What Are Altcoins? A Guide to Alternative Cryptocurrencies

Everyone knows about Bitcoin (BTC), especially given how much it’s mentioned in the crypto media, but arguably the second most common, yet more confusing

Bitcoin (BTC) is a household name, especially given how frequently it’s mentioned in the crypto media, but arguably the second most common, yet more confusing term, is ‘altcoins’.

The truth of the matter is that the two are inherently related. While Bitcoin set the foundation for crypto’s existence, altcoins have allowed it to flourish into the ecosystem we all know today.

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But the question remains: What exactly are altcoins, and what sorts of benefits can they offer the everyday crypto investor?

An altcoin is simply any cryptocurrency that isn’t Bitcoin, with the ‘Alt’ referring to ‘alternative.’

It’s important to remember that Bitcoin was the very first modern cryptocurrency, so in a sense, every crypto that came after it was based on, or at least inspired by, Satoshi Nakamoto’s token.

However, Bitcoin is far from perfect and has several issues that many altcoins have seemed to address, creating an endless cycle of improvement.

Therefore, while all altcoins are based on Bitcoin’s technology, they each have their own use cases and purpose, becoming alternative coins to the token that started it all.

The term altcoin didn’t exist until Namecoin arrived in April 2011, nearly two years after Bitcoin’s launch.

Namecoin was primarily designed as a way to decentralize the infrastructure of the internet – resisting censorship and increasing privacy and security for online users.

However, it was also built directly from Bitcoin’s source code, ultimately opening the floodgates to the wave of altcoins that would emerge shortly after. Namecoin encouraged developers to tweak Bitcoin’s code for themselves, leading us into the modern age of cryptocurrency.

From a broad perspective, the cryptocurrency industry as we know it today couldn’t exist without altcoins. This is admittedly a pretty bold statement, but we can break it down by focusing on two central benefits of altcoins’ emergence.

Altcoins can be created for various use cases, from granting voting power or enhancing user privacy to being used in crypto games. Therefore, having a diverse market allows crypto investors to interact with tokens in ways that Bitcoin doesn’t allow.

As a bonus, it also creates the opportunity to bulk up a portfolio with tokens built for many different and unique purposes.

On the other hand, the existence of altcoins also adds to the market’s long-term survivability by helping to garner mainstream attention. Suppose we imagine just how common headlines are concerning tokens’ rising and falling value. In that case, it ultimately drives excitement and garners attention inside and outside the crypto community, ensuring the market never becomes stale or predictable.

As mentioned, altcoins are designed to be ‘alternatives’ to Bitcoin. This inherently means they are trying to be more appealing, primarily by using new technology.

As a result, the arrival of altcoins has simultaneously ushered in a rise in technological improvements across the crypto ecosystem.

For example, Ethereum (ETH), which most people consider an altcoin, was the first to introduce smart contracts. Smart contracts allow developers to create dApps on blockchains, opening up new financial avenues for crypto investors, like lending and borrowing. Bitcoin, meanwhile, has struggled to implement them.

On the other hand, Bitcoin SV has considerably ramped up transaction speeds by enhancing its block size – blocks are used to store transactions, so being bigger means more transactions can be processed at once.

Meanwhile, Peercoin in 2012 introduced the Proof-of-Stake (PoS) consensus mechanism. This is a method of verifying transactions on a blockchain network that is drastically more energy-efficient than Bitcoin’s Proof-of-Work (PoW).

By definition, altcoins are any token other than Bitcoin, but this isn’t to suggest that all of them are the same in terms of their design and purpose. Here are some of the most popular altcoins that fall under the altcoin ‘umbrella.’

As the name implies, memecoins are tokens influenced by and named after characters and individuals from memes and pop culture. Popular examples are Dogecoin (DOGE) and Shiba Inu (SHIB), which both use the Shiba dog meme as their symbol.

Since they aren’t technically built for any particular use case, memecoins entirely rely on their community to raise the token’s price due to a lack of intrinsic value. Unfortunately, this has also made them easy to use as scams.

Therefore, they are seen as fun, light-hearted, community-driven alternatives that tend not to be concerned with long-term investment potential like Bitcoin.

These tokens are pegged to a stable asset, such as the US dollar or gold, and will, therefore, maintain as closely to the original’s value as possible.

Since stablecoins don’t harbor any volatility, many companies use them as an alternative to Bitcoin when paying employees, for example. Similarly, they are easier to use when buying real-life goods since they are essentially a digital