Altcoins: What are they, why are they needed, and what types are there?

For most people, cryptocurrency isBitcoin(BTC). It was the first and is therefore considered a certain crypto standard. But Bitcoin is not the only cryptocurrency in the world. Any coin issued after BTC is called an altcoin.

Why are altcoins needed? Bitcoin is a truly powerful cryptocurrency, but it has its limitations. When developers come up with a new idea, a unique offering for the market, a new blockchain is created.

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Let's take 12 altcoins as an example, in reality there are many more.

1. Ethereum (ETH)

The second most popular cryptocurrency after Bitcoin is Ethereum.

Ethereum is a decentralized software platform that enables the creation of decentralized online services (DApps) on the blockchain using smart contracts. The idea was formulated by Vitalik Buterin in 2013 with the goal of making financial products accessible to everyone, and the network entered the market in 2015. Regardless of location, users can use Ethereum products to access loans, mortgages, payment platforms, and even establish businesses with strangers, because all terms are written in smart contracts embedded in the blockchain.

2. Litecoin (LTC)

Litecoin is one of the top ten cryptocurrencies by market capitalization. Launched in 2011 as one of the first Bitcoin alternatives, the coin was created by MIT graduate and former Google engineer Charlie Lee.

Technically, Litecoin is very similar to Bitcoin, with a few minor differences. Because of their similarities, their prices are closely matched.

The main differences between BTC and LTC:

1. Litecoin confirms payments faster;

2. Litecoin uses a different cryptographic algorithm.

3. Cardano (ADA)

Cardano is popular, almost like Ethereum, because it enables financial and decentralized applications (dapps). The price of ADA has skyrocketed in the past year, jumping to almost ten cents per coin.

Cardano is currently the fourth-largest cryptocurrency by market capitalization. Its clear advantage is its ability to verify transactions with low energy costs.

4. Ripple (XRP)

The sixth-largest cryptocurrency, Ripple, is based on the XRP ledger, which is not blockchain-based but rather an open-source consensus ledger. The coin had obvious market appeal before it ran into serious regulatory issues. According to the Financial News Herald, the token's price has fallen more than 60% since December 22, 2021, when the SEC filed a complaint against Ripple. The SEC considers it a security, not a cryptocurrency.

The coin still deserves attention. If Ripple can solve its current problems, the coin has potential.

5. Solana (SOL)

Solana is among the top 10 cryptocurrencies by market capitalization, approaching $12 billion. Its protocol is based on a proof-of-history consensus algorithm and is capable of processing 65,000 transactions per second.

Solana is responsible for several popular trading platformsNFT, such as Magic Eden, and even released a flagship web3 Android phone earlier this year.

6. Stellar (XLM)

This coin is similar to Ripple, probably because it was created by Ripple's co-founder, and has a similar goal - to create a decentralized protocol for international transfers of digital money into fiat.

Stellar effectively connects financial institutions via blockchain and provides low-cost alternatives to foreign exchange platforms.

7. Tron (TRX)

A platform that publishes entertainment content. It was created by Chinese entrepreneur Justin Sun in 2017. Until 2018, it was based on the Ethereum blockchain, then migrated to its own blockchain. The platform uses the Tronix token and pays developers for creating entertaining decentralized applications. The Tron coin is among the top 20 cryptocurrencies by market capitalization.

8. Chainlink

Link is a subsidiary of Ethereum, its technology built on the ETH network. It is the first decentralized oracle network (DON) of its kind, enabling smart contracts to connect to external networks. Buyers search for specific data, and bidders can securely provide data to buyers.

9. Tether

Tether is a stablecoin. Each Tether is pegged to the US dollar, so it doesn't fluctuate much and is considered a stable cryptocurrency. However, this coin is considered controversial because in 2019, it included loans issued to affiliated companies as part of its collateral. Why is it controversial? People buy Tether to gain access to coins pegged to a stable fiat currency while still enjoying the benefits of blockchain technology. When Tether revealed that its coin was also backed by loans issued to affiliated companies, people began to doubt it.

However, Tether is a major player in the crypto space.

10. Dash

Dash is known for its fast transaction speeds. This financial instrument, once called "Dark Money," is designed for cheap and fast transactions. According to its website, you can complete a transaction of less than a cent in less than a second.

Dash is built on Bitcoin technology but offers greater privacy—it hides public addresses. This means senders can remain anonymous.

11. Polygon (Matic)

Polygon is a second-layer blockchain built on Ethereum and ranked 11th by market capitalization. Polygon enables Ethereum-compatible blockchain networks to achieve high transaction speeds at low costs. Their native token, Matic, boasts near-zero gas fees and fast transactions.

Polygon also provides an easy-to-use platform for developers to build decentralized applications on top of the Polygon network.

12. Monero

This is an altcoin whose primary advantage is privacy. Monero transactions are completely anonymous. Some consider it a breeding ground for financial crime, while others consider privacy essential in the modern world.

There are thousands of different altcoins, and we've reviewed a few. New coins enter the market every day, some worthy of attention, others less so. When deciding to invest, it's important to thoroughly understand the investment principles and the currency you're considering.

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