Since Bitcoin’s launch in 2009, the cryptocurrency landscape has been transformed with the rise of alternative coins, or altcoins. While Bitcoin continues to dominate the market, thousands of new digital assets are emerging on the blockchain, driving innovations in speed, security and scalability, while also unlocking entirely new use cases beyond anything early Bitcoin adopters would have ever thought possible.
Definition of Altcoin
Altcoin, short for alternative coin, is a term for cryptocurrencies other than Bitcoin (and, according to some experts, Ethereum and Solana). Each type of altcoin serves a different purpose, from improving blockchain speed and security to supporting decentralized apps and creating new ways to earn and spend.
From foundational coins like Ether to the hottest new memecoin, altcoins vary greatly in their philosophies and functionalities, catering to different needs within the crypto ecosystem. Below, we’ll unpack the different types of altcoins, and highlight some of the most popular examples shaping the industry today.
What Are Altcoins?
Altcoins are generally defined as any cryptocurrency that isn’t Bitcoin. However, many crypto experts include Ethereum and Solana in that definition as well, since most coins derive from one of the three.
Altcoins have emerged to address use cases that Bitcoin didn’t anticipate. For example, Namecoin, the first altcoin, was created from a “fork,” or offshoot, in the Bitcoin blockchain to allow users to develop their own domain names. While some altcoins, like Namecoin, were created to add a feature or fix an issue in an existing blockchain, others come from entirely new blockchains with different architectures or means of validating transactions. Altcoins not only serve as the currency for these blockchains, but they may also be used to influence the direction of the network or fund its operations.
“This is one of the main benefits of altcoins, to innovate and introduce an idea that works better than what is currently available,” James Wo, founder and CEO at cryptocurrency investment firm Digital Finance Group, told Built In. “This innovation helps enhance the crypto space, as it often provides a better experience for both developers and users.”
Types of Altcoins
Altcoins can be categorized into six different types. Some altcoins may belong to more than one category.
Stablecoins
A stablecoin’s value is tied to that of another asset to offer more stability than other types of cryptocurrencies. Some stablecoins are tied to fiat currencies like the U.S. dollar, while others are tied to other cryptocurrencies or commodities. The price of algorithmic stablecoins are stabilized by an algorithm that regulates the amount of inventory.
Utility Tokens
Utility tokens are used to purchase services within a network. Ether, for example, is used to pay transaction fees, also known as “gas,” on the Ethereum blockchain. Utility tokens are akin to loyalty programs in that they often incentivize participation within a network, like the Basic Attention Token that pays users to watch ads on Brave, a web browser that blocks ads and trackers.
Security Tokens
Security tokens represent ownership in an asset or company, and their value is tied to the valuation of that asset or company. It functions much like a stock in that it can pay dividends from any revenue generated by the underlying asset. Because they are considered securities, these tokens are regulated by the Securities and Exchange Commission.
Payment Tokens
As the name implies, payment tokens are used as currency to make or receive payments. A number of altcoins, like Litecoin and Bitcoin Cash, have cropped up to facilitate transactions that are faster and cheaper than using Bitcoin.
Governance Tokens
Governance tokens allow users to vote on proposals impacting a decentralized autonomous organization (DAO), similar to how shareholders vote on issues impacting a company. With these tokens, users can voice their opinion on transaction fees, stakeholder rewards and other operational matters. A governance token is a type of utility token, but its specific role in the democratic decision-making of a DAO earns it a category of its own.
Play-to-Earn Tokens
Blockchain-based games reward users with play-to-earn tokens, which can be used to make in-game purchases or be converted into fiat or another form of cryptocurrency. Players might receive these tokens for accomplishing missions, leveling up their skills or participating in the social aspects of the gaming community.
Memecoins
Memecoins are cryptocurrencies based on jokes and social media trends, and they are sometimes promoted or inspired by celebrities. They are relatively easy to create, and their popularity is often short-lived. Memecoins are notoriously volatile, as coinholders may pump up their value only to sell a short time later.
Benefits of Altcoins
Improved Technology
Altcoins have improved blockchain technology with new consensus mechanisms, architectures and algorithms that allow more security, scalability and decentralization. Avalanche, for example, was the first blockchain to confirm transactions in less than a second. It also introduced a unique blockchain architecture that allows developers to build their own independent blockchain that is interoperable with the main chain.
“We need to proliferate blockchains to allow everybody — if they have the necessary users or have rules that they need to abide by for their business or use case — to have their own blockchain,” John Nahas, chief business officer at Avalanche blockchain developer Ava Labs, told Built In.
As the altcoin ecosystem evolves, developers will keep fine-tuning existing technologies and creating new ones, driving continuous innovation within the crypto sector.
Increased Functionality
These blockchain innovations lead to functionalities that surpass the capabilities of Bitcoin. Payment tokens and stablecoins, for example, have made it easier than ever to send money on the blockchain.
“Back when crypto transactions were made on the Bitcoin blockchain, sending money was expensive,” Arthur Azizov, CEO at B2BINPAY, told Built In. “Now, we’ve got faster and cheaper options like Solana and Tron, which have near-zero fees. Plus, stablecoins like USDT and USDC offer price stability, which makes them perfect for everyday use without the need for long wait times or bureaucracy.”
Altcoins also serve a wide range of functions beyond Bitcoin’s original use case of storing and transferring value. They are used to influence the governance of blockchain networks, encourage participation in networks and power entire ecosystems of decentralized apps (dApps).
“[Altcoins] give people access, rights, yield and participation in an on-chain digital economy,” Nahas said.
Many altcoins serve as the native cryptocurrencies for emerging blockchains that are, in turn, facilitating a new wave of functionalities within the Web3 ecosystem, enabling internet users to go beyond traditional online activities like reading, writing, streaming and shopping. “Web3 is really ownership — digital ownership — and the ability to create and move digital assets without an intermediary,” Nahas said.
More Room for Growth
Altcoin investors are excited by the prospect of getting in on the ground floor of an undervalued coin that is headed for the moon. If an investor gets in early enough with the right coin, they could see exponential returns beyond anything that would be possible with a more established asset like Bitcoin. Very few altcoins live up to these lofty expectations, which is why it’s important for investors to research the coin’s technology, functionality and tokenomics, or the pricing and distribution of tokens.
Drawbacks of Altcoins
More Risk
Altcoins are notoriously volatile, so they may be risky for investors. Unlike Bitcoin and other crypto staples that have earned trust over time, the developer of a new altcoin may attract investors with false promises only to abandon the project and take off with the money. This practice, called a rug pull, is especially pervasive in the memecoin space. Even if there’s no intentional deception, altcoins can still falter if they don’t meet expectations or attract enough users.
“Altcoins are very easy to manipulate both physically and culturally, so be very wary of someone ‘shilling’ you their favorite coin,” Johnny Gabrielle, head analyst of blockchain economics and AI integration at The Lifted Initiative told Built In. “These coins often do not have fundamentals, so their price is 100 percent determined by market sentiment, which can and will turn on a dime.”
Saturated Market With Low Liquidity
Bitcoin enjoys a significant first-mover advantage, and network effects have only bolstered its popularity over time. Bitcoin and Ether make up 70 percent of the crypto sector’s market share, according to CoinGecko, and more than 16,000 coins are vying for the remaining 30 percent. With so many projects competing against each other — oftentimes with the same functionality or use cases — altcoins often lack adequate liquidity, making them vulnerable to a sudden price drop if even one investor decides to sell. This makes it difficult for altcoins to break out and gain market share.
“There are many forks of dApps and a wide variety of different Layer 1s and 2s that see limited adoption,” Wo said. “This leads to an underperformance of many if not most altcoins, a complete opposite of what many are expecting since only select quality [altcoins] that fit the current hot narratives receive a strong bid in their token price."
Regulatory Hurdles
The SEC has sued major crypto exchanges like Coinbase and Binance for selling cryptocurrencies that failed to register as securities. In its complaint against Coinbase, the SEC names 13 tokens, including Solana, Cardano and Polygon, that it considers to be securities. On the other hand, Bitcoin (and possibly Ethereum) are not considered securities, according to the SEC, due to their decentralized and open-source structure. While President Donald Trump has pledged to loosen crypto regulations, this remains a liability for new altcoins.
Examples of Altcoins
These are some of the most popular altcoins on the market.
Ether
Ether, the native currency of the Ethereum blockchain, is the second-largest cryptocurrency next to Bitcoin, with a market capitalization of $319 billion as of February 2025. While the Bitcoin blockchain was primarily built for the Bitcoin cryptocurrency, the Ethereum blockchain allows users to create dApps and automatically execute agreements using smart contracts, an essential tool in decentralized finance.
Ethereum launched in 2015 with a proof-of-work consensus mechanism, which, like Bitcoin, validates transactions with cryptography. In 2022, it transitioned to a more energy-efficient proof-of-stake model, in which stakeholders validate transactions. Ether is a form of currency in blockchain transactions, but it’s also a utility that pays for transactions and smart contracts on Ethereum.
Solana
SOL is the native cryptocurrency of the Solana blockchain, which launched in 2020. Like Ethereum, Solana supports smart contracts and decentralized apps, but it touts faster transaction times and lower fees. It uses a proof-of-stake protocol, but it also incorporates a unique proof-of-history mechanism that creates consensus by verifying the time or historical record of transactions. The company says this hybrid approach improves speed and scalability.
Tether
Tether, which trades under the symbol USDT, is the most popular stablecoin on the market, with a market cap of $140 billion as of February 2025. USDT is pegged to the U.S. dollar on a one-to-one basis. It also offers tokens for the Mexican peso, offshore Chinese yuan and gold. The tokens are built on numerous popular blockchains, and they can be issued and redeemed across those networks.
XRP
XRP is the native cryptocurrency for the XRP Ledger blockchain, which was created by Ripple. The company says XRP can conduct transactions faster and cheaper than other coins, making it a popular cryptocurrency for peer-to-peer payments, particularly cross-border transactions. Banks also use XRP as a bridge currency when conducting cross-border transactions through Ripple’s decentralized global payments system.
BNB
BNB is the native cryptocurrency of BNB Chain, an Ethereum-compatible blockchain created in 2017 by Binance, the world’s largest crypto exchange. The BNB token can be used to pay blockchain transaction fees, make payments in dApps and get discounted trading fees on the Binance exchange. It can also be used as payment on Binance’s travel booking site and in its marketplace of e-commerce vendors.
Dogecoin
Dogecoin, one of the first memecoins, launched in 2013 as a joke inspired by the “doge” meme of a Shiba Inu dog and its funny internal thoughts. Much like the meme that inspired it, dogecoin rose to popularity on Reddit and was promoted by celebrities ranging from Elon Musk to Snoop Dogg. Unlike most memecoins, dogecoin has enjoyed continued popularity, and ranked as the eighth most popular cryptocurrency as of February 2025.
Ada
Ada, which is named in honor of influential mathematician Ada Lovelace, is the native cryptocurrency of the Cardano blockchain. Launched in 2015 by Ethereum co-founder Charles Hoskinson, the open-source blockchain validates transactions using Ouroboros, which according to the Cardano website, is the “first provably secure proof-of-stake protocol.”
Avalanche
AVAX is the coin used on the Avalanche blockchain, an open-source platform for dApps launched in 2020 by Ava Labs. Founded by researchers from Cornell University, Ava Labs says its proof-of-stake Snowman consensus protocol offers increased speed and scalability. It also allows developers the ability to create custom blockchains that are independent but interconnected with the main chain. Developers can control the permissions and privacy of these chains, giving them more autonomy and flexibility of the networks on which they build dApps.
Frequently Asked Questions
What are altcoins?
Altcoins are any cryptocurrencies that are not Bitcoin (and, according to some experts, Ethereum). These coins provide a variety of functions beyond storing value and being used as currency. Some are created from forks in existing blockchains, and others are created for entirely new blockchains.
How many altcoins are there?
More than 16,000 coins are listed on CoinGecko, a crypto data aggregator. Some of those may be inactive or worthless, though, as less than 9,000 of those coins have a market capitalization listed. CoinGecko only displays market cap data for coins it has researched.
What is an example of an altcoin?
An example of an altcoin is XRP, which can act as a bridge currency for fast, cheap cross-border transactions.
