What Are Altcoins?

Check out our guide to learn everything you need to know about Alt coins.

Updated: May 18, 2024
Matt Crabtree

Written By

Matt Crabtree

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Cryptocurrency and related coins and tokens have taken the world by storm in recent years. Bitcoin was the first to the game and made a huge impression in the crypto industry. Since then, they’ve built into something astronomical and their holdings are valued high. Of course, they’ve had quite the roller coaster, but you won’t be able to get your hands on them for cheap. 

In this industry, there are a lot of terms to get to know. Altcoin is one of those terms. But what is Altcoin? In short, Altcoin is just an alternative to Bitcoin, but there is much more to be learned about it than this quick definition. 

What is Altcoin? 

Here is what you need to know about Altcoin. You have Bitcoin and then you have everything else. So Altcoin is the everything else in this scenario. It encompasses anything that is an alternative to Bitcoin.

The name comes from the word coin and the word alternative put together.

You might see it types as one word, like Altcoin. However, there are also plenty of people that split into two words, like Altcoin. 

These terms are the same and they mean the same thing — alternative coins to the original BTC. Another detail to be aware of is that there are cryptocurrency people who feel as though Ethereum is also its own category. While the general consensus is that Ethereum is an Altcoin, it’s possible you will see it separated as well. 

And if we’re talking numbers, there are thousands upon thousands of coins and tokens out there, with more continually being added on a regular basis. They come in different forms and types and often work differently as well. 

Think of Altcoin as an umbrella category for all of the cryptocurrency coins and tokens out there, except for Bitcoin. 

Understanding How Altcoins Work

The thing about the crypto industry is that it’s still heavily unregulated in many ways. It’s not your everyday coin or investment. While there are more regulations being appropriated, it’s taken some time to get there. It’s a relatively new industry so there is still a lot to learn and it takes time to figure out those details. 

There have been a lot of investors and coin mining companies out there trying to create the next big thing. However, managers and owners don’t always see eye to eye. This leads to them parting ways and parties looking for new ventures and creating a whole new coin or token in the process. 

Every Altcoin is tied to a specified blockchain.

The blockchain is designed for them so without a blockchain of some sort, there is no Altcoin. And those blockchains can be split into forks, which is commonly what happens when those disagreements we spoke of occur. A group of developers takes their ideas one way and the opposers take their ideas another way. And then there was two. 

It's really a very complicated structure and it would be quite easy to get lost in the details and still have no idea what is happening. 

The evolution of having so many different Altcoins out there mostly happened because people had ideas to improve or build on a specific blockchain. So, they brought their idea in and started mining and creating, leading to an almost overwhelming industry that crypto exchanges, trading platforms, and wallet will likely never really be able to keep up with! 

Instead of getting worked up about the details and how we happened to get tens of thousands of Altcoins, just know that almost every cryptocurrency out there falls into this category. 

Different Types of Altcoins

We know there are tons of different brands of Altcoins, but there are also different types of coins in this category. Some of the most common ones include these: 

  • Payment Tokens
  • Security Tokens
  • Utility Tokens
  • Governance Tokens
  • Stable Coins
  • Meme Coins

Payment Tokens

Payment tokens are designed with the intention of being a form of currency, rather than simply a digital asset. Much like Bitcoin, you can spend these types of coins for purchases or even paying bills. Of course, the ability to spend them is directly related to compatibility and whether the payment platforms accept tokens for payment. 

This is a type of token that may be limited for the time being, but many payment providers continue to build their systems to allow for crypto payments. 

Security Tokens

Security tokens are held on the stock market, which is something that sets them apart from other tokens. How this works is the asset is purchased and the value is then tokenized, which means it’s transferred from the asset itself into a token.

Investors can then purchase the token and trade it, just like they might stock. 

Security tokens are regulated since they are approved for stock market exchanges. This means they have to adhere to specific standards, and this may make some people more comfortable with their uses. 

A security token has to be secured by an asset in order to be worth any value. This is the whole purpose of this type of token. 

Utility Tokens

As the name suggests, these tokens are meant to provide a utility, or a service, to a specific network. In most cases, utility tokens are provided and used for a very specific purpose. However, the purpose may vary depending on the token in question. 

Some common examples of utility token usage include things like network fees, rewards, and other similar properties. Ether is a great example of a utility token. This token is used to purchase Ethereum or anything within that blockchain. So, you purchase the Ether tokens and then can redeem those towards Ethereum-related things. 

There are other options out there as well. These can be purchased on an exchange, but the intent is for them to remain in the network of blockchains related to that utility. 

Governance Tokens

Governance tokens are like special edition tokens, in a sense. They have special privileges tied to them that are related to whatever blockchain they are associated with. The rights and privileges may vary, but the idea is the same for all governance tokens. 

With governance, you might be able to cast a vote or help make decisions with programs and choices related to a token or a blockchain. These are generally private and mostly for private blockchains, but they are unique in their own way. 

Stable Coins

Stable coins were designed because the crypto markets have been so volatile and racked with never ending changes and uncertainty. So the stable coin helps provide a more stable solution, hence the name of it. These coins are tied to a specific good.

One of the most popular stable coins is fiat currency. 

There are plenty of others as well. Many of them are tied to things like another cryptocurrency or perhaps even precious metals. While prices will fluctuate, it should be more narrow than a lot of crypto out there, which is what sets them apart so much. 

Meme Coins

Meme coins were originally created almost as a joke. They are definitely speculative in nature, and all meme coins come from some sort of joke or silly idea. What happens with these most of the time is they are popular at initial release because people think the concept is funny.

That popularity often dies off, but it could pick back up again as it is discovered. While crypto as a whole is considered risky and speculative, this is one of the most speculative forms of Altcoins on the market. 

Popular Altcoin Choices

There are thousands and more thousands of Altcoins out there. We could never create a complete list, but you might be surprised at how many names you recognize or have heard of at some point. We know that Bitcoin is the only thing that really falls outside of this category, but it’s always helpful to hear some ideas. 

Check out a few of these top Altcoins. 

  • Ethereum (some consider this its own category)
  • Tether
  • USD Coin
  • Cardano
  • Solana
  • Polkadot
  • XRP
  • BNB
  • Ripple
  • Binance

This is just the beginning of the list. If you’re learning about the crypto industry, do a little bit of research. Before you invest in a coin, it’s always a good idea to learn about it and understand exactly what you are investing in! 

Final Thoughts

In summary, an Altcoin is anything that falls outside of the Bitcoin line and its blockchain. There are more than 10,000 cryptocurrencies that fall into this category, and the industry is steadily growing.

There are also several different types of coins and tokens. 

The cryptocurrency industry is a massive one and there is a lot to know. It’s easy to feel overwhelmed as you start trading or learning about crypto, but the basis of how it works remains the same.

Before you invest, do your due diligence and ensure you feel comfortable with the assets that you hold. Get to know how the industry works and keep your investments secure with a reliable wallet.

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