An altcoin is any cryptocurrency other than Bitcoin. The name is short for «alternative coin». After Bitcoin launched in 2009, developers began creating new coins that changed its rules or tried to do completely different things. Today there are many thousands of altcoins.
Some altcoins power entire ecosystems of applications; others are jokes that became popular. Knowing which category a coin belongs to is the first step to understanding what it does and how risky it is.
Key takeaways
- Every cryptocurrency except Bitcoin is called an altcoin.
- Altcoins range from smart-contract platforms and stablecoins to governance tokens and memecoins.
- Most altcoins are more volatile than Bitcoin, and many eventually fail.
- Coins and tokens are different: coins run their own blockchain, tokens live on someone else’s.
Coins vs tokens
Before looking at the categories, it helps to understand one distinction. A coin is the native asset of its own blockchain — ETH on Ethereum or SOL on Solana. A token is created on top of an existing blockchain using smart contracts. Thousands of tokens run on Ethereum and other networks without having a blockchain of their own.
Both are commonly called altcoins. The difference matters because a token depends on the security and fees of the blockchain it lives on.
The main types of altcoins
Smart-contract platforms
These blockchains let developers build applications. Ethereum is the largest; others include Solana, Cardano, Avalanche and many more. Their coins pay for transaction fees and are often used for staking.
Stablecoins
Stablecoins such as USDT and USDC aim to stay worth one US dollar. They are used for trading and payments rather than for speculation.
Layer 2 tokens
Layer 2 networks like Arbitrum and Optimism process transactions off the main Ethereum chain to make them cheaper. Their tokens (for example ARB and OP) are mainly used for governance.
DeFi and governance tokens
DeFi protocols such as Uniswap or Aave issue tokens that let holders vote on changes to the protocol. Some also share protocol revenue or give fee discounts.
Exchange tokens
Centralised exchanges issue tokens such as BNB that offer trading-fee discounts and other perks. Their value is closely tied to the success of the exchange behind them.
Oracles and infrastructure
Projects like Chainlink provide real-world data (such as prices) to smart contracts. Their tokens pay node operators for providing that data.
Privacy coins
Monero and Zcash use cryptography to hide sender, receiver or amount. Because of regulatory concerns, some exchanges in Europe no longer list them.
Memecoins
Dogecoin started as a joke in 2013; Shiba Inu and countless others followed. Memecoins usually have no product — their price depends almost entirely on attention and community. They are the most volatile and most frequently abandoned category.
Why altcoins are riskier than Bitcoin
- Higher volatility. Altcoins regularly lose 80–90% or more in a downturn.
- Concentrated ownership. Founders and early investors often hold a large share of the supply and may sell it.
- Weaker security. Smaller networks with fewer validators or miners are easier to attack.
- Project risk. Teams can run out of money, lose interest or disappear — a so-called rug pull.
- Liquidity risk. Small coins can be hard to sell without moving the price.
Many of the scams in our list of common crypto scams involve brand-new tokens promoted with promises of huge returns.
How to research an altcoin
A short checklist before you buy anything:
- What problem does it solve, and does anyone actually use it today?
- Who are the founders, and are they public? Check the tokenomics: who owns the supply and when it unlocks.
- How big is it? Compare market cap and fully diluted valuation.
- Is the code open source and audited by a reputable firm?
- Is it listed on major, regulated exchanges with real trading volume?
- Can you explain in one sentence why it should be worth more in five years?
If you cannot answer most of these questions, treat the purchase as a gamble, size it accordingly, and never invest money you cannot afford to lose.
What is «altseason»?
Traders use the term altseason for periods when altcoins as a group rise much faster than Bitcoin. Historically these phases have come late in bull markets, when Bitcoin dominance falls. They are hard to time and often end abruptly.
Frequently asked questions
Is Ethereum an altcoin?
Technically yes — anything that is not Bitcoin is an altcoin. In practice many people treat Ethereum as a separate category because of its size and importance.
Are stablecoins altcoins?
They are usually counted as altcoins on data sites, but they behave very differently because their price is designed to stay stable.
How many altcoins are there?
Data aggregators track well over ten thousand, and new tokens are launched every day. Only a small fraction have meaningful trading volume.
Should I invest in altcoins?
That is a personal decision and this is not financial advice. Many experienced investors keep most of any crypto exposure in Bitcoin and Ethereum and treat smaller altcoins as high-risk positions.
Next step: understand how to compare coins by market cap, or learn how to buy crypto safely.
