There are literally over 15,000 types of digital currencies in the market according to CoinMarketCap. Out of all these cryptocurrencies, Bitcoin occupies the largest share of the market with a whopping 40% of the total cryptocurrency market cap. Ever since Bitcoin established itself as the first cryptocurrency, other kinds of coins have been created and added into the cryptocurrency universe. These coins occupy 60% of the market, which means that there are literally thousands of them. These coins, are referred to as “altcoins.”
What Is Altcoin?
Altcoin is a term used to refer to any other form of cryptocurrency other than Bitcoin. The term altcoin is a combination of the words “alternative” and “coin.” The first altcoin was launched in 2011 and today, there are thousands of them. Early altcoins were created to improve upon Bitcoin’s flaws such as energy efficiency and transaction speed. Today, altcoins serve a variety of purposes depending on the developer’s goals. According to CoinMarketCap, there are over 15,000 coins in the crypto ecosystem as of December 2021.
There are several different kinds of cryptocurrencies in the market today separated based on how they function and their consensus mechanism. Here are the different categories of altcoins you will come across in the crypto ecosystem:
Stablecoins are cryptocurrencies that have been created to counter the high volatility associated with cryptocurrencies. They are usually pegged to the value of an asset such as the USD. Examples of stablecoins include Tether (USDT), USD Coin (USDC), Binance USD (BUSD), etc.
These are cryptocurrencies inspired by memes or jokes on social media. The first-ever meme coin, Dogecoin, was inspired by a popular Doge meme of the Shiba Inu in 2013. The majority of 2021 was ruled by these meme coins. The notable examples here are the renowned Shiba Inu (SHIB), Kishu Inu (KISHU), Hoge Finance (HOGE) and many others.
This kind of altcoins is used to access services within a network. They can be utilized to pay for services, pay fees, or even redeem rewards. The likes of Siacoin (SIA), District0x (DNT), Chainlink (LINK).
These kinds of altcoins are comparable to securities that are traded on exchange platforms. They often promise equity in the form of dividend payouts or ownership.
These altcoins employ the Proof-of-Work consensus algorithm and that’s how they are mined/created. Some noteworthy mining-based altcoins include Litecoin (LTC), Monero (XMR), Zcash (ZEC), among others.
This type of altcoins is not mined. Instead, they are distributed before they are ever listed on any cryptocurrency exchange. A perfect example of a pre-mined altcoin is Ripple (XRP).
Which Altcoins to Buy?
With over 15,000 altcoins currently circulating in the market, it’s a little challenging deciding which altcoins will have a lasting value. This is because some of these altcoins are just enjoying a moment in the spotlight. A perfect example is the Omicron crypto that rose by 1,000% in value and then fell just as quickly as it rose. With that said, here are some of the best altcoins to buy, according to industry insiders and crypto experts:
- Ethereum (ETH)
- Solana (SOL)
- Polkadot (DOT)
- Chainlink (LINK)
- Decentraland (MANA)
Best Crypto Exchange for Altcoins
If you are looking to buy or sell any of these altcoins, then you will require access to an altcoin exchange. The best altcoin exchange is supposed to make it easy for you to purchase or sell any kind of altcoin that you want. Additionally, you might want to make sure that the exchange has low to zero fees along with important security features. The best factors to look out for in altcoin exchanges include security, withdrawal options, pricing, and supported currencies.
With these factors in mind, here are the 5 top best crypto exchanges for altcoins:
How Many Altcoins Are There?
According to the price-tracking website, CoinMarketCap, there are over 15,000 cryptocurrencies in the market as of December 2021. Out of all these cryptocurrencies, Bitcoin and Ethereum take the lion share of the market cap. Both coins make up to 60% of the overall market cap with Bitcoin taking 40% and Ethereum 20%. The rest of the market is made up of all kinds of altcoins.
How to Find Good Altcoins?
With a lot of altcoins constantly flooding the market on a daily basis, it can be a little challenging to identify a good altcoin. Therefore, the key to finding a good altcoin is to conduct proper research. Some of the factors that you can look into while researching includes:
- Market Cap
This factor reflects the stability and growth potential of an altcoin. The higher it is, the safer the altcoin. The market cap is a much better long-term indicator of an altcoin’s worth than the price.
A whitepaper helps you have a comprehensive understanding of the project. Some whitepapers are a little technical but they help you get an idea of what the altcoin’s project is all about.
- Applications/ Use Cases
This factor investigates whether the altcoin offers any kind of utility. Basically, it asks the question, “Does this altcoin have a use case or utility that people are looking for?”
A majority of altcoins have similar applications and use cases. Therefore, it’s important that you take the time to compare altcoins against their competitors. The rule of thumb is that whoever was first onto the space is best placed.
An altcoin’s roadmap helps you understand whether the altcoin is going to last for a long time, whether it will continue to grow, or if it has a future. The roadmap is a great indicator of both future and past performance.