Altcoin
As Bitcoin is the first cryptocurrency that captured the world’s imagination, all other coins were subsequently termed “altcoins,” as in “alternative coins.”
What Is an "Altcoin"?
The term “altcoin” is used to describe any cryptocurrency that is not
Bitcoin. As Bitcoin was the first cryptocurrency, any cryptocurrency that was created after was treated as an "alternative." Some people, particularly
bitcoiners, consider
Ethereum to be an altcoin as well. Others now exclude Ethereum from the list of altcoins and consider all cryptocurrencies other than Bitcoin and Ethereum to be altcoins.
What Is the Difference Between Crypto and Altcoins?
Altcoins are all cryptocurrencies other than Bitcoin and Ethereum. Bitcoiners like to stress that Bitcoin is not a cryptocurrency but its own category. However, there is no difference between crypto and altcoins.
Types of Altcoins
There are several different types of altcoins.
Payment Tokens
Payment tokens focus on payments as their main use case. These tokens are often not considered to be "real" cryptocurrencies since they tend to be more centralized.
Utility Tokens
A
utility token is one that can be used for a specific purpose within its ecosystem. For instance, paying for
gas can be considered a utility.
Governance Tokens
Governance tokens are used to vote on a project's
governance. For example, governance token holders can influence the level of fees a project can charge on
token swaps.
Memecoins
A
memecoin is a cryptocurrency that was created as a joke and with no obvious utility. For example,
Dogecoin and
Shiba Inu are two popular memecoins.
Stablecoins
Stablecoins are cryptocurrencies that are pegged to currencies like the dollar and are often backed with collateral in
fiat currencies. Stablecoins are not "real" altcoins since their value does not oscillate like other cryptocurrencies.
Pros and Cons of Altcoins
Altcoins have several different pros and cons.
Pros
Variability: There are thousands of altcoins, each with its own unique use case.
Upside Potential: Altcoins can multiply in value much faster, thanks to their low
market capitalization.
Innovation: Altcoins bring new and innovative solutions to the market.
Cons
Altcoin Season
When the market focus rotates from lower to higher risk assets, this is known as Altcoin Season. The
CMC Altcoin Season Index was launched in 2024 to help understand when this rotation into and out of higher risk crypto themes is underway.