Altcoins, short for alternative coins, are what we call any cryptocurrency that is not Bitcoin. Although they all use blockchain technology, each altcoin has distinct features and uses that make it unique. For instance, Ethereum is known for its smart contract capabilities, Cardano focuses on scalability and sustainability, Ripple was designed for cross-border payments, and Litecoin has faster transaction processing times compared to Bitcoin.
Just as with Bitcoin, you keep altcoins in a cryptocurrency wallet and buy or sell them through cryptocurrency exchanges.
Here are some of the most popular altcoins today:
Litecoin, or “light Bitcoin” is the first altcoin ever created. It was a fork or "version" of BTC designed to make a faster version of Bitcoin with lower transaction fees. After it was created, developers realized the potential of using blockchain technology for purposes other than payments and began creating cryptocurrencies with unique uses and characteristics.
Ether is the native coin of the Ethereum network. It is the second-largest cryptocurrency in the market in terms of market value as well as the second most popular coin next to BTC. Launched in 2015, the network is used for a variety of purposes, including creating and trading NFTs and running decentralized applications.
XRP is the native coin of Ripple Labs Inc. The network is widely used for settling both fiat and crypto payments with banks and financial institutions. Compared to Bitcoin, transactions made via XRP are processed very fast and only require a small fee.
SOL is the cryptocurrency of the Solana Network. Developed by Solana Labs in 2017, it is also currently one of the largest cryptocurrencies around. It uses unique technology that allows the network to charge lower transaction fees and process transactions much faster than Ethereum can.
ADA is the native crypto of the Cardano network. Founded by Charles Hoskinson, who is also the co-founder of Ethereum, Cardano was designed to be the "Ethereum killer." It was developed to be more scalable and sustainable than previous blockchains. The Cardano network can handle around 250-1,000 transactions per second.
Tether is a special altcoin called a stablecoin, or a type of cryptocurrency whose value is “pegged” or directly connected to the value of a fiat currency. The different Tether coins are classified by which asset they represent: USDT is based on the U.S. Dollar, EURT is based on the Euro, XAUT is based on gold, CHNT is based on the Chinese Yuan, and MXNT is based on the Mexican Peso. Like other stablecoins, Tether was created to allow users to transact with fiat currency in a digital and decentralized way.
Bitcoin holds several advantages over its alternatives. It was the first cryptocurrency to be widely used and is still the most popular one of all. It is also less volatile. Compared to most altcoins, Bitcoin remains one of the most stable investments in the crypto space. It is the most purchased, held, and traded coin on the market. As more countries worldwide begin to adopt cryptocurrencies, the demand for Bitcoin as the chosen cryptocurrency for transactions will continue to rise.
If Bitcoin was designed for financial transactions, you’ll be glad to know that the different altcoins all have different functions and target users. Ethereum, which is the second largest crypto next to Bitcoin, was designed so blockchains could use smart contracts to create NFTs and build applications. Solana was designed for very fast, cheap, and environmentally-friendly transactions. Some altcoins were designed to be used specifically for blockchain gaming. Holding various altcoins gives you access to different innovations and use cases.
Since Bitcoin and the other cryptocurrencies were created for different purposes, we cannot say that one is better than the other.So, what should you pick? Should you stick to the reliability of Bitcoin? Or, should you buy altcoins that could yield more profits in a shorter amount of time? The answer is it's completely up to you.
If you’re an investor who wants to hold the equivalent of “digital gold” in your portfolio, you’d probably want to buy Bitcoin because of its reputation and stability. If you want to send remittances across the world without paying huge fees, an altcoin like Ripple may be a better option. If you want the crypto version of the U.S. dollar, go for USDT. And if you are willing to risk investing in a less popular coin hoping the price increases by a hundred percent in the next few months, you can select a newly released altcoin that seems to have a lot of future potential.
Every person works with their own goals, profit targets, and risk appetite when it comes to investing. Check out our other guides to discover which altcoin is right for you!
