Definition

‘Altcoin’ is a broad term that refers to all cryptocurrencies besides Bitcoin.

Understanding Altcoins

Cryptocurrency is much more than just Bitcoin. While Bitcoin remains the most well-known digital asset, millions of alternative cryptocurrencies (altcoins) have emerged, each designed with unique use cases, technologies, or innovations.

As of 2025, the number of cryptocurrencies has exploded, surpassing over 2 million tokens on various blockchains. Many of these are Solana-based memecoins, which have rapidly flooded the market due to low transaction costs and ease of creation. However, while some altcoins bring genuine innovation—such as smart contracts, DeFi, interoperability, and privacy solutions—many are purely speculative or short-lived.

The success of an altcoin depends on whether it improves upon existing technology or solves a real problem in the market. With the sheer volume of tokens in circulation, only a small percentage will sustain long-term adoption and value, while the majority may fade into obscurity.

In this rapidly evolving space, due diligence is essential when evaluating altcoins, as the market is filled with both groundbreaking projects and fleeting trends.

Bitcoin & Altcoins

Generally, altcoins, or ‘alts’, offer new features & possibilities that Bitcoin doesn’t. Many altcoins have real world use-cases & applications beyond the realm of finance and digital money.  

Still, as Bitcoin was the original cryptocurrency to begin the crypto revolution, altcoins do share many traits with Bitcoin. For instance, both alts and Bitcoin use Blockchain technology and are ‘decentralised’, offering many of the same benefits, including:

• Faster & more efficient transactions
• A transparent, public record of all transactions
• Less dependence on banks & financial institutions
• True ownership & privacy of your assets
• A secure & trustworthy way to do business with one another directly (without the need for a bank or third party)

Use-cases of Altcoins

Understanding that each cryptocurrency has its own unique purpose & reason for existing is the first step to understanding the true potential of the crypto revolution. For instance:

XRP seeks to replace the SWIFT interbank payment system with an instant and less expensive international payment system.

Ethereum provides a platform for smart contracts and dApps (decentralised applications) to be built, creating a space for a range of innovative and decentralised financial services (DeFi) to evolve.  

Solana provides high-speed, low-cost blockchain infrastructure, making it a preferred choice for DeFi, gaming, and memecoin ecosystems.

Toncoin powers the Telegram-integrated blockchain, enabling seamless in-app payments, NFTs, and decentralised applications for Telegram’s vast user base.

Chainlink acts as a decentralised oracle network, bridging real-world data with smart contracts for automation and reliability.

Celestia introduces a modular blockchain approach, allowing developers to build more scalable and efficient blockchain ecosystems.

As you can see, altcoins extend beyond digital money, covering finance, gaming, AI, cloud computing, privacy, and even social media integration. Some, like Ethereum, Solana, and XRP, have already gained significant mainstream adoption, demonstrating how blockchain is evolving into a core part of global technology.

Altcoins as investments

With cryptocurrency evolving beyond just Bitcoin, many people are exploring altcoins to diversify their holdings. However, the altcoin market is highly diverse, ranging from large-cap projects with strong adoption to high-risk speculative tokens. Here are a few key considerations before getting involved:

• Altcoins vary in risk and size – The term altcoin covers everything from established projects like Ethereum and Solana to highly speculative small-cap tokens.
• Large and mid-cap altcoins tend to be less volatile – If you’re looking to reduce exposure to extreme price swings, focusing on established projects with strong teams, real-world use cases, and adoption may be a safer approach.
• Altcoins are more volatile than Bitcoin – Due to their lower market caps, limited track records, and evolving technology, most altcoins experience higher price fluctuations.
• Some altcoins may see widespread adoption – Projects that successfully solve real-world problems or improve blockchain infrastructure could gain long-term value.
• Most altcoins will not succeed – Thousands of altcoins have launched promising innovation, but many fail due to poor execution, lack of demand, or being outright scams.

Before adding any altcoin to your portfolio, thorough research is essential. Understanding the project’s goals, technology, team, adoption potential, and competition can help you make informed decisions. If you’re new to crypto, consider learning how to do your own research.

Key Takeaways

• The term ‘altcoins’ refers to all cryptocurrencies besides Bitcoin
• Like Bitcoin, altcoins are ‘decentralised’ and carry many of the advantages that Bitcoin does
• Altcoins have a wide range of use-cases & offer possibilities that Bitcoin doesn’t
• Altcoins carry higher risk-reward profiles than Bitcoin
• Altcoins can be classified in terms of risk into small, mid or large-cap cryptocurrencies. Most altcoins & crypto projects will not achieve what they set out to do – you should always DYOR.

Pros and Cons of Including Altcoins in Your Portfolio

Pros

Low barrier to entry – Most altcoins trade at very low prices compared to Bitcoin. They are a good place to start if you feel you’re late to the Bitcoin party!

Higher potential for greater return on investment (ROI) – Altcoins are higher-risk-higher-reward than Bitcoin & many other investments, and volatility can be used to your advantage if you know what you’re doing!

Wide-range of use-cases – Altcoins have the power to revolutionise areas beyond finance, including online voting, cloud-based storage, supply chain management, Blockchain gaming, digital IDs, medical record-keeping, weapons tracking, tax regulation & much more.

Room for evolution – With mainstream adoption growing, the future possibilities of crypto are boundless– plenty of altcoins have A LOT of room to grow. 

Not just digital money – Unlike Bitcoin, altcoins are built with specific utilities, meaning they are often more than just an investment and can be used on a specific Blockchain to redeem a service.

Innovative tech –  Altcoins address many of the shortcomings of Bitcoin. Many altcoins also use more efficient, scalable and sustainable Blockchains & network verification methods than Bitcoin.

Decentralisation – Altcoins are more scalable than Bitcoin and mark a huge step towards decentralisation and putting financial autonomy back in the hands of regular people.

Support the future of crypto – Legitimate altcoin projects add new value and functions to cryptocurrencies & the world at large – if you believe in crypto, the world of alts is for you!

Cons

Risk & speculation – In comparison to Bitcoin, most altcoins lack exposure, infrastructure and acceptance. While altcoins like Ethereum and XRP are well supported, the majority of alts can be considered speculative & risky investments.

Lack of track record – Most altcoins are relatively new and have not yet proven that they will be adopted. Unlike regular investments, their track record & financial history is harder to analyse.

Rapidly evolving – With new altcoins being created every day, it can be hard to stay on top of all the news. Never invest in more coins than you can keep track of! 

Potential for scams – As with all emerging technologies, there are those that capitalise on the naivety and inexperience of new investors through scams and theft – particularly in the world of altcoins & initial coin offerings (ICOs).

Harder to buy – A lot of online exchanges don’t provide direct fiat (USD, AUD, etc.) trading for  certain altcoins. That means you’ll also have to convert any altcoins to Bitcoin or a stablecoin before cashing out into fiat money.

*Note – This is not a problem with Digital Surge. We allow you to buy/sell over 420+ altcoins directly with AUD.

How do I evaluate what a good altcoin investment is?

When assessing a potential crypto investment, the key elements to consider are:

• The Utility & Use-case
• The Community
• The Team (developers, advisors, partners)
• Market Cap
• The Website & White Paper
• The Competition
• The Road Map & Vision
• Trading Volume & Liquidity
• Circulating Supply vs Total Supply

Ethereum & Altcoins

You can’t talk about altcoins without mentioning Ethereum. Ethereum, the second largest crypto by market cap, is not just a form of digital currency but also a platform which facilitates the creation of smart contracts, decentralised applications and other altcoins & cryptocurrency projects.

Ethereum’s Blockchain has its own coding language called Solidity, which anyone with some tech knowledge can use to create smart contracts & new altcoins. This is done using the ‘ERC-20’ standard which is now the most widely used standard for altcoins, leading to the explosion of thousands of new cryptocurrencies.

Why are there so many altcoins?

Blockchain technology has the potential to solve a wide range of real-world problems, and creating a cryptocurrency is now easier than ever. Thanks to Ethereum’s ERC-20 token standard and the rise of blockchains like Solana and Binance Smart Chain, launching a new token requires minimal technical expertise. This has led to an explosion of cryptocurrencies, each aiming to provide unique utility or improve upon existing technology.

However, not all altcoins are built to last. Thousands of tokens have launched only to disappear, often leaving their holders with nothing. The altcoin market is highly volatile, and while some projects bring real innovation, many are purely speculative—or worse, outright scams.

That’s why doing your research is critical. Understanding a project’s team, purpose, technology, and community adoption can help separate legitimate innovations from short-lived trends. In a space filled with both opportunities and risks, taking the necessary precautions is essential.

If you’re new to crypto feel free to read more about what cryptocurrency is

Are altcoins a good investment?

This question doesn’t have a simple yes or no answer. Altcoins cover thousands of different cryptocurrencies, each with varying levels of adoption, utility, and risk. Whether an altcoin is worth adding to your portfolio depends on your personal goals and how well you evaluate the project.

While some altcoins have introduced groundbreaking innovations in DeFi, gaming, AI, and blockchain infrastructure, many fail to deliver on their promises. The majority of new tokens either fade into obscurity or never achieve real adoption.

That’s why doing your research is crucial. Understanding a project’s technology, team, real-world use case, and long-term potential can help you separate genuine opportunities from hype-driven speculation.

If you’re looking for a guide on how to evaluate an altcoin, click here for a simple but comprehensive breakdown.

What are the different types of altcoins?

While you don’t need a technical understanding of altcoins to engage with the crypto ecosystem, altcoins can be classified into several major categories based on their functionality and purpose. Over time, new types of altcoins have emerged, expanding beyond the original four categories.

1. Utility Tokens

Utility tokens provide access to specific services within a blockchain network. They are not designed as direct investments but rather as tools for interacting with decentralised applications (dApps) and ecosystems.

• Example: Filecoin (FIL) – Used to buy decentralised cloud storage space.
• Example: Chainlink (LINK) – Rewards node operators for providing real-world data to smart contracts.

2. Stablecoins

Stablecoins are cryptocurrencies pegged to a stable asset, such as fiat currency or commodities, to reduce volatility. They act as a bridge between traditional finance and the crypto economy, offering price stability for traders, businesses, and DeFi applications.

• Example: USDT (Tether), USDC (USD Coin) – Pegged to the US dollar.
• Example: DAI – A decentralised stablecoin backed by crypto collateral.

3. Mining-Based Coins (Proof-of-Work Coins)

These altcoins rely on Proof-of-Work (PoW) mining, where network participants validate transactions and secure the blockchain using computational power. This method was the original model for cryptocurrencies but is being replaced by more energy-efficient alternatives.

• Example: Bitcoin (BTC) – The first and most well-known mining-based cryptocurrency.
• Example: Dogecoin (DOGE) – A PoW-based memecoin that runs on the Litecoin blockchain.

4. Staking-Based Coins (Proof-of-Stake Coins)

Unlike mining-based coins, staking-based cryptocurrencies use Proof-of-Stake (PoS) or similar consensus mechanisms. These networks allow users to lock up their tokens to help validate transactions, earning rewards in return.

• Example: Ethereum (ETH) – Transitioned from Proof-of-Work to Proof-of-Stake in 2022.
• Example: Solana (SOL) – A high-speed, low-cost blockchain that uses a version of PoS called Proof-of-History (PoH).

5. Governance Tokens

Governance tokens give holders the right to vote on decisions affecting a blockchain protocol, including upgrades, fees, and funding allocation. These tokens are common in decentralised autonomous organisations (DAOs) and DeFi projects.

• Example: Uniswap (UNI) – Allows holders to vote on upgrades to the Uniswap decentralised exchange.
• Example: Maker (MKR) – Governs the MakerDAO ecosystem, impacting the DAI stablecoin’s parameters.

6. Memecoins

Memecoins are cryptocurrencies that often start as internet jokes or trends but sometimes gain massive community-driven adoption. While many have no fundamental use case, some develop ecosystems around gaming, tipping, and community engagement.

• Example: Dogecoin (DOGE) – Initially a joke, now widely used for microtransactions.
• Example: Shiba Inu (SHIB) – A memecoin that has expanded into DeFi and NFTs.
• Example: Bonk (BONK) – A Solana-based memecoin that gained popularity in late 2023.

7. AI and Decentralised Compute Tokens

With AI and cloud computing on the rise, several crypto projects focus on decentralised GPU rendering, AI model sharing, and cloud processing.

• Example: Fetch.ai (FET) – Uses blockchain and AI to automate business processes and decentralised networks.
• Example: Render (RNDR) – Powers decentralised GPU rendering for 3D artists and AI applications.

8. Gaming Tokens

Gaming tokens are used for in-game economies, NFT ownership, and play-to-earn mechanics in blockchain-based games and metaverse projects.

• Example: Axie Infinity (AXS) – Powers the Axie Infinity play-to-earn ecosystem.
• Example: Gala (GALA) – A gaming token supporting multiple blockchain-based games.
• Example: Immutable X (IMX) – A layer-2 scaling solution for Ethereum-based gaming and NFTs.
• Example: The Sandbox (SAND) – A metaverse platform where users can build, own, and monetise virtual land and assets.

Examples of popular altcoins

Ethereum (ETH)

Ethereum is the second-largest cryptocurrency in the world. It is both a cryptocurrency and an open-source platform that allows developers to innovate and build decentralised applications and smart contracts.

Smart contracts allow people from anywhere in the world to execute a contract without needing a third party. Instead, pre-defined conditions are put into the smart contract, and when these conditions are met the contract is executed.

Ethereum’s cryptocurrency, ‘Ether’ (ETH), is just a small component of what makes the Ethereum network so special. A new era of programming, digital ownership and other innovations are being introduced as a result of Ethereum’s smart contract capabilities. While Ethereum is more like Bitcoin than other altcoins (in its solid infrastructure), it serves an entirely different purpose and has opened a world of new possibilities.

Etherum’s key takeaways:

• Ethereum is highly secure and is used and accepted in many large industries
• If Bitcoin crumbles, altcoins like Ethereum will be there to fall back on
• ETH has the largest market cap after Bitcoin and is well-established in the space
• The internet may have connected the world, but Ethereum is demonstrating new levels of interconnection for businesses and individuals, without middlemen
• While Ethereum is extremely popular, the altcoin market is fierce with competition. There are many other companies looking to address Ethereum’s potential inability to scale well

XRP (XRP)

Ripple is a technology that acts as both a cryptocurrency and a digital payment network for banking & financial transactions. The idea is that Ripple can act as a trusted agent in between two parties transacting, as the network can process & confirm the validity of the exchange in a highly efficient manner. 

Ripple’s affordable price, low barrier to entry and potential to revolutionise international banking makes it one of the most attractive crypto investments on the market, with many large banks already adopting Ripple technology for cross-border payments

Ripple’s key takeaways:

• Founded in 2012, Ripple (XRP) is one of the most traded digital currencies across the globe. It has one the biggest market caps in the crypto space.
• Ripple is faster, more cost-effective and more scalable and transparent than many other cryptocurrencies.
• Ripple transactions use less energy than Bitcoin, are confirmed in seconds, and cost less than Bitcoin.
• Ripple operates similarly to the SWIFT system, aiding in the transfer of various currencies and securities across borders.
• Ripple is both a currency and a platform that allows for fast and affordable transactions from user to user, wherever they are in the world.

Cardano (ADA)

Cardano (ADA) is the world’s first sustainable & peer-reviewed Blockchain. Founded in 2017 by a co-founder of Ethereum, Cardano looks to combine the benefits of Ethereum (allowing for smart contracts and decentralised applications) while fulfilling several other functions.

Cardano looks to solve issues of scale, transaction speed and operability. It also enables owners of its cryptocurrency to help operate its network and vote on changes to its software rules. This promising project differs from other cryptos by focusing on a rigorous research-driven approach. Many people like Cardano because of its world-class team of academic leaders, researchers and scientists.

Bitcoin Cash (BCH)

Bitcoin cash (BCH) was created in 2017 as an early fork of Bitcoin. Bitcoin cash made the following improvements to the original Bitcoin:

• Faster transaction times
• Cheaper transfer fees
• Able to handle more transactions per second
• Better scalability

While its value and market cap are still nowhere near that of Bitcoin, Bitcoin Cash is a well-established altcoin that operates on its own Blockchain. Despite not offering any radically new possibilities or changes (like some other altcoins), it has proven useful to the market and thus continues to be a popular altcoin investment.

Tether (USDT)

Tether (USDT) is not your typical altcoin. USDT is what’s known as a stablecoin, which is a hybrid form of cryptocurrency pegged to the US dollar (meaning it doesn’t fluctuate in value like other cryptocurrencies). USDT and other stablecoins are 100% backed by actual USD or other real-world assets in the issuing company’s reserve. 

In addition to being a useful currency for making everyday payments, USDT was initially created to be used on crypto exchanges that did not provide direct fiat to crypto trading. It mimicked fiat currency and provided a place for investors to keep their money as it is a stable store of value which can be easily converted into a variety of cryptocurrencies. Some other popular stablecoins include TUSD, PAXG and BUSD.

What is an altcoin ICO?

ICOs or ‘initial coin offerings’ are the most common way for companies to roll out a new altcoin and raise money for their project. An ICO refers to a fundraising stage where developers essentially explain their project and try to convince people why this particular altcoin will succeed.

Just like the stock market, you’re betting on which company can deliver what they promise. ICOs are often the best way to get in at ground level and see the biggest gains. However, ICOs are not bound by any legal requirements, making them susceptible to scams. Getting in on an altcoin at ground level during the ICO phase is a high risk-high reward investment that should be treated with great caution.

What do I need to get started trading crypto?

To get started you need an account at a trusted crypto exchange like Digital Surge. For this, you’ll just need some personal identification, a secure Internet connection, a method of payment and a few minutes of time.