening a bank account for your golden goose and letting her own all the golden eggs she lays instead of taking those golden eggs and selling them to enrich yourself.  We all know that nobody is  opening any bank accounts for any geese around here...

Because BTC was the 1st of it's kind, and everything was at least back then, pegged to it somehow.
Now you can even find coins which don't have a btc pair (hard, but can be found)

Its because BTC is the strongest coin with the biggest marketcap at the moment, also its already listed on all exchange.
It just like USD pair in the forex market, the difference is alt power against BTC is really small, but i believe in the future some coin will overpass the Bitcoin power because its adopted by many person in the world as a payment processor.

Yeah, I understood the same from the "backed" as well but when you think about it, it can work the same way as well. Altcoins are sort of "backed" by bitcoin in that sense too because when bitcoin goes down the price of all others go down and that's backing, and when bitcoin goes up then price of altcoins go up as well.

I believe this dump caused the price of all other coins to drop as well because we are talking about a massive sell off from the people and that's understandable, I do not think that bitcoin started the dump and everything else dropped, I believe all crypto had a significant drop all together at the same time. This could be explained by the time difference, when there is a "backing" or anything like that, it has a time difference, bitcoin goes up first then a week later or a few days later the price of altcoins go up as well, this was all together at the same day even same minute.

There are certain reasons that why altcoins follow the Bitcoin rally which you need to understand:

- Bitcoin was first decentralised currency of its type built on POW mechanism and network is secured my miners so investors have faith on Bitcoin and want to invest in it on top basis.So whenever Bitcoin prices fall investors cash out from other alts also.

- Bitcoin is easily traded pair for BTC/USD and most of the exchanges don't allow for direct altcoin buying and you first have to convert your funds into Bitcoin and then exchange it for your prefered altcoins so it is directly related to price.

- There are many in market which are hard fork of Bitcoin like Bitcoin Cash and their price is relative to its growth somehow.

- Most Exchanges use Bitcoin as reserve currency as it is easily acceptable and most preferred Cryptocurrency so they maintain reserve with respect to altcoins also so whenever there is price dips it affect altcoin rally.

bitcoin is the mecca of the current altcoin, wherever bitcoin goes to the altcoin will follow it, if bitcoin moves calmly, but if bitcoin is aggressive, all altcoins will fall, this is already often the case, bitcoin is the determinant of all coins.

It's not necessarily "backed" by bitcoin. Bitcoin is just a pair of altcoin for trading.
People trade altcoins bother with BTC pair and Altcoin pairs such as USDT, BNB etc...
Most of the times people sell their altcoins in bitcoin pair to get hold of bitcoins during a bull run.
This is the reason why many altcoins dump in price in BTC pair during a bull run.

People should realise there is Bitcoin aka digital gold and there are some altcoins that are diggital currency and digital tech. Alts need bitcoin and bitcoin also needs alts because some of the revenue from alts always go to bitcoin.

The first crypto currency is Bitcoin, and Bitcoin is the parent of all coins in this virtual world,
look at the marketcap of Bitcoin on coinmarketcap, there are already more than 700 billion in the market,
yes and this is the reason why coins are based on Bitcoin , without Bitcoin altcoin there is no meaning mate.

This is how the cryptocurrency market works and nothing can be done about it, therefore, almost always when the price of bitcoin rises, the prices of altcoins also rises, and when the price of bitcoin falls, then prices of altcoins also begin to fall, of course, there are exceptions, but this usually happens, therefore you shouldn't even think about it because nothing will change either now or in the future, so I don't even pay attention to it as it doesn't bother me at all.

Bitcoin accounts for 46% of the whole crypto market cap, as long as other crypto will increase their market cap we could either see a decorrelation between bitcoin and some altcoins or the correlation of return could be reinforced if bitcoin is chosen as a refuge asset.

Altcoin is a coin alternative where it means the price will follow the price of coin on it, that is the BTC as the top Crypto. Although there are some alternatives that remain stable and unpunished but most of them will follow BTC prices. BTC is the best coin in Crypto and dominates the crypto market where if the price is down then the other coins will also go down. Both will be closely related as we know that Altcoin is an alternative coin from the BTC itself.

Altcoins are continuously trying to poach market share and funds from Bitcoin, but in the end they remain heavily dependent on BTC. You might have noticed that whenever Bitcoin prices go down, the altcoin prices go down even more (in terms of percentage). This is because the liquidity with many of these altcoins are lower than that with Bitcoin. In most cases, the altcoins are kept at an artificially inflated level, by removing most of the circulating supply from trading. And this create issues when a correction occurs and the prices go down very steeply.

Bitcoin is still the indicator for the whole crypto market. So even today it is still the case that if bitcoin starts to drop than almost all other coins are dropping too. The reason for that is that bitcoin is around the longest and a lot of people that are not really into crypto or do only know a little about cryptos in general don't really know about any other coins except bitcoin and maybe ethereum. Also most other projects have a BTC/altcoin trading pair which means the prices of that trades automatically go down to if the rates are not adjusted by the users which rarely happens.

This is due to the dominance of bitcoin, it's the most popular coin in the market, heavily invested so it's normal to see that altcoins will just follow. If you follow the market, before this bull run, bitcoin is holding a 60% dominance rate, which tells altcoins only follow.

By the way welcome, get yourself accustom to crypto so you will not make a bad decision, study its past and you will see the trend that you can easily follow.  What I can only say is that, be more aggressive investing in bitcoin than in altcoins.

Yeah, I guess I'm misunderstood what "backed" means. Answering the question from the OP, I think it's because bitcoin is the fundamentals of crypto as a whole, so where there is a change that occurs in bitcoin, other cryptos will follow it (although this doesn't apply to all existing cryptos, but most and more 80%).

What exactly do you mean by "backed"? If we look from your message, I think your question is more or less why altcoin took a big hit when Bitcoin dump. That was answered by some people above.

In crypto, people usually use the "backed" term to indicate that the token/coin has other assets to guarantee its value. There are some altcoins backed by BTC such as WBTC (or at least they claim to be), but not all of them do this.

The altcoin isn't backed by bitcoin, you must know all market altcoin has pair of BTC. just look at coinmarketcap.
when bitcoin dump, altcoin would be dump and when bitcoin pump, altcoin would be dump either. After that, the altcoin will have the session (altcoin session). Holder altcoin should know the situation right now, this happens all time.

I cannot understand why you think think that the alts are backed by Bitcoin, if you are talking about trading pair, then some of the coins have other trading pairs as well including ETH and other fiat currency trading pairs and whenever there is a correction in Bitcoin it does not mean that correction is pulling the entire market down, everyone else holding those alts are selling off their coins as well.

Exchanges paired a lot of altcoins with Bitcoin, to double dip in FEES ,
1. Deposit fiat and buy Bitcoin you pay a fee.
2. Buy altcoin with Bitcoin you pay fee,
3. Withdraw Bitcoin or altcoin you pay fee
Thats why alts are backed by BTC so exchanges can rip you off

Basically, because almost all Altcoins have trading pair with Bitcoin and as such, if the price of Bitcoin goes down it will naturally affect the Altcoin and you must understand that since Bitcoin is like the Alfa or is the Alfa of crypto, people will naturally panic sell their alts if the reaction to bitcoin price even the Alts that are not paired with BTC.

Bitcoin is the number 1 cryptocurrency so most altcoins will only follow the price of Bitcoin, in the cryto market there are many altcoins, of course different, some have big or small potential, some of these altcoins use Bitcoin on their platform, so it cannot be ruled out, that Bitcoin is king.

btc is the first crypto to ever and has a huge market cap and widely accepted in the crypto community, every exchange list btc as trading pair against other coins/tokens, any project who want to have a wide reach of users will definitely paired to btc when listing on exchange to have wider market, so in this case, when btc going down most alts are equally down, same when btc is up. the whole market largely depend on btc.

There's no being fair or unfair on the market. They're mostly paired with bitcoin and that's why all of them are affected when bitcoin drops.
It is okay that you're asking and being curious what's really happening and for sure that you get to learn more about the market.

Bitcoin and altcoins are two independent coins but are correlated to each other. Bitcoin being the leading coin in the crypto world will surely affect the coins following its path once the price will rise the others will rise as well and vise versa.

In my opinion if altcoin didn't backed by bitcoin but bitcoin is a very strong coin that already affected the whole of market. You can dig into the old thread on this forum about the history of crypto.
Bitcoin is the first crypto that issued by satoshi and then there have been new developers started to work with the code of bitcoin.
The bitcoin code is open source and that was making altcoin to be exist in the market. This is making altcoin fundamentally connected with bitcoin.

Altcoins are parasites on the trend, success of Bitcoin. Bitcoin does not have relation with altcoins and it does not back altcoins.

Bitcoin rises, altcoins can rise together if it is a bull trend. If the market is in a bearish trend, altcoins can move side way or fall even bitcoin is on a rise.

Bitcoin falls, altcoins will be in bloodbath.

After bloodbath of Bitcoin, it will rally first and if there are altcoins will follow Bitcoin, they would be top altcoins.

In my opinion, it is because Bitcoin is the base of cryptocurrency so mostly altcoins will just follows through the hype of Bitcoin even though there are lots of different altcoins which have a big potential, most of this altcoins are using Bitcoin in their platforms so it is unavoidable that Bitcoin is the GOAT in cryptocurrency.

That's a different perspective, it sounded like the altcoins have no right to exist.

Altcoins are not backed by Bitcoin. BTC is just the base currency when an altcoin is paired to BTC because we base the price on BTC. The price of ADA for example is 0.00003876 BTC which currently is worth $1.38 as the value in USD or USDT.

Bitcoin is a way for the altcoin to determine its value and from there that's why altcoin totally pegged with the bitcoin caused by altcoin have been using bitcoin as a way to know how much it will worth.
You should read various article on the internet to know more about the correlation between altcoin and bitcoin.
Bitcoin is the history of altcoin. Altcoin generated from forking the bitcoin code.

It's because there are still many markets are selling altcoin with BTC pair instead of crypto fiat (USDT for example), so the altcoins will naturally drops when bitcoin price is dropping. Also bitcoin is the largest and the most famous cryptocurrency right now people must be panic when the price is drop

You just need to understand as follows, altcoins are created to steal bitcoin. 
And when the bitcoin are stolen we get the altcoins.

Bitcoin has been around the longest and is the most trusted cryptocurrency. Fiat and stablecoin trading pairs have been really common for a while now. There are also ETH and BNB trading pairs so you really can't blame bitcoin for altcoins performing badly. Nobody is thanking bitcoin when the price goes up. Altcoins are dropping harder because people have less faith in them. Many of them are also scams. People are realizing NFTs are useless and dogecoin was all hype and no substance. There is good reason why people prefer bitcoin.

So I am a newbie and I always had this question in my mind why all altcoins are backed with BTC because at times like these altcoins are the most affected one there are some really great altcoins out there but due to this correction we can see a massive drop in those coins and I don't think it is fair to other coins that because of only one single coin they also see a massive drop.

I am saying again I am just a newbie who is trying to understand these market.

Thank you