Altcoins demystified: Understanding its 2023 definition

Tokenomics and supply models – Cryptocurrencies have economic structures called tokenomics that influence their value and utility over time. ETH has a dynamic supply mechanism with both inflationary and deflationary components, while many stablecoins peg their value to fiat currencies, commodities or algorithms to ensure price stability. Learn more about stablecoins, memecoins and the crypto market – read our comprehensive trader’s guides on what are stablecoins, what are memecoins, and what is cryptocurrency trading. When it comes to investing in altcoins, there are a few potential risks and drawbacks to keep in mind.

To run applications like smart contracts on the Ethereum network, you’ll need to pay a transaction fee in ether. The information herein was prepared by Fidelity Digital Asset Services, LLC (“FDAS LLC”) and Fidelity Digital Assets, Ltd (“FDA LTD”). It is for informational purposes only and is not intended to constitute a recommendation, investment advice of any kind, or an offer to buy or sell any asset. Perform your own research and consult a qualified advisor to see if digital assets are an appropriate investment option.

Crypto Markets Today: Bitcoin Holds Near Weekly High, Altcoins Remain Subdued

With a staggering selection of over 23,000 altcoins, pinpointing the definitive “most popular” option becomes daunting. Each altcoin holds a unique purpose, catering to different communities and stakeholders. Although they generally lack any real purpose, meme coins often experience great volatility (and may spike in price if they go viral on social media). As a result, meme coin gamblers can bank big gains on these joke cryptocurrencies — or big losses. Native cryptocurrencies are the coins that were originally created to run on a specific blockchain network.

Carefully consider whether investing in crypto-assets is suitable for you in light of your financial condition and risk tolerance. You can find more information on the risks involved with trading or holding arbivex crypto-assets here. In conclusion, altcoins offer an exciting and diverse range of opportunities for traders looking to explore the cryptocurrency market beyond Bitcoin and Ethereum.

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This method supports confidentiality while maintaining the integrity of the transaction process. It’s recommended to look into the professional backgrounds of team members, their involvement in past projects and their participation in the community. Stablecoins are often used to protect a crypto portfolio against inflation and reduce portfolio volatility. Altcoins encompass everything that isn’t Bitcoin, but don’t be tempted to lump them all together. The Real-World Asset (RWA) sector is another sector that surged 500% year-over-year, propelled by the accelerating adoption of tokenized treasuries and private credit. One example is Starknet’s token (STRK), launched in February 2024 with an initial circulating supply of 719 million tokens (7.2% of the total supply).

Why did altcoins not perform well?

The crypto asset market is new to many and unproven and may have the potential not grow as expected. Although these approaches have been technically feasible, their adoption was constrained by regulatory uncertainties around securities classification. Recent developments, such as the EU’s MiCA framework and the growing clarity of SEC guidance around crypto assets, are now in the process of easing these limitations. By aligning incentives among projects, investors, and communities, this trend is fostering greater trust and enthusiasm surrounding new launches.

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• As the altcoin market matures, investors and enthusiasts seek opportunities beyond the pioneering Bitcoin.
• Digital assets are speculative and highly volatile, can become illiquid at any time, and are for investors with a high-risk tolerance.
• The list of different altcoin groupings could be continued endlessly because, nowadays, almost all cryptocurrencies have a specific purpose.
• After dominating altcoin headlines, the memecoin frenzy is showing signs of fatigue.

Charts and graphs are provided for illustrative purposes only and past performance is not an indication or guarantee of future results. The investment performance of any security referred to on this website can be volatile and can go up or down in value and you can lose your entire investment. Investments in foreign currencies are additionally subject to exchange rate fluctuations and therefore carry a higher level of risk. Therefore, 21Shares cannot guarantee that any capital invested will maintain its value or increase in value. The word altcoin is a portmanteau of “alternative” and “coin”, so appropriately an altcoin is a cryptocurrency coin that is an alternative to Bitcoin. However, there can be some nuance here in certain niche communities, particularly among enthusiasts of a particular altcoin.

That’s why we built CoinGecko – to democratize access to cryptocurrency data and empower users with actionable insights, so you can access all information in one place and make informed decisions in your investment & trading journey. The future of altcoins remains uncertain, as the rapidly changing cryptocurrency landscape continues to evolve. Some projects will likely gain prominence and establish themselves as dominant players in the market, while others may fade into obscurity. As the market matures and consolidates, it is essential for traders to stay informed and adapt to shifting trends and opportunities. Smart contracts and decentralised applications (DApps) on platforms like Ethereum (ETH), Cardano (ADA) or Solana (SOL) address the inefficiencies and high costs of traditional contract settlements. These technologies enable automated, transparent and secure transactions and asset transfers without intermediaries.

Governance tokens like Uniswap (UNI) provide holders with voting rights for protocol changes and upgrades, while utility tokens such as Polygon (MATIC) facilitate transactions within specific networks. These tailored functionalities enable altcoins to cater to niche markets, from decentralised finance (DeFi) to blockchain-based gaming and NFTs. Altcoins emerged as alternatives to Bitcoin, seeking to address some of the perceived limitations of the pioneer cryptocurrency. They are digital assets that operate on similar principles as Bitcoin but are built on different blockchain platforms with varying features and functionalities. Since the introduction of the first altcoin, Namecoin (NMC), in 2011, thousands of altcoins have been created, each aiming to provide unique value propositions to the cryptocurrency market.