What Are Altcoins? A Guide To Crypto Beyond Bitcoin

Binance also offers advanced trading features, including futures and margin trading, catering to both beginners and experienced traders. Polkadot focuses on interoperability, allowing different blockchains to communicate and transfer data with each other. Polkadot uses a unique architecture that includes a relay chain and multiple parachains, which are specialized blockchains that can be customized for specific use cases. The DOT token is used for staking, governance, and paying transaction fees within the Polkadot network. The platform aims to create a decentralized web by enabling seamless integration between different blockchain protocols.

Solana (SOL) – High-Speed Transactions

Bitcoin’s price swings follow a market cycle, but altcoins’ volatility tends to be even more extreme. Their value can skyrocket or crash within hours, making them riskier investments. It how to buy defi coin introduced the world to digital assets powered by blockchain technology. As the word altcoin suggests, these assets are alternatives to Bitcoin. PoS requires investors to hold funds in a cryptocurrency wallet in exchange for rewards over time.

While Bitcoin’s primary objective is to be a store of value, altcoins often have varying purposes that impact the risk, success rate, demand, and use case of owning the asset. You won’t earn any profit through price appreciation with stablecoins, but there are plenty of applications for a coin whose value doesn’t rise and fall by the minute. For some, stablecoins offer a way to hold funds in a crypto exchange and easily convert them into another cryptocurrency, rather than converting from U.S. dollars. Others may use stablecoins to easily send and receive funds globally.

This also means that Bitcoin has more of a track record, which may be more appealing to long-term investors who may see newer altcoins as a riskier investment. That said, because altcoins aim to be more advanced than Bitcoin, they may be the preferable option for some. The investing information provided on this page is for educational purposes only. NerdWallet, Inc. does not offer advisory or brokerage services, nor does it recommend or advise investors to buy or sell particular stocks, securities or other investments. NerdWallet, Inc. is an independent publisher and comparison service, 25 exchanges to buy bitcoin in the united states bitcoin guides not an investment advisor. Its articles, interactive tools and other content are provided to you for free, as self-help tools and for informational purposes only.

• ‘Altcoin season’ refers to periods when alternative cryptocurrencies – known as altcoins – outperform BTC in terms of market dominance, trading volume, or returns.
• Yes, Ethereum is an altcoin, as it’s any cryptocurrency that is not Bitcoin.
• Litecoin has been around for a long time and has a solid track record and a large community of developers.
• BNB is one of the top altcoins by market cap and belongs to Binance, the world’s largest crypto exchange.

Key differences between altcoins and Bitcoin

Early adopters may gain significant returns if these projects (1) deliver on their potential and (2) resonate with the market. Altcoins with meaningful use cases and partnerships can attract institutional interest and drive long-term growth. As of December 2024, there are over 10,000 active cryptocurrencies worldwide, each designed with a specific purpose or function in mind. These can range from practical applications like powering decentralised networks to more speculative assets driven by community support. Altcoins are any cryptocurrencies that are not Bitcoin (and, according to some experts, Ethereum). These coins provide a variety of functions beyond storing value and being used as currency.

What is an altcoin?

For instance, CoinMarketCap’s altcoin index, which focuses on top 100 coins, remains stuck at 27 to suggest “bitcoin season.” A sudden reversal like this often signals a capital rotation, with traders beginning to shift profits from BTC into altcoins. Recently, CryptoQuant CEO Ki Young Ju called Bitcoin Cycle Theory obsolete as TradFi takes over.

Security Tokens

But many altcoins have taken this premise and either used it to achieve different goals or sought to improve a perceived flaw in Bitcoin. Altcoins encompass everything that isn’t Bitcoin, but don’t be tempted to lump them all together. Consider your timing before making the exchange from BTC to altcoin, just as you would with any other currency exchange. On the other hand, a niche that meets demand could also take off quickly if it serves a gap in the marketplace. Despite their moniker, sometimes stablecoins are anything but stable. TerraUSD, a stablecoin pegged to the dollar, made headlines in May 2022 when it collapsed to just pennies on the dollar.

Instead, utility tokens act as vouchers for purchasing goods or services within the blockchain ecosystem. Utility tokens are usually awarded to investors who participate in the early stages of a coin’s initial offering. These types of altcoins are a new subset of the full time job during coding boot camp crypto market that’s meant to reduce volatility. By design, they’re digital assets with value pegged to fiat and physical assets (off-chain) and crypto collateral (on-chain).

They solve new problems, improve speed and security and bring fresh features to the market, pushing the entire industry forward. Bitcoin introduced blockchain technology, and most early altcoins tried to compete with BTC. Many will disappear, but the strongest projects will continue shaping the cryptocurrency market.

However, regulatory challenges, particularly with the SEC, have impacted its adoption in certain markets. Decentralized finance (DeFi) tokens power blockchain-based financial services. These tokens enable lending, borrowing, trading, and staking without intermediaries. Investors buy utility tokens because they believe in a project’s potential. Their value is often linked to the adoption and success of an underlying blockchain ecosystem. Tokenomics examines the economic principles behind cryptocurrency creation, distribution, and usage.

Many altcoins like Litecoin and Ripple offer faster transaction speeds and lower fees. Meme coins, as their name implies, are digital currencies that derive their inspiration from humorous or satirical takes on established cryptocurrencies. They tend to gain widespread popularity quickly, often due to influential figures or investors promoting them online in an attempt to profit from short-term gains. Some industry players contend that all cryptocurrencies have developed because of Bitcoin and that up to 99 percent of all altcoins will eventually be worthless. The main reason, however, behind an altcoin failing is lack of utility.

• The alts, or altcoins, work on the same technology as Bitcoin, wherein each transaction is stored in a block forming a chain, known as the blockchain.
• By design, they’re digital assets with value pegged to fiat and physical assets (off-chain) and crypto collateral (on-chain).
• But this compensation does not influence the information we publish, or the reviews that you see on this site.
• Every actor participating in the IOTA network has the same incentives and rewards.
• No other financial rewards are offered, the network is fee-free and allows for high scalability.

Examples of altcoins

Solana is one of the most popular altcoins in the crypto community, known for its faster transaction speeds and low fees. Its hybrid Proof-of-Stake and Proof-of-History consensus enables high-speed processing, making it ideal for DeFi, NFTs, and gaming platforms. However, its network has suffered multiple outages, raising concerns about long-term reliability. These types of altcoins are digital or liquid assets representing an ownership stake in a tangible asset. Stored on a distributed ledger, security tokens are the blockchain equivalent to shares, but they can also represent a stake in an asset like IP or property.

As an investor, you have many to choose from, and many entry points. Altcoins are a type of digital currency that is an alternative coin to Bitcoin. Governance tokens give holders voting rights to help shape the future of a project or network. These tokens allow users to create and vote on proposals related to the cryptocurrency, contributing to its decentralised nature and ensuring that decisions are not made by a single central authority. They get inspiration from popular internet memes and have little to no intrinsic value. Memecoins originally mocked or satirized the hype and perceived absurdity of the broader cryptocurrency market.