Altcoins are all cryptocurrencies other than Bitcoin. The name comes from “alternative coins”. There are thousands of them, from large projects like Ethereum, Solana and XRP to stablecoins pegged to the dollar and joke tokens known as memecoins. Some aim to improve on Bitcoin; many have different purposes entirely. Most are far riskier than Bitcoin, and the majority of altcoins ever launched have lost most or all of their value.
The main types of altcoins
Smart contract platforms
Blockchains that run apps and programs, such as Ethereum, Solana, Cardano and Avalanche. Their coins pay for using the network. Ethereum is by far the largest. Compare it in Ethereum vs Bitcoin.
Stablecoins
Coins designed to hold a steady value, usually one US dollar, like USDT and USDC. They are backed by cash and short-term Treasuries and are used for trading and payments, not for growth.
Payment coins
Coins focused on transferring money quickly and cheaply, such as XRP and Litecoin.
DeFi and exchange tokens
Tokens tied to decentralized finance apps or to crypto exchanges, like UNI, AAVE or BNB. They may give holders voting rights or fee discounts. Read what is DeFi.
Layer 2 tokens
Networks built on top of Ethereum to make transactions faster and cheaper, such as Arbitrum and Optimism.
Memecoins
Coins like Dogecoin and Shiba Inu that started as jokes and trade mostly on hype and social media. They can rise thousands of percent and crash just as fast.
Why people buy altcoins
- Bigger potential gains. Smaller coins can move much more than Bitcoin when crypto markets rally.
- Belief in a specific technology, like a faster blockchain or a new financial app.
- Staking rewards on proof-of-stake coins. See what is crypto staking.
The risks are much higher
- Most fail. Of the thousands of coins launched in past cycles, only a small fraction remain near their old highs.
- Deeper crashes. When Bitcoin falls 50%, many altcoins fall 80% to 95%.
- Thin trading. Smaller coins can be hard to sell at a fair price in a panic.
- Scams and rug pulls, where creators abandon a project and take investors’ money.
- Concentrated ownership. Founders and early investors often hold large shares they can sell.
- Regulation. Some tokens may be treated as securities, which can affect where they trade.
What is “altcoin season”?
Crypto traders use “altseason” for periods when altcoins rise much faster than Bitcoin, often late in a bull market, when money rotates from Bitcoin into smaller coins. Bitcoin’s share of total crypto value, called Bitcoin dominance, tends to fall during these periods. They have historically been short and followed by sharp declines.
How to approach altcoins carefully
- Start with Bitcoin and Ethereum if you want crypto at all. They are the largest, most widely held and most liquid.
- Keep altcoins tiny. Many investors limit all crypto to 1% to 5% of their portfolio, with altcoins a small part of that.
- Research the project: what problem it solves, who is building it, how many coins exist and who owns them.
- Use reputable platforms and avoid coins promoted by influencers promising guaranteed returns. See how to buy crypto safely.
- Know the tax rules. Swapping one coin for another is usually a taxable sale. Read how crypto is taxed.
- Live prices and sentiment on every ticker page
- Weekly email with your watchlist movers
- Price alerts on the stocks and coins you follow
Frequently asked questions
Is Ethereum an altcoin?
Technically yes, since it is not Bitcoin. Many people treat it as its own category because of its size.
Can you buy altcoins through ETFs?
Some. Ether ETFs trade in the US, and funds for a few other large coins have followed. Most altcoins are only available on crypto exchanges.
Will altcoins go up if Bitcoin goes up?
Often, but not always. In many rallies Bitcoin rises first and altcoins follow later, if at all.
This article is general information, not financial advice. Crypto is highly volatile and you can lose all of your money.
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