The crypto space’s onset began in 2009 with the introduction of the first-ever
decentralised token, Bitcoin. Since then, innumerable new coins and tokens have
been introduced to the crypto dynamic. All these coins are called Altcoins. Every
crypto coin that is not Bitcoin is called Altcoin. The invention of these coins is
considered an attempt to bring changes and improvements in Bitcoin by working on
factors like the total supply of coins, mining algorithm, confirmation time, etc.

What are Altcoins?

Altcoins are all cryptocurrencies other than Bitcoin. However, some people confuse
altcoins with being all cryptocurrencies except Bitcoin and Ethereum. The confusion
arises because most cryptocurrencies branch from either of the two.
Some altcoins use different mechanisms to open new blocks, validate transactions,
or try to differentiate themselves from Bitcoin and Ethereum by providing additional
capabilities.
Simply put, all cryptocurrencies except Bitcoin are called altcoins. They are
developed in a similar blockchain structure and follow a peer-to-peer network
system. Altcoins also need a specific mining method to allow users to carry out
secure web transactions. Altcoins generally follow a framework similar to Bitcoin but
come with additional capabilities and enhanced features, like cheaper transactions,
better mining processes, etc. Despite immense competition with over 14,000
Altcoins, Bitcoin still tops the list in the crypto world.
Altcoins have ideally been developed to solve particular problems and not just to
collect money. However, Ethereum and Tether are considered top Altcoins per
market capitalisation, with Neo and Ripple performing exceptionally well. While it is
almost impossible to predict these coins’ future value, many more are designed and
developed daily.

Types of Altcoins

Listed below are the different kinds of Altcoins depending on their mining process,
purpose, etc.

● Mining-Based

There is a mining system mastered by the altcoins where the new coins are mined
by fixing the challenging issues.

● Payment Token

As the name suggests, these are developed to be used as currency and to trade
value between parties. Even though not an altcoin, Bitcoin is the perfect example of
a payment token. Ethereum is an excellent example of a payment token too.

● Stablecoins

Cryptocurrency trading and use have been marked by volatility since launch.
Stablecoins are crypto tokens with a value pegged to another relatively stable asset,
like fiat currency, precious metals, or other cryptocurrencies. Stablecoins aim to
reduce this overall volatility, as the price fluctuations are not supposed to exceed a
narrow range. The most popular stablecoins are Tether (USDT) and Libra of
Facebook.

● Security Tokens

These altcoins are connected with an enterprise and commence in an initial coin
offering (ICO). Security tokens are considered to be the same as customary stocks.
While trading, they frequently payout dividends or possession. Security tokens are
assets offered on stock markets. Tokenisation refers to transferring value from an
asset to a token, making them available to investors. The Securities and Exchange
Commission regulates security tokens because they are designed to act as
securities.

● Utility Tokens

These offer the right to services. Simply put, they provide services within a network,
pay network fees, buy storage space on the network, or redeem rewards. They are
offered as an element of an ICO.
Filecoin is an excellent example of a utility token provided in an ICO that is used to
secure information and buy storage space on a network. These are tailored to be
irreplaceable.
Ether (ETH) is a utility token. It is design to pay for transactions in the Ethereum
blockchain.
“An altcoin can cater to more than one category. For instance, TerraUSD is a
stablecoin and a utility token.”

● Meme Tokens

Well, this segment of crypto assets is relatively new and has witnessed a significant
surge amongst dedicated communities. The greatest examples of Meme tokens are
Dogecoin and Shiba Inu. Dogecoin has branched from Litecoin, which sprouted out
of Bitcoin. It was created as a joke, yet a digital mode of payment. Meme tokens
have little to no influence except being push by influential people like Elon Musk.
Pros and Cons of Altcoins
Ever since the evolution of cryptocurrency began, there have been various opinions
on the pros and cons of Altcoins.
Pros

• Altcoins work towards improving other cryptocurrency’s weaknesses
• They have higher survivability
• Multiple options to choose from

Cons

• Altcoins have relatively lower popularity and an even smaller market cap
• They have lesser liquidity than Bitcoin
• It is challenging to dictate use cases
• Many altcoins lose community interest or turn out to be scams.

Future of Altcoins

There have been discussions concerning cryptocurrencies and altcoins. The current
situation in the altcoin market is unlikely to integrate into one cryptocurrency.
However, strong voices are stating that all the thousands of altcoins may not survive
in the long run, except those with a vital purpose, utility, and opportunities.
If you’re looking to diversify your investments and are willing to venture into the
cryptocurrency market, then altcoins will be less expensive than Bitcoin. However,
with the risk and volatility associated with the cryptocurrency market, it is best to
choose a relatively stable and popular coin with a good purpose defined.
Cryptocurrency is still fighting to stand a role in the global economy. Hence, it is best
advisable to approach them cautiously.

Best Altcoin for Investment

The best altcoin to invest your money in depends on your financial goals, situation,
risk appetite, and market situation. Also, seeking help from a financial advisor or choosing
a platform, like LotusX, that provides detailed knowledge, understanding, and facts
will be a great option.

Top 10 Altcoins

As per the latest data, here are the ten largest crypto tokens according to their

Market Capitalization: Coin Market Cap

Coin Market Cap

Ethereum $194 Billion

Tether $ 67 Billion

BNB $ 48 Billion
USD Coin $ 43 Billion
XRP $ 20 Billion

Cardano $ 13 Billion

Solana $ 9 Billion
Polkadot LTC $ 7.2 Billion
Avalance $ 6.3 Billion

LTC $6 Billion

Bitcoin or Altcoins, a Better Investment?

This debatable argument is based on investor needs, circumstances, goals, beliefs,
and risk tolerance. It has been establish that Altcoins were developed on similar
lines to that of Bitcoin. However, they are price lesser and have more use cases
that Bitcoin. But before buying anything, you must always do your due diligence and
understand that cryptocurrency is risky.