Altcoins, or alternative cryptocurrencies, are digital currencies other than Bitcoin (BTCUSD). They share some characteristics with Bitcoin. Some altcoins distinguish themselves from bitcoin by using a different consensus mechanism to produce blocks or validate transactions. Other altcoins use new or additional capabilities, such as smart contracts or low price volatility.
After Bitcoin established its reputation at the top well before any other types of coins were minted on the blockchain. That left altcoins for individual mining-based coin retrieval.
Since then, thousands of altcoins have been created and added to the crypto ecosystem. Ethereum, also referred to as Ether (ETH), is the most popular altcoin. Ethereum is used when referring to the broader blockchain network, and Ether is used to discuss the currency itself.
As of February 22, there are over 17,000 different types of cryptocurrencies available for purchase. Bitcoin makes up nearly 50% of the total cryptocurrency market cap, and Ethereum accounts for nearly 25%. Altcoins occupy the remainder of the market share.
Here are the nine most popular cryptocurrencies after Bitcoin as of November 2021:
- USD Coin
Because they’re often derived from Bitcoin, the price movements of alternative cryptocurrencies tend to mirror Bitcoin’s. Analysts say that the maturity of cryptocurrency investing systems and the development of new marketplaces for these coins will make their prices independent of Bitcoin’s trading patterns.
Altcoins vary in terms of their functionalities and consensus protocols.
An altcoin may be classified under multiple categories.
Mining-based cryptocurrencies are created by solving complex mathematical equations. Most cryptocurrency-based altcoins use Proof of Work (PoW), a method by which systems create new coins by solving difficult mathematical problems to create blocks. Examples of mining-related cryptocurrencies include Litecoin, Monero, and ZCash. Most of the top cryptocurrencies in early 2020 were mining-based. There are two main types of cryptocurrency: mined-based coins and pre mined and often ICO-based coins. Such coins are not created by an algorithm but are distributed before they’re listed in cryptocurrency markets. An example of a premineded coin is Ripple’s XRp.
Since its launch, cryptocurrency trading has been marked by volatility. Stablecoins aim at reducing the volatility of cryptocurrency prices by tying them to a basket of goods. A basket is meant to act as a reserve for holders who want to redeem their tokens if the cryptocurrency faces problems. Stablecoin price fluctuations are not meant to exceed an extremely narrow range.
Digital assets are similar to securities traded on stock markets except that they have a digital provenience. Security tokens resemble traditional stock, and they often promise ownership in the form of dividends to holders. Investors see the potential for price appreciation for such tokens and put money into them.
Meme coins are inspired by a funny joke or a silly take on other well-known cryptocurrencies. They usually gain popularity quickly, often hyped online by prominent crypto influencers and retail investors trying to exploit short-term profits.