The cryptocurrency market is an extraordinary space, home to nearly 16,500 different coins and tokens. The majority of these fall into the largest category in the market — altcoins.
In this comprehensive guide, you’ll learn what altcoins are, where they came from, and whether they’re worth investing in.
Introduction to Altcoins
Definition and Overview
Let’s start by answering the question: What are altcoins? Altcoins, or alternative cryptocurrencies, include all coins except the first and most well-known one — Bitcoin (BTC).
Altcoins vs Bitcoin
The primary goal of altcoins is to offer features and opportunities that Bitcoin lacks.
For instance, the altcoin market often demonstrates better growth rates, attracting a wide range of investors and traders. While Bitcoin's price may remain relatively stable, alternative digital assets frequently present profitable opportunities.
An excellent example is Ethereum, which introduced smart contracts, enabling the creation of decentralized applications (dApps). Similarly, Litecoin optimized transaction speed and cost.
History and Evolution
The first altcoins appeared shortly after Bitcoin's launch in 2009. Since then, thousands of altcoins have been created, each offering unique features, technologies, and goals. Here are some of the earliest and most notable coins:
Litecoin (LTC). Founded by former Google employee Charlie Lee in October 2011, Litecoin was designed to reduce transaction time from 10 minutes to just 2.5 minutes. As one of the first cryptocurrencies launched after Bitcoin, Litecoin remains a significant player in the market. As of January 21, 2025, it holds 19th place in market capitalization rankings, with a market cap exceeding $9 billion.
Dogecoin (DOGE). Launched in 2013, Dogecoin was the first-ever memecoin, inspired by the popular Shiba Inu internet meme. Over time, it gained widespread popularity and the affection of the crypto community, reflected in its impressive market capitalization of nearly $56 billion. As of this writing, DOGE proudly holds the 7th spot in the overall rankings.
Ripple (XRP) is a payment protocol introduced in 2013. Its native token, XRP, ranks among the top cryptocurrencies launched after Bitcoin. According to CoinMarketCap, XRP holds third place in the digital currency rankings, with a market cap exceeding $178 billion.
Top 10 Cryptocurrencies by Market Capitalization as of January 21, 2025. Source: CoinMarketCap
Types of Altcoins
Since the group of altcoins is vast and diverse, it can be broken down further into several smaller subgroups—different types of altcoins. Let’s take a closer look at them.
Payment Tokens. These tokens are designed to serve as a medium of exchange, similar to traditional currencies. For instance, Litecoin (LTC) and Bitcoin Cash (BCH) offer faster and cheaper transactions compared to Bitcoin.
Stablecoins. Stablecoins are pegged to traditional assets like the US dollar or gold, reducing their volatility. Examples include Tether (USDT) and USD Coin (USDC). They are commonly used for trading and as a store of value. You can find more details about stablecoins in our dedicated article.
Security Tokens. Security tokens represent ownership of real-world assets, such as stocks or real estate, and are regulated by law. They act as a bridge between traditional financial systems and blockchain technology. Examples include tZERO (TZROP) and Aspen Coin.
Utility Tokens. Utility tokens grant access to specific services or products within a blockchain ecosystem. For example, Binance Coin (BNB) is used to pay fees and receive discounts on the Binance platform..
Mining-Based Altcoins. These altcoins rely on a proof-of-work (PoW) consensus mechanism. Examples include Ethereum (before its transition to proof-of-stake) and Monero, which offers enhanced privacy features.
Memecoins. Initially created as jokes or inspired by existing internet memes, memecoins like Dogecoin (DOGE) or Pepe Coin (PEPE) have gained popularity thanks to community support and viral trends. Despite their humorous origins, some have become serious investment tools. You can learn more about memecoins in our comprehensive guide.
Popular Altcoins in the Market
To better understand altcoins, it’s helpful to dive into the cryptocurrency market. Let’s take a look at some of the best altcoins currently available.
Ethereum (ETH) is widely known as the second-largest cryptocurrency by market capitalization. Launched in 2015, it has long held the position of the second most popular cryptocurrency, only behind Bitcoin.
Its high level of technological sophistication and price stability have made it a popular choice for investors. Ethereum revolutionised blockchain technology by enabling the creation of smart contracts, DeFi (Decentralized Finance), and non-fungible tokens (NFTs).
Price dynamics of ETH over its history. Source: CMC
As of January 21, at the time of writing, the token is trading at $3,300. Over the past year, it has delivered a 33x return to its investors.
Litecoin (LTC), which is already familiar to us, is often referred to as "digital silver," akin to Bitcoin’s "digital gold" nickname. Litecoin offers faster transactions and lower fees, making it ideal for everyday use.
Price dynamics of LTC over its history. Source: CMC
At the time of writing, Litecoin is trading at $120. Its return over the past year has been nearly 70%.
Ripple (XRP) is the native token of the fintech startup Ripple Labs. It can confidently be called one of the “veterans” of the cryptocurrency market, having been launched back in June 2012. Over the years, this altcoin reached an all-time high of $3.84 in 2018. This impressive performance has positioned it as the third-largest cryptocurrency by market capitalization, trailing only the two undisputed market leaders — Bitcoin and Ethereum.
Price dynamics of XRP over its history. Source: CMC
At the time of writing, the token is trading at $3.11. Its return over the past year has been an astounding 466%.
Investing in Altcoins
Altcoin trading is a potentially profitable activity, but it should be approached with great caution. Let's explore the risks and benefits that come with investing in altcoins.
Benefits 👍
- High growth potential
- Variety of coins to invest in
- Good opportunities for portfolio diversification
- Chance to make quick profits
- Day trading possibilities with a focus on speculation
Risks 👎
- High volatility of altcoins
- Risk of fraud, scams, and hacks
- Difficulty predicting price movements, especially for memecoins or tokens with low market cap
- Due to the unpredictable nature of altcoins, investors may not only lose their entire investment but also end up in the red
Market Trends and Analysis
To avoid making mistakes and choosing the best altcoins, it's important to follow a few straightforward strategies.
Firstly, pay attention to market trends. By examining the volume of discussions on such social media as X or Reddit (and, of course, the emotional tone of these discussions), you can gauge which market sectors and their associated tokens are currently trending.
It's also a good idea to regularly read trustworthy news portals — such as the itez blog. This way, you’ll be better equipped to understand the technologies being discussed (for example, AI agents and their tokens, which have emerged as a trend at the start of 2025).
Additionally, materials on technical analysis will help you form an idea of where the prices of your target coins might move in the near future. For this, it’s crucial to keep an eye on charts. Some of the most intuitive and user-friendly tools are aggregators like CoinMarketCap or CoinGecko.
Conclusion
Altcoins are a diverse and rapidly growing segment of the cryptocurrency market. Every investor can find an altcoin that suits their tastes and needs, whether by investing in the technology and its development or by betting on speculation and quick profits.
However, it's important to remember that altcoin investment, like any other crypto investment, should be approached with intelligence and caution. The itez team encourages you to always carefully weigh the risks and do your own research (DYOR).
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This article is not investment advice or a recommendation to purchase any specific product or service. The financial transactions mentioned in the article are not a guide to action. It’s not intended to constitute a comprehensive statement of all possible risks. You should independently conduct an analysis on the basis of which it will be possible to draw conclusions and make decisions about making any operations with cryptocurrency.
