The term ‘altcoin’ means every other cryptocurrency apart from Bitcoin.
- Altcoins are cryptocurrencies, similar to Bitcoin, and there are thousands of them in total
- Most coins have been created to address specific flaws with Bitcoin, or to offer new functionality that doesn’t exist in the market leader
- Altcoins are popular trading assets because they have volatile values that rise and fall over the course of each day
What are altcoins?
The word ‘altcoin’ stands for ‘alternative coin’ and that’s exactly what they are: alternatives, both to Bitcoin and to traditional fiat currencies. Every altcoin is a cryptocurrency built using blockchain technology and can be bought, sold, or traded online.
Within that framework, the function of each coin can vary quite dramatically and there are many different types of altcoin. They range from digital currencies that you can use to purchase goods to coins that are part of a whole new vision of the internet.
Most people buy and sell altcoins in order to speculate on their price changes rather than to invest in a particular project. Every time a new company wants to launch its own altcoin, it releases a fixed number of coins onto the market through an initial coin offering which can then be bought by the public through a cryptocurrency broker.
What’s the difference between altcoins and Bitcoin?
It depends on the individual coin but there can be many differences between them. For example, each coin is supported by a blockchain and each blockchain has a different set of features. In some cases, altcoins have been specifically set up to fix issues with Bitcoin.
Since Bitcoin was first created there has been lots of opportunities for other people to see how it worked and improve it. That led to the creation of Ethereum in 2013, which added the ability to build applications on the blockchain rather than simply use it to transfer money.
Altcoins are also different in terms of popularity. Bitcoin is more established and valuable than any altcoin, to the extent that it’s owned by institutional investors through hedge funds. Altcoins are yet to reach that level of acceptance, so their price is more volatile and they are riskier to own as a result.
What are some altcoin examples?
The first was a coin known as Namecoin, released in 2011. However, that has long since been superseded and there are thousands of altcoins on the market these days. With more coins being created every day this is an asset that’s always growing and changing, but the coins below are three of the most well-known.
- Ethereum. Created in 2013 by Vitalik Buterin, Ethereum is the leading altcoin by far. It was set up as a radical alternative to Bitcoin, a platform where software developers can build applications that offer services that are unique to the blockchain. Many other altcoins are built on the Ethereum network or use similar technology.
- Dogecoin. Dogecoin is a cryptocurrency with features similar to Bitcoin, in that it’s used to make payments online. Although it has been around for a few years, it only catapulted into the public consciousness thanks to the social media activity of the Tesla CEO, Elon Musk, in 2021.
- Uniswap. Uniswap is one of the new waves of altcoins that offers traditional financial services to people who own cryptocurrency. Set up in 2018, the platform itself is a crypto exchange where you can buy or sell other coins.
Where can I learn more?
For more information on altcoins and about each one in more detail, check out our altcoins hub page. To learn more about cryptocurrency, head to our courses which take you through how it works, or visit the investing hub to get started.
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