Altcoin (Altcoins)

What is an Altcoin?

An altcoin is any cryptocurrency other than Bitcoin (BTC). This was an early term used in the early days of cryptocurrency, when the industry was dominated by the giant digital asset Bitcoin (BTC) and all other digital assets were alternatives.

Altcoins are different in their concept, purpose, and technology, and provide alternative forms of improvement, innovation, or something entirely new to Bitcoin.

History and Evolution

The first altcoin, Namecoin, was issued in 2011. Its function was to create a decentralized domain name system. Since its inception, thousands of other altcoins have been developed, each attempting to advance blockchain technology in some way. Some have attempted to improve anonymity (e.g. Monero, Zcash), while others have added smart contract functionality (e.g. Ethereum) or new consensus algorithms (e.g. Cardano (ADA), Solana (SOL)).

Types of Altcoins

Altcoins are divided into several categories based on their purpose and functionality:

1. Stablecoins - designed to maintain a stable price because they are pegged to fiat or another "hard" asset (USDT, USDC, DAI).
2. Utility Tokens - used in a specific blockchain environment to facilitate transactions or services (BNB, UNI, LINK).
3. Governance tokens — represent voting rights in decentralized protocols (AAVE, MKR, COMP).
4. Security tokens — represent ownership of real or financial assets and are regulated as securities.
5. Privacy coins — support enhanced anonymity and privacy of transactions (e.g. Zcash, Dash, Monero).
6. Meme coins — are usually offered as a joke, but sometimes their market cap is greatly inflated due to hype around popularity (e.g. Dogecoin, Shiba Inu).
7. DeFi tokens — are used in decentralized financial platforms such as lending, borrowing, and staking services (e.g. SNX, AAVE, UNI).
8. RWA (Real World Assets) cryptocurrencies — tokenization of real-world assets such as property or commodities on the blockchain (e.g. gold-backed cryptocurrencies such as PAXG).
9. AI cryptocurrencies — power AI-powered services and applications (e.g. Fetch.ai, SingularityNET).

Largest Altcoins

Some of the largest and most well-known altcoins in use today are:

1. Ethereum (ETH) — the first and most well-known smart contract platform for DeFi, NFTs, and a huge range of dApps.
2. Binance Coin (BNB) — a cryptocurrency issued by Binance for lower trading fees and use on the Binance network.
3. Cardano (ADA) — a blockchain focused on sustainability, scalability, and interoperability.
4. Solana (SOL) — enables cheap and fast transactions, widely used in DeFi and NFT projects.
5. XRP (XRP) — cheap and fast cross-border payments developed by Ripple Labs.
6. Polkadot (DOT) — enables interoperability between blockchains with cross-chain capabilities.
7. Avalanche (AVAX) is a high-performance blockchain with subnets for native blockchains and applications.
8. Dogecoin (DOGE) - Originally developed as a joke, it is now widely used for tipping (donations and fees) and online trading.
9. Shiba Inu (SHIB) is a meme coin that emerged as an Ethereum-compatible replacement for Dogecoin (DOGE).
10. Chainlink (LINK) is a network of decentralized oracles that connect smart contracts and off-chain data.

Altcoins are very important to the cryptocurrency ecosystem as they offer important use cases, improved technology, and decentralized applications to complement Bitcoin. With the current development of the industry, new altcoins emerge from time to time, which together shape and develop the global digital economy and blockchain ecosystem.