A cryptocurrency that serves as an alternative to the dominant coin in its category.
An Altcoin, short for "alternative coin," refers to any cryptocurrency that is not the market leader in its respective category. These alternatives often exhibit volatile price movements, presenting both high-risk and high-reward scenarios for investors. Altcoins emerged following Bitcoin's success, with developers seeking to improve upon Bitcoin's technology, implement different consensus mechanisms, or serve specialized use cases.
In various sectors, an altcoin could be any coin except the market leader:
Store of value: Bitcoin (BTC) is the leader, while Litecoin (LTC) is an altcoin
Smart contracts: Ethereum (ETH) is the leader, while Cardano (ADA), Solana (SOL), and Polkadot (DOT) are altcoins
Peer-2-peer cash: Bitcoin Cash (BCH) might be considered the leader, with Dash and Monero as altcoins
Exchange tokens: Binance Coin (BNB) is the leader, while CRO (Crypto.com) and FTT (FTX Token) are altcoins
In a broader context, every cryptocurrency that is not Bitcoin (BTC) is often referred to as an Altcoin. This definition emerged from Bitcoin's position as the first cryptocurrency and its continued market dominance. Even Ethereum, despite its massive market capitalization and ecosystem, is technically considered an altcoin under this broader definition.
Altcoins can be categorized based on their technological foundations and intended purposes:
Payment Altcoins: Focused on transaction efficiency and serving as digital cash (Litecoin, Dash, Monero)
Platform Altcoins: Provide infrastructure for building decentralized applications (Ethereum, Solana, Polkadot)
Utility Tokens: Designed for specific use cases within particular ecosystems (Chainlink, Basic Attention Token)
Stablecoins: Pegged to maintain a stable value relative to a fiat currency or asset (USDC, DAI)
Memecoins: Created based on internet memes or jokes, often with minimal utility (Dogecoin, Shiba Inu)
Governance Tokens: Provide voting rights in decentralized protocols (Uniswap, Compound)
The altcoin market is highly dynamic, with new projects constantly emerging while others fade into obsolescence, a phenomenon often referred to as "altcoin seasons" when these tokens collectively outperform Bitcoin.
All terms and definitions may update as the Cryptionary improves.