What is an Altcoin?

Altcoins (alternative coins) is a term used to describe all cryptocurrencies other than Bitcoin (BTC -0.4%). Their name comes from the fact that they’re alternatives to Bitcoin and traditional fiat money.

The first altcoins launched in 2011, and, by now, there are thousands of them. Early altcoins aimed at improving aspects of Bitcoin such as transaction speeds or energy efficiency. More recent altcoins serve a variety of purposes depending on the goals of the developers.

Since altcoins are such a big part of the market, every crypto investor should understand how they work. Keep reading to learn about what altcoins are used for, their pros and cons, and much more.

There are several different types of altcoins, including stablecoins, mining-based coins, staking-based coins, and governance tokens. 

The term altcoin refers to all cryptocurrencies other than Bitcoin (and for some people, Ethereum).

There are tens of thousands of altcoins on the market.

Altcoins come in several types based on what they were designed for.

The future value of altcoins is impossible to predict, but if the blockchain they were designed for continues to be used and developed, the altcoins will continue to exist.

1. Stablecoin

A stablecoin is a type of cryptocurrency whose value is tied to an asset such as the U.S. dollar or gold to maintain a stable price.

A “stablecoin” is a type of cryptocurrency whose value is pegged to another asset class, such as a fiat currency or gold, to stabilize its price.

Cryptocurrencies such as bitcoin and ether offer a number of benefits, and one of the most fundamental is not requiring trust in an intermediary institution to send payments, which opens up their use to anyone around the globe. But one key drawback is that cryptocurrencies’ prices are unpredictable and have a tendency to fluctuate, often wildly.

in March 2021, payment processing giant Visa Inc. announced that it would begin settling some transactions on its network in USDC over the Ethereum blockchain, with plans to roll out further stablecoin settlement capacity later in 2021.

most popular stablecoins

Tether

Tether (USDT) is one of the oldest stablecoins, launched in 2014, and is the most popular to this day. It’s one of the most valuable cryptocurrencies overall by market capitalization.

USD Coin

USD Coin is a stablecoin launched jointly by cryptocurrency firms Circle and Coinbase in 2018 through the Centre Consortium.

Like tether before its shift towards a mix of collateral assets, USD Coin is pegged to the U.S. dollar. USDC is an open-source protocol, which means any person or company can use it to develop their own products.

Dai

Running on the MakerDAO protocol, dai is a stablecoin on the Ethereum blockchain. Created in 2015, dai is pegged to the U.S. dollar and backed by ether, the token behind Ethereum.

2. Mining-based

This type of cryptocurrency use a process called mining to verify transactions and add more coins to the supply. Miners use devices to solve mathematical equations. Typically, the first miner to solve the equation gets to verify a block of transactions. In return, miners who verify blocks receive crypto rewards.

3. Staking-based

These cryptocurrencies use a process called staking to verify transactions and add more coins to the supply. Holders of a staking-based cryptocurrency can choose to stake their coins, meaning they’re pledging those coins to be used for transaction processing. The cryptocurrency’s blockchain protocol chooses a participant to verify a block of transactions. In return, participants receive crypto rewards.

List of the Best Staking Coins to Buy Today

Looking for a top staking coins list? If so, the 10 best coins to stake right now are listed below:

AiDoge – A New Meme Generation Platform with a Community-Driven Approach. Using Sophisticated AI Technology it Creates Relevant Memes Based on Text Prompts. Its Current Presale Has Already Raised over $6M USDT.

Ecoterra– Exciting Staking Coin Helping to Fight Climate Crisis

RobotEra – Metaverse Building Ecosystem With Passive Rewards

Tether – Earn Staking Rewards Without Market Volatility

Ethereum – Large-Cap Smart Contract Framework With Proof-of-Stake Rewards

Cardano – Efficient Staking Coin With 80% Discount From Prior All-Time Highs

TRON – Permissionless and Decentralized Blockchain for Content Creators

BNB – Invest in the Future of the Binance Ecosystem

Peercoin – The Original Proof-of-Stake Blockchain

SwissBorg – Democratising Wealth Management Through Web3 Technologies

4. Governance Tokens

Governance tokens are cryptocurrencies built on blockchain platforms, that grant holders the right to participate in the governance of a protocol.

Token holders have a say in proposing new features to a project and making changes to its governance system, depending upon their voting powers. The voting power of each token holder is proportional to the number of tokens they hold. The more governance tokens they hold, the more influence they have.

Governance tokens are designed to provide holders with ownership in fully decentralized protocols. Anyone who holds a governance token can influence a protocol’s future direction.

Most protocols accommodate a standard proposal submission process that lets developers make various proposals. In the event that a submission is taken to a vote, token holders can use their voting power to influence any potential change to the project. Governance tokens are considered to be a key decision-making mechanism within decentralized autonomous organizations (DAOs).

When a governance proposal is taken to a vote, token holders get the opportunity to position their vote on the blockchain. In most cases, the voting power a token holder has is directly proportionate to the total number of tokens that they hold. Therefore, anyone who has 1,000 governance tokens will have double the voting power of a holder with 500 tokens. Nevertheless, each DAO has slightly different governing methods. The types of governance proposals for which token holders can vote typically include:

1. Making revisions to developer funds
2. Ensuring that best practices are adhered to when developing user interface changes
3. Modifying reward distribution
4. Voting on fees for network transactions

ADVANTAGE AND DISADVANTAGE OF ALTCOIN

How many Altcoins exist?

As of today, over 5000 of these “alternative” currencies have been created worldwide.

Are Altcoins any different from Bitcoin?

Most of the Altcoins are based on Bitcoin, and their basic functions are essentially the same.

Bitcoin vs Altcoins

The total global cryptocurrency market has a total market capitalization of roughly $996 billion, as of July 26, 2022, according to CoinMarketCap.

Bitcoin, the leading cryptocurrency, holds about 41.7% of the crypto market share, and Ethereum, the second-largest crypto, accounts for about a 20% share of the total crypto market. The rest of the crypto market is comprised of altcoins.

While Bitcoin is larger and well established, many altcoins are smaller, have lower valuations, and may be more experimental or innovative. Given Bitcoin’s enormous increase in value over its 13-year span, some investors who are interested in buying cryptocurrency may hope to find an altcoin that could deliver the same outsize returns. But as with anything in the investing world, there are no guarantees.

As of July 2022, Bitcoin itself, along with most other crypto, has also seen a dramatic drop in value since its all-time high of about $68,000 in November of 2021.

Difference between bitcoin and altcoins

It is fair to say that Bitcoin has better investing fundamentals than the vast majority of altcoins. Bitcoin is the most purchased, held and traded cryptocurrency on the market. It has a market capitalization of about $1.2 trillion, or more than 60% of the total market cap of cryptocurrencies. Bitcoin’s daily trading volume accounts for more than $30 billion, which means it’s a highly liquid asset.

altcoins with stronger fundamentals will have difficulty catching up with Bitcoin. All the while, Bitcoin’s popularity and demand continue to grow.

Some investors see Bitcoin as a way to store wealth and point to its increasing acceptance as a payment currency.

Furthermore, there’s growing demand for Bitcoin among both individual and institutional investors. As a result, greater investment interest creates more credibility and adoption of Bitcoin in the long term.

Another factor contributing to Bitcoin’s dominance over altcoins is that Bitcoin has enough of a track record to show an ability to withstand market crashes.

Investing in Altcoins

When Bitcoin goes up, altcoins also tend to go up, and when Bitcoin falls, altcoins tend to also fall. But the rises and falls of altcoins tend to be much more volatile than those of Bitcoin.

Still, some investors see upside in altcoins in a market where Bitcoin is trading near record highs.

“As the price of Bitcoin rises to a certain point, money will flow from Bitcoin to altcoins. As the price of altcoins rises, it flows back to Bitcoin,” says Philippe Bekhazi, CEO of cryptofinance firm XBTO.

Crypto investors who want to diversify into altcoins should consider the risks associated with these digital assets. There are more than 10,000 cryptocurrencies, which means the probability of choosing one of the few that will have staying power is low.

Given the versatility in altcoin options, Bekhazi says crypto investors can tailor their risk.

“Altcoins, especially the smaller ones, have the potential to provide exponential returns on the initial investment if you choose the right ones. One year ago, a Solana token now worth over $200 cost just $2. However, most altcoins will never take off, and often lose what little value they have if the project isn’t maintained,” he says.

Since altcoins carry high risk, it’s best to seek out alternatives that are high in quality and have strong fundamentals, experts told U.S. News. Risk-averse investors should seek out altcoins that have the promise of future widespread utility and consider the size of their market cap and the magnitude of price swings.

“Volatility is always going to be an issue with a nascent, speculative asset class like crypto, so investing in fundamentals will ultimately lead to a more successful long-term strategy,” says Nick Saponaro, CEO of the Divi Project, a blockchain startup in San Diego.

Meme coins like Dogecoin and Shiba Inu may ride community-driven waves to exponential highs, but Saponaro says, “These peaks are often short-lived because there is little to no fundamental basis for the price of the asset.”

Market Cap

Market capitalization, or market cap, is one measurement of a company’s size. It’s the total value of a company’s outstanding shares of stock, which include publicly traded shares plus restricted shares held by company officers and insiders.

As of April 2023, the total market capitalization of domestic companies listed on stock exchanges worldwide recorded as 108.23 trillion U.S. dollars

To calculate market cap, you take the total number of a company’s shares outstanding and multiply that figure by the company’s current stock price. For example, if a company has 5 million shares outstanding and its current stock price is $20, it has a market capitalization of $100 million.

The Limitations of Market Cap

Something important to keep in mind is that market cap is the perceived value of a company because stock price is determined by investors. It isn’t necessarily the actual value of a company and all of its parts. Some of that perceived value may stem from expectations of future growth or the introduction of a product, but those expectations may not pan out, in which case the share price of the company—and thus its market cap—is likely to adjust accordingly.

That’s why it’s a good idea to look at a number of metrics when considering an investment. Market cap can be one tool you use to develop a diverse portfolio, but it shouldn’t be your only tool.

Most promising altcoins to buy in 2023

The sections below offer a glimpse into the top altcoins we will be reviewing in this guide:

Wall Street Memes – With the backing of 1 million loyal community,, Wall Street Memes has raised over $2.6 million in a week through the $WSM token presale. Elon Musk interacted with the project on Twitter.

AiDoge – The $AI presale has already raised $15 million in its presale. It’s building an AI-based meme-generating crypto platform.

yPredict – With $YPRED, users can purchase monthly subscriptions to crypto models giving detailed insights into the future of the crypto space. $YPRED selling out fast and is priced at $0.09 on presale.

Launchpad XYZ – This cryptocurrency platform acts as a single entry point for accessing Web3 services such as DEXs, buying fractionalized assets, and creating crypto wallets. Buy $LPX on presale and access multiple trading discounts.

ecoterra – Earn $ECOTERRA, the native token, on presale by recycling waste using this platform’s Recycle2Earn application.

DeeLance – This platform leverages blockchain technology to decentralize the freelancing industry. Buy $DLANCE on presale to mint your work into NFTs and connect on a metaverse.

Ethereum – Largest Altcoin in the Crypto Space, Boasting a Market Cap of Over $225 Billion

Polygon – Top 10 Altcoin offering High Throughput and Low Transaction Fees

Solana – Layer-1 Blockchain Processing Up to 65,000 Transactions per Second

Dogecoin – Top Meme Coin which has Offered an ROI of Over 12,000%

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